Twitter exceeds growth expectations

Twitter exceeds growth expectations

Twitter gives investors hope that the chronically loss-making short message service is gradually getting its business under control.

In the past quarter, Twitter exceeded analysts’ expectations for revenue and profit, increasing the number of monthly active users by four million. The share price rose by 14 percent at times in early U.S. trading.

However, Twitter also had to admit that since 2014 the user numbers were slightly overstated due to an error in the selection of data sources. That’s why in the second quarter, for example, there were 326 million active users instead of the previously reported 328 million. By the end of September, the number had risen to 330 million, according to correct calculations.

Quarterly revenue fell by a good four percent year-on-year to $589.6 million. Analysts, however, had expected even somewhat lower revenues. The bottom line was a loss of just over $21 million, compared to a $103 million shortfall in the year-ago quarter. In terms of adjusted operating earnings per share, however, Twitter significantly exceeded stock market expectations.

Twitter wants to finance itself with advertising. The main issue is the possibility of paying money to include Twitter posts in users’ news streams. The broadcast can be focused on certain regions or user groups. For example, companies should be able to reach users who do not directly follow their posts on Twitter.

For this reason, the stock exchange traditionally pays special attention to the development of user numbers on Twitter: more reachable eyes make a service more attractive to advertisers. Thereby Twitter is compared again and again with Facebook. The world’s largest online network, however, has now far outpaced Twitter with more than two billion users and is highly profitable with a similar model.

Twitter, like Facebook, is increasingly relying on a self-service platform. At the same time, both services are currently under criticism in the U.S. because, among other things, Russian masterminds allegedly used the system during the last presidential election campaign to stir up social and ethnic tensions with false-flag messages. Twitter managers are invited to a congressional hearing on the issue next week.

Shortly after the quarterly figures were presented, Twitter kicked out the Russian media "Russia Today" and "Sputnik" as advertisers in an unprecedented decision. The decision stemmed in part from the U.S. intelligence community’s assessment that both had attempted to interfere in the 2016 U.S. presidential election campaign in the service of the Russian government, it said in justification.

Advertising revenue of $1.9 million received from the TV channel "Russia Today" since 2011 is to be donated – for research into Twitter’s influence on elections, including the spread of false information. According to previous information, "Russia Today" spent $274,000 on the distribution of the channel’s Twitter posts in the last US election campaign alone. The way Twitter’s advertising system works is that for money, you can add amounts to the message stream of users who don’t follow you directly.

"Russia Today" or its online offshoot RT.com and "Sputnik" are often referred to as the Kremlin’s propaganda mouthpiece in the West. But they themselves insist that they are regular media with all the rights that follow from that.

Even before the announcement, the editor-in-chief of Russia Today, Margarita Simonjan, tried to expose Twitter. The short messaging service itself actively sought to have "RT" join the campaign by advertising on Twitter, she wrote in a tweet on Thursday, linking to a corresponding presentation slide that apparently originated on Twitter.

Co-founder and chief executive Jack Dorsey has dedicated Twitter to a focus on breaking news and personalization, including video. "Our goal is to deliver content that is relevant to you, no matter what the format," he affirmed in a conference call after the quarterly figures were presented. The idea is to use machine learning to get to know users so well that the software can automatically filter out posts of interest to them.

A few weeks ago, Twitter also gave a few selected users the option of sending tweets that were twice as long as before, with up to 280 characters, on a trial basis. Dorsey said German was one of the languages where the previous limit frustrated users. But it is still too early to draw conclusions from the test: "We are still observing how this affects the service as a whole."Detailed data, however, would be released in the coming weeks. Critics of the move warned, among other things, that the 280 characters could rob Twitter of its striking brevity.

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