Twitter beats revenue target with ad improvements, stocks jump 5%

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(Reuters) – Twitter Inc (TWTR.N) on Thursday reported higher revenue growth than Wall Street expected, as the social media platform rolled out improvements to ad targeting to help brands reach potential customers.

Twitter shares were up 5% to $73 in trading after the bell.

Since the start of the year, Twitter has raced to introduce products in new areas like voice-only chat rooms and newsletter publishing in an effort to turn around years of business stagnation and reach its goal of doubling annual revenue by 2023.

Ad revenue totaled $1.05 billion, an 87% increase from last year’s quarter, and it beat Wall Street estimates of $909.9 million.

In a conference call with Twitter, the company said that Twitter has worked to improve the effectiveness of its ads, introducing 2,500 new topic categories during the quarter to help users find content they’re interested in, all of which provide more ad targeting data back to Twitter. Analysts.

“We get a great indication of what people care about most, and where they are or where they care,” said Twitter CFO Ned Segal during the call.

Twitter said these improvements, along with increased demand from advertisers seeking to reach consumers as countries reopen to pandemic restrictions, have helped boost ad revenue.

Strong results from both Twitter and its tech peer Snap Inc. (SNAP.N), which reported quarterly revenue growth of 116% Thursday, show, “The overall digital advertising market is now on fire, with a further boost reopening to advertisers’ budgets,” said Yigal Aronian, research analyst at Wedbush Securities.

Twitter reported 206 million daily active monetized users (mDAU), a term for users whose ads are served, for the second quarter ended June 30, matching analyst targets of 205.9 million users, according to IBES data from Refinitiv.

Twitter said its US user base fell by 1 million over three months compared to the previous quarter due to a lighter news cycle in the US, with total users worldwide in line with Wall Street’s goals.

Total revenue, which also includes revenue the company earns from data licensing, rose 74% year-over-year to $1.19 billion, topping analysts’ estimates of $1.07 billion.

future investments

The San Francisco-based company now expects headcount, total costs and expenses to grow at least 30% for the full year, up from previous guidance of 25%, as it invests in its engineering teams and products.

CEO Jack Dorsey, a longtime supporter of bitcoin, said during the earnings call that the digital currency is a “big part” of Twitter’s future and can be used for e-commerce transactions on the platform or to mentor popular content creators.

Twitter added that new privacy controls Apple Inc implemented in April, which is designed to limit digital advertisers’ tracking of iPhone users without their consent, had a smaller-than-expected impact on revenue in the second quarter.

Aronian said the full impact of Apple’s changes has yet to be seen, and some concerns remain.

Twitter expected total revenue in the third quarter to be in the range of $1.22 billion to $1.3 billion, roughly in line with or just ahead of analysts’ consolidated estimates of $1.17 billion.

On an adjusted basis, Twitter earned 20 cents per share during the second quarter, well above the estimate of 7 cents.

Additional reporting by Sheila Dang in Dallas; Editing by Sonya Hepstel and Lincoln Fest.

Our Standards: Thomson Reuters Trust Principles.

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