Twitter (TWTR, Financial) surprised everyone, and possibly even itself, in the first-quarter earnings as the company posted better-than-expected numbers on all fronts. Twitter posted earnings per share of 11 cents as the market was expecting only 1 cent per share while revenue came in at $548 million against the expected $511.9 million.
But what was heartening to see more than the earnings and revenue beat was that Twitter added 9 million monthly active users during the first quarter. To put that number in perspective, Twitter took three quarters (second, third and fourth) to add 9 million users in 2016. Monthly active user base in the U.S. finally showed some momentum after being stuck at 67 million users for two quarters in a row.
With a potential user base that can easily cross 100 million, being stuck at the same user base level is a big no-no for a social media company, but Twitter has bounced back, adding 3 million users in the U.S. during the first quarter.
Twitter did make a lot of changes in 2016 to try and increase user engagement. It has been pushing hard into the video segment, improving user experience and working on its notification system.
“In the first quarter, we further refined the timeline to display a broader set of Tweets from a person’s network and applied deep learning models to show the most relevant Tweets first. We also continued to use other machine learning techniques to improve the relevance of notifications, which increased engagement and brought people back to Twitter. These changes improved retention across both MAU and DAU.” – Twitter First Quarter Shareholder letter
Twitter still has a long way to go, but getting the U.S. back on track is a significant first step because it is the one geography with the highest earning potential and will allow Twitter some breathing space to keep improving its product and user experience.
If it can continue the trend set by the 3 million increase in the U.S. user base, then slowly but surely, Twitter can keep improving on its other key metrics.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
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