You will be redirected back to your article in seconds

Twitter Posts Strong Q2 Earnings, but Monthly Users Drop by 1 Million Amid Cleanup Effort

Twitter turned in its third straight quarter of profitability for Q2 of 2018, beating Wall Street expectations for revenue and earnings. But investors were focused on Twitter’s lackluster user metrics: Its monthly user base dropped by 1 million sequentially, to 335 million worldwide, as Twitter continues efforts to eliminate fake accounts and reduce harassment on the platform.

The poor showing on user growth drove Twitter’s stock down in pre-market trading Friday by as much as 15%.

Twitter said it expects monthly active users to decline in Q3, as well. “Based on our current level of visibility, we expect the decline to be mid-single-digit millions of [monthly active users],” the company said in its investor letter. In addition, the company said it plans to continue to grow its headcount, targeting an increase of 10%-15% by year-end, which will mean operating expenses will increase in the second half of 2018.

Total revenue hit $711 million in Q2, up 24% year-over-year, and Twitter posted net income of $100 million (or 13 cents per diluted share), and a net margin of 14%.

“Our second quarter results reflect the work we’re doing to ensure more people get value from Twitter every day,” Twitter chief Jack Dorsey said in prepared remarks. “We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviors that distort and distract from the public conversation.”

Twitter’s average monthly active user base was 335 million for Q2, up 9 million year-over-year and down 1 million quarter-over-quarter. The company said that was the result of “decisions we have made to prioritize the health of the platform, to not move to paid SMS carrier relationships in certain markets and, to a lesser extent, GDPR,” referring to Europe’s General Data Protection Regulation law, which took effect May 25.

Average U.S. MAUs were 68 million for Q2, flat with the year-earlier period and down from 69 million in Q1. Average international MAUs were 267 million for Q2, versus 258 million in the same period of the previous year and 267 million in Q1.

Twitter again touted daily active user growth. It doesn’t disclose DAUs but said those remain well below 50% of monthly active users. In Q2, daily active users increased 11% year-over-year, with double-digit growth in five out of its top 10 global markets.

In its letter to shareholders, Twitter alluded to a recent report by the Washington Post that it was purging fake (“bot”) accounts at a rate of more than 1 million per day.

Twitter said that when it suspends accounts, many of them have already been excluded from its MAU or DAU tallies, “either because the accounts were already inactive for more than one month at the time of suspension, or because they were caught at signup and were never included in MAU or DAU.”

The company said it will continue to prioritize its initiatives to eliminate fake accounts and improve tools for dealing with harassment and abuse, “as we believe the best driver of long-term growth of Twitter as a daily utility is a healthy conversation.” In June, Twitter acquired Smyte, a company that specializes in spam prevention, safety and security technologies.

According to Twitter, new tools to address “behaviors that distort and distract from the public conversation” introduced in Q2 have resulted in a 4% drop in abuse reports from search and 8% fewer abuse reports from conversations.

Twitter’s Q2 ad revenue grew 23%, to $601 million, with video ads continuing to account for more than half of that. U.S. advertising grew 9%, to $293 million. International ad revenue grew 40%, to $308 million — the first time non-U.S. sales represented the majority of total ad revenue. Twitter said Asia-Pacific was again its fastest-growing region, driven by growth in video in Japan and “performance ad products in our China export market.”

More Digital

  • Netflix Our Planet Sophie Darlington

    Netflix's 'Our Planet' Roars to Life With Work by Top Wildlife Cinematographers

    In terms of scope, production time and — very likely — budget, Netflix’s “Our Planet” is one of the most ambitious projects from the streaming service to date. Narrated by David Attenborough and made available worldwide on April 5, the goal of the eight-part series is to capture diverse habitats across the globe and highlight [...]

  • Amazon

    Amazon Music’s Free Tier Is More Advertising Play Than Spotify Killer, Analysts Say

    When news began to spread last week that Amazon Music’s long-anticipated free streaming tier was imminent, headlines emerged about its threat to Spotify and Apple Music, with some stories saying that Spotify’s stock price dropped in response to the news. But not only was today’s launch of the free tier basically a soft one — [...]

  • Gay Chorus Deep South

    Why Airbnb Produced Documentary 'Gay Chorus Deep South,' Its First-Ever Film (EXCLUSIVE)

    The latest player to hit the film-festival circuit may be a bit unexpected: Airbnb, the travel-accommodations booking marketplace, developed, financed and produced documentary film “Gay Chorus Deep South,” set to premiere at the 2019 Tribeca Film Festival on April 29. It’s the company’s very first feature film. Directed by David Charles Rodrigues, “Gay Chorus Deep [...]

  • Amazon

    Amazon Music Launches Free Streaming Tier, Through Alexa Only (for Now)

    Amazon Music today basically soft-launched its free streaming tier, in which U.S. customers of its Alexa voice assistant will have access to top Amazon Music playlists and thousands of stations, at no cost. The limited access that the new free service provides — it’s only available through Alexa, and when the listener requests a song, [...]

  • Ben Silbermann, Evan Sharp. Pinterest co-founder

    Pinterest Shares Up Close to 29% on IPO Day

    Shares of the social pinning service Pinterest closed at $24.45 — 28.6% above their IPO price — on the company’s first day at the New York Stock Exchange Thursday as investors were looking to get in on the latest tech listing. Pinterest’s shares opened at $23.75, 25% above the IPO pricing of $19 per share, [...]

  • Netflix Logo

    Netflix to Open Production Hub, Expand Offices in New York City

    Netflix plans to move into a bigger new office in Manhattan and open a Brooklyn production hub — all told, bringing up to $100 million in investments to New York City and resulting in hundreds of new jobs, according to New York State Gov. Andrew M. Cuomo. Netflix’s new corporate offices in the Big Apple [...]

More From Our Brands

Access exclusive content