Twitter profit soars as user base shrinks

Mae Love
February 7, 2019

Twitter is a publicly-traded company, and as such, its quarterly earnings reports always include data about the platform - including the amount of active users. However, the company disclosed in a recent report that it found operations to mislead users on the platform that were potentially connected to sources in Iran, Venezuela, and Russian Federation.

"Health is our top priority as we continue our work to help people find credible information and feel safe participating in the conversation on Twitter", said the company's chief executive, Jack Dorsey. Twitter is also anticipating operating income during the quarter of $5 million to $35 million-well below the $74.9 million operating income Twitter posted during the same period a year ago.

The short-messaging platform said it posted a $255 million profit in the final three months of 2018, compared with $91 million a year earlier, as revenues rose 24 per cent to $909 million.

"We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service", he added. Twitter stock was down more than 10 percent in midday trading.

Dorsey said the platform is a hub for following people's interests, but acknowledged it can be hard for users to engage in conversations and, for first-time users, to find accounts that share their interests.

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Twitter rarely talks about the number of Daily Active Users, saying that it's a poor metric that would easily be misinterpreted. The move effectively removes users who are not shown ads and therefore not able to generate revenue for the company.

But Twitter's base of monthly active users declined to 321 million - a drop of nine million from a year earlier and five million from the prior quarter. "The falloff in monthly active users is likely a continuation of Twitter's efforts to remove questionable accounts", which began last quarter, said Jasmine Enberg, an analyst at the research firm eMarketer.

Enberg said the growth in daily users, however, means that people are still "highly engaged" on Twitter, which advertisers will take as a positive sign.

Total advertising revenue rose 23 percent to $791 million.

Investors appear to be concerned that Twitter is seemingly expecting a slightly less successful 2019. And, from next quarter, it will stop reporting on its monthly user figures, which may make investors jittery that they're not getting the data they need.

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