Twitter Reports First-Ever Quarterly Profit Despite Stagnant User Growth

Getty Images for The New York Times

One side goes up and, as if by design, the other side goes down.

It only took 12 years, but Twitter has finally turned a quarterly profit.

The company reported fourth quarter earnings of $91 million, or 12 cents a share, on revenue of $732 million, up 2 percent from a yar ago.

The company also announced record quarterly revenue and an increase in daily users - but total monthly active users failed to grow, staying at around 330 million. In the fourth quarter, Twitter lost 1 million monthly active users in the United States, bringing the total down to 68 million. Barclays PLC reaffirmed a "sell" rating and issued a $16.00 price objective on shares of Twitter in a research report on Friday, July 28th.

While Twitter is well-known, it remains hard to use, making it hard for the company to explain to people why they need it. Twitter also has an "image problem", Wedbush analyst Michael Pachter said in a recent research note, "as it has been slow to act on harassment and other hostile behavior". Total ad engagements were up 75% year-over-year which has been put down to engagement growth, improved products, better ad relevance to the user. It also has an internationally recognized brand and user base. That marked the company's first-ever profitable quarter.

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Twitter's off-platform ad business continued to be a sore spot in Q4. Twitter Inc has a one year low of $14.12 and a one year high of $33.76. "This severely limits its revenue potential, as Facebook and Google will continue to capture the bulk of the growth in spending for digital advertising". Twitter said its slow user growth could be a result of its recent crackdown on fake accounts.

According to Twitter, a change Apple made to the Safari browser's third-party app integration resulted in a loss of approximately 2 million MAUs in Q4 (1 million in the US and 1 million internationally). During Thursday's earnings call, Segal said the change resulted in 1 million fewer monthly users in the USA and 1 million fewer outside of the US. Trading volume for Twitter, Inc. was 48.65 Million in its previous trading session. There's some level of optimism now for the social media company because it's in fact now making money.

The concerns about bots is just the latest black eye for Twitter, which struggles with everything from revenge porn and nonstop harassment among some users to concerns about how its service may have been used by Russian operatives in an attempt to influence the 2016 election. At the time, Apple stopped automatically updating the list in the background, requiring people to open the "shared links" tab to refresh the list and become a Twitter user, though not a Twitter user that the company could serve with ads.

Twitter blames the fall in numbers on two things: a change to Safari's app integrations, and the project that's euphemistically-titled "information quality efforts".

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