Twitter’s Stock Rises After User Engagement Metrics Beat Investor Expectations

The company increased its monthly active users and increased its revenue during the second quarter.

On Friday, Twitter saw its shares rise 10% after releasing its second-quarter earnings report. The company’s revenue rose 18% to reach $841 million and the company’s daily operating income reached $76 million, far exceeding the company’s guidance of $35 to $70 million.

But best of all, the company saw its daily active users increase 14% year over year to reach 139 million. This is largely thanks to the company’s focus on improving the user experience on its platform.

The company sees its revenue and users growth

Twitter used to report its monthly active users but the company shifted away from this model during the second quarter. Twitter said that focusing on daily active users is a metric that better reflects its audience. 

The company’s new model focuses on monetizable daily active users who log in throughout the day and are exposed to ads. Twitter says this is what makes its metrics different than other social media companies. 

Twitter’s daily active users are much smaller than other social media companies report. For instance, Facebook has 1.59 billion daily active users and Snapchat has 203 million daily active users. But according to Twitter, both of these companies use a much broader range to analyze their users. 

Twitter improves the user experience on its platform

The growth in users likely comes as welcome news to investors since the company has missed the mark on its user growth for several quarters now. Twitter said this was due to changes it made to the platform as well as GDPR.

The increase in users likely came about because Twitter has been focusing on improving its overall user experience. Specifically, the company is focused on creating conversations and not just emphasizing likes and retweets.

And the company is currently beta testing an app called twttr. The new app is allowing the company to test out new ideas and features. Twitter’s CEO Jack Dorsey said the company has received promising results but declined to say when these features would be available for widespread use. 

What to expect from Twitter going forward

During the third quarter, Twitter expects its revenue to fall somewhere between $815 million to $875 million. And the company expects its operating income to fall in the range of $45 million to $80 million.

Twitter does expect its operating expenses to increase by about 20% during the remainder of the year. This is because Twitter plans to invest heavily in top priorities like revenue product and sales and the company’s platform.

The company’s shares were down slightly on Monday morning but the overall outlook for Twitter is positive. The company’s shares are up 21% year to date and 43% from a year earlier. We can likely expect more good things to come from Twitter in the coming months.