Twitter Inc. TWTR, a major David Einhorn (Trades, Portfolio) holding, said Thursday that the third quarter represented its fourth consecutive quarter of profitability, driven by double-digit revenue growth and strong daily active user growth.
The San Francisco-based social media platform reported net income of $789 million, or $1.02 in diluted earnings per share, up from net loss of $21 million, or 3 cents in diluted loss per share in the prior-year quarter. Adjusted earnings of 16 cents per share outperformed the consensus estimate by 3 cents.
Company accelerates revenue and DAU growth on positive advertising sentiment
Twitter CEO Jack Dorsey said revenues increased 29% year over year, driven by “broad-based” revenue growth across multiple regions including the U.S. and Japan. Advertising revenues increased 29% on strong owned and operating revenue growth, stemming from continued positive sales momentum with advertisers through better relevance, improved return on investment and the company’s “differentiated ad formats.”
Even though Twitter’s efforts to improve the social platform’s health contributed to a 4% decline in monthly average user growth, the company still increased its daily active user growth 9% on factors including product improvements and organic growth. On the earnings call, Dorsey underscored Twitter’s mission to facilitate conversations within the platform by organizing the comments in three ways: recap, top commentary and recent commentary. Twitter strives to understand each user’s interests and match the user to relevant topics in convenient ways.
The CEO also highlighted two examples that show strong advertising sentiment: one related to the 2018 FIFA World Cup and a second related to McDonald’s Corp. MCD testing a new product combining French Fries and potato wedges in France.
Stock rises, sending tech sector and U.S. markets higher
Shares of Twitter traded at an intraday high of $33.38, up approximately 21.2% from its previous close of $27.54 on the strong revenue performance. Gurus cheering on the news include Einhorn and Chase Coleman (Trades, Portfolio)’s Tiger Global Management.
The Dow soared over 250 points higher, partially erasing Wednesday’s 600-point nosedive on Thursday. The Nasdaq gained 2.3% and Standard & Poor’s 500 index rose 1.4%, with communication services and technology rising over 2% each.
Disclosure: no positions.
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David Einhorn’s Twitter Falls on Weak Monthly Active User Outlook
