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Twitter Boosts User Base in Q1, Beats Earnings Forecasts With Sixth Profitable Quarter in a Row

Twitter turned in another quarter that topped Wall Street earnings estimates and grew its user base on both a daily and monthly basis sequentially — as the company touted success of efforts to thwart abuse on the platform.

The social network’s Q1 revenue was $787 million, up 18% year-over-year, and net income was $190.8 million (for adjusted earnings per share of 37 cents), marking its sixth consecutive quarter reporting a profit. Wall Street analysts on average expected revenue of $775.2 million and adjusted EPS of 15 cents. Twitter said the better-than-expected profitability for Q1 stemmed from higher revenue, lower relative costs and a one-time tax benefit of $124 million.

Twitter reported average daily active users of 134 million in Q1, up 11% year-over-year and a gain of 8 million versus 126 million in the previous quarter. Average monthly active users — which Twitter will no longer report going forward — were 330 million for Q1, up 9 million from 321 million in the previous quarter but down from 336 million in Q1 2018.

Shares of Twitter jumped more than 8% in premarket trading Tuesday on the results. The company’s stock soared more than 17% in morning trading, to a nine-month high of $40.23 per share as of 11:06 a.m. ET. [UPDATE: Twitter shares closed up 15.7% for the day, to $39.77 per share.]

Twitter called out particular strength in the U.S., where ad revenue was $363 million for Q1, up 26%. The U.S. results reflect “continued execution across product and sales, coupled with broad-based advertiser demand,” the company said in its investor letter. Overall, video formats for the sixth straight quarter represented more than half of Twitter’s ad revenue.

Jack Dorsey, Twitter’s CEO, said the company is making progress in combating bad actors on the platform. For example, he said Twitter now removes 2.5 times as many tweets that share personal information since the company last month launched better tools to report such violations. In addition, about 38% of abusive tweets that are taken down each week are being proactively detected by automated systems, according to Dorsey.

“We are taking a more proactive approach to reducing abuse and its effects on Twitter,” Dorsey said in announcing the results. “We are reducing the burden on victims and, where possible, taking action before abuse is reported.”

Starting with the fourth quarter 2018 earnings, Twitter reported “average monetizable daily active users,” or  “mDAU,” which is the only user metric it will report from here on out. That’s partly because its daily active user base continues to grow, while monthly user counts have stalled or declined, as Twitter continues to purge fake and other suspect accounts.

“We want to provide something valuable to people on Twitter every day, and we believe that mDAU, and its related growth, are the best ways to measure our success,” Twitter said in explaining why it will no longer report monthly active user numbers.

For the second quarter of 2019, Twitter projected total revenue to be between $770 million and $830 million and operating income to be between $35 million and $70 million.

In announcing earnings, Twitter pointed to its live-streaming video strategy as a further boost to user engagement, citing its recent deal with the NBA and Turner Sports that let fans watch the second half of 20 NBA games this season through a single-player camera feed, focusing on a different player each game as selected by a fan vote.

Twitter also called out the recent launch of its first public prototype app, called (twttr), which it’s using as a proof-of-concept testing ground. The initial focus for (twttr), released 30 days ago, is to make Twitter more conversational, “with the end goal of making conversation on Twitter feel faster, more fluid, and more fun,” Dorsey said in the earnings announcement. Twitter last month launched a new camera feature in its app, which lets users access the camera by swiping left from their timeline.

On the earnings call with analysts, Dorsey was asked about government regulation of social media. He said Twitter is “completely open to regulation where it makes sense” and said regulations like Europe’s General Data Protection Regulation (GDPR) “have been a net positive not just for our service, but also for our broader industry in general. It’s added a lot more clarity around privacy and how data is being used to the people that we serve.”

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