The stock is up more than 20% since the beginning of the year.
On Thursday, Twitter reported its fourth-quarter earnings before market open, and the results were impressive. The company beat revenue estimates and showed its biggest increase in user growth to date.
This caused its stock to soar more than 17% by mid-morning. Here is a brief overview of the company’s fourth-quarter earnings:
- Earnings: 25 cents per share reported; 29 cents per share forecast
- Revenue: $1.01 billion reported; $996.7 billion forecast
- Daily active users: 152 million reported; 147.5 million forecast
A closer look at Twitter’s fourth-quarter
Twitter’s revenue grew 11% year over year to surpass $1 billion, which was largely driven by an increase in the company’s advertising revenue.
The company’s operating income did fall by 26% from a year earlier. This was largely due to headwinds from ongoing product issues.
But the most noteworthy aspect of the company’s earnings report was its growth in monetizable daily active users (mDAU). Twitter saw its mDAU grow by 21% from a year earlier. In comparison, the company saw a growth of 17% during the third quarter.
Company management credited these gains to overall product improvements. Twitter has also worked to make its timeline and user notifications more relevant, and these efforts seem to have paid off.
What’s next for the social media company?
Twitter expects the momentum to continue into 2020 and its guidance reflected this sentiment. The company expects its first-quarter revenue to fall within a range of $825 million and $885 million.
Going forward, the company will continue to make product improvements, especially to its Mobile Application Promotion (MAP) product. Several months ago, the company reported that it discovered bugs in the legacy MAP product.
These bugs held back the company’s fourth-quarter revenue by at least four points, making the strong revenue gains especially impressive. Twitter plans to launch its next-generation MAP product sometime this year.
Company management is also focused on continuing to make its platform safer for users. One of the ways it is doing this is by eliminating political ads from the platform and giving users the option to report content that contains misleading election information.