×

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

  • SAG-AFTRA HQ

    SAG-AFTRA Ends Long Strike Against Ad Agency Bartle Bogle Hegarty

    SAG-AFTRA has ended its 10-month strike against Bartle Bogle Hegarty after the advertising agency agreed to sign the union’s new commercials contract. The union instructed its 160,000 members in September not to accept any work for BBH, which had been signed to SAG-AFTRA’s commercials contracts since 1999. The strike came two weeks after BBH publicly [...]

  • FaceApp is displayed on an iPhone,

    SAG-AFTRA Warns Members About FaceApp Terms of Use

    SAG-AFTRA is warning its 160,000 members about the “overreaching and invasive” terms of use for the FaceApp mobile application. FaceApp, developed by Russian company Wireless Lab, uses neural network technology to automatically generate transformations of faces in photographs. The app can be used to make users appear older, younger, or change gender. The terms include [...]

  • J. Cole

    Apple Music Launches 'Rap Life' Playlist

    Apple Music announced the launch of “Rap Life,” a new global playlist focusing on contemporary rap artists and culture. It replaces the former “The A-List: Hip-Hop” playlist. Said Ebro Darden, Apple Music’s Global Editorial Head of Hip-Hop and R&B: “We flipped it to dig deeper into into the lifestyle [and to] keep pushing the culture [...]

  • Billie Eilish

    ARRI, Mobile TV Group Back New Venture Revitalizing Streamed Concerts

    A new venture looking to bring a fresh approach to live-streaming concerts has gotten the backing of hardware heavyweights ARRI and Mobile TV Group. Wide+Close is launching with the mandate of shooting music performances with film cameras and cinematographers in order to give the content a more cinematic feel. “We want to take concert filming [...]

  • Fortnite Battle Royale

    How 'Fortnite' Fans Can Earn Loot by Watching YouTube Videos

    Epic Games and YouTube have teamed up with a special offer for “Fortnite” players — giving players of the popular battle-royale game rewards when they watch “Fortnite”-premiered content on the video platform. The catch: You have to watch at least 20 minutes of “Fortnite” special content or live esports broadcasts to receive the loot. Under [...]

  • Roku headquarters

    Roku Plans to Expand to Brazil, Other Countries (EXCLUSIVE)

    Roku plans to expand to multiple new territories in the coming months, Variety has learned. One of the first new markets for the company will likely be Brazil. An international expansion could help Roku grow its customer base, which in turn should lead to growing advertising revenues. Roku executives have been hinting at plans to [...]

  • Google Stadia Pro to Include 1

    Google’s Stadia Game Streaming Service to Include Free Monthly Game

    Google has been busy sharing additional details about its upcoming game streaming service Stadia, clearing up some confusion in the process. Stadia’s pro subscription tier, which will cost $10 per month, won’t be a Netflix-type subscription service. However, subscribers will get free games at the rate of about a title per month. That’s according to [...]

More From Our Brands

Access exclusive content