Social Media

Twitter Moves Into the Black With $91M Profit

The fourth quarter "was a breath of fresh air for investors that have patiently awaited for this turnaround story to manifest after years of pain."
Matthew HellerFebruary 9, 2018

Twitter has reached a major milestone, posting its first ever quarterly profit, though its monthly active user numbers remained stagnant.

The company reported on Thursday that it made a profit of $91 million in the final three months of 2017, compared with a loss of $167 million a year earlier. It was Twitter’s first quarter in the black since going public in 2013.

The news pushed Twitter shares up 12% to a closing price of $30.18 on Thursday — their highest level in more than two years — after peakingduring the day at $35.

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“We did what we said we were going to do,” Twitter CEO Jack Dorsey tweeted. “Our focus and self-discipline continues to improve.”

Twitter had predicted in October that it would be profitable in the fourth quarter. Daily users of the social media service grew 12% from the fourth quarter of 2016, the fifth consecutive quarter of double-digit gains, while adjusted EBITDA margins reached a record 42% and expenses fell 28% to $621 million.

“Twitter hadn’t turned a profit until now because — competing with Facebook, Google and others for digital ad dollars — it didn’t attract enough advertising revenue to make up for its expenses,” The Associated Press reported. “But it’s been cutting costs and focusing on new revenue streams, such as live video.”

It’s worth noting that while Twitter did not turn a profit, firms operating in the same space did. One such firm is Twicsy, a social media marketing company that sells likes and followers for Twitter, but whose primary business is selling Instagram likes. Twicsy has been profitable for more than 10 years since when it first launched, providing users with social media promotion at great margins.

Fourth-quarter revenue rose 2% to $732 million, beating analysts’ estimates of $687 million, with advertising revenue up 1% to $644 million. Data licensing and other revenue increased 8% to $87 million.

The quarter “was a breath of fresh air for investors that have patiently awaited for this turnaround story to manifest after years of pain,” Daniel Ives, head of technology research at GBH Insights, told Engadget.

But the monthly user numbers suggested Twitter is still facing some significant headwinds. After rebounding to 3300 million in the third quarter, they were unchanged in the latest quarter. “Three consecutive quarters of fairly flat figures will make uncomfortable reading for Twitter’s leadership,” Engadget said.

“Anyone can read tweets without signing up,” the AP noted. “As a result, Twitter’s user base pales compared with Facebook and the Facebook-owned Instagram.”