Twitter’s ability to show more ads to users pays off with boost in share price
The latest earnings report from Twitter shows its ability to monetise its users is growing, which is good news for shareholders.
While questions remain over Twitter’s ability to keep a hold of its userbase, the company’s Q2 earnings for 2019 showed that it is increasing the number of users who can be targeted for advertising.
A metric recently introduced into its earnings report was that of ‘average monetisable daily active users’, which amounted to 139m users this quarter, marking a 14pc increase on the previous year.
Breaking this down further, the US market saw a 10pc increase in this group over the space of a year, growing to 29m users, while the international market rose by 15pc to 110m. This ability to show it is increasing the platform’s capacity to get advertising to its userbase has encouraged shareholders and led to a surge in share prices, according to CNBC.
The decision to no longer report Twitter’s monthly active users came after the company failed to meet estimates for two successive quarters, which it blamed on a variety of reasons from GDPR to its attempts to cull bot accounts.
While it was originally expected to come in at 19c per share, Twitter just beat that figure at 20c per share, boosting its share price by 8pc at the beginning of trading and adding more than $2bn to its market cap to reach a total of $31bn.
Overall, revenue rose by 18pc on the previous year to $841m versus the expected $829.1m. Speaking after the figures were released, Twitter’s chief financial officer Ned Segal said that this showed the company was “remarkably consistent” in bringing monetisable users who visit for very specific purposes.
Segal added that Twitter is now working on its algorithms to convert users into those who can be monetised to help them “find what they’re looking for faster”.
Notable changes have come to the platform in recent weeks with the global roll-out of its new desktop look, taking in many elements from its mobile design. Twitter CEO Jack Dorsey said that this includes making lists more prominent in timelines as a “starter pack” for new users.
Looking to Q3, the company expects to earn revenues of between $815m and $875m, while for the total year it expects operating expenses to increase by 20pc compared with 2018.