Popular microblogging company Twitter Inc reported its first ever quarterly profit in the 12-year history of the company on Thursday, helped by expansion outside the United States. Twitter reported a net profit of $91.1 million, compared to a loss of $167.1 million in the same period previous fiscal. Adjusted profit was 19 cents per share, topping analyst expectations of 14 cents per share, according to Reuters. Overall revenue increased by 2 percent in the fourth quarter from a year earlier, beating analyst estimates that had predicted a fourth straight quarter of declines. Earlier, Twitter has never had a profitable quarter, but had told Reuters that it “will likely be GAAP profitable” in the fourth quarter if it hits the high end of its estimates. In the US, where Twitter makes a bulk of its revenue, the number of users dipped to 68 million from 69 million in the third quarter. We explore the reported results in greater detail.
Increase in revenue from outside of the United States
While revenue from within the United States declined by 8 percent, revenue from outside the US has helped the company to turn profitable. Revenue from outside the United States rose 17 percent, making up for an 8 percent decline in revenue from within the United States. Revenue from Japan rose 34 percent to $106 million, and Chief Financial Officer Ned Segal said Chinese exporters were strong advertisers abroad.
Better targeting of Ads helps revenue jump
Twitter says that revenue was helped by using data to make the targeting of ads more customised, a process known as machine learning. This had led to a rise in clickthrough rates, or the ratio of users who click on a specific ad to the number that view it. The company also cited higher video ad sales and redesigned ad formats as factors that led to growing revenues.
Shares hit 2-year high
Twitter shares soared on the back of the news and hit a 2-year high. The shares soared 15% in early trading yesterday after closing at $26.91 Wednesday on NYSE. Intra-day, the shares soared as much as 30 percent, the most since Nov. 7, 2013, to $35.