Twitter Soars After Surprise Sales Gain

Twitter soared the most since its market debut in 2013 after it posted the first revenue growth in four quarters, driven by improvements to its app and added video content that are persuading advertisers to boost spending on the social network, according to Bloomberg.

The company topped analysts’ average sales estimates in the fourth quarter and for the first time reported a real profit, a milestone in CEO Jack Dorsey’s turnaround effort. Monthly active users were little changed from the prior quarter at 330 million, a lower-than-projected total that the company attributed in part to stepped-up efforts to reduce spam, malicious activity and fake accounts.

Revenue in the recent period rose 2 percent from a year earlier to $731.6 million, buoyed by data-licensing sales and video advertising. Analysts on average had predicted $686.4 million. Net income was $91.1 million, or 12 cents a share, marking the first time the company reached profitability under generally accepted accounting principles. That compared with a loss of $167.1 million, or 23 cents, a year earlier. Profit excluding some costs was 19 cents a share, exceeding projections for 14 cents.

Analysts on average had estimated monthly users would rise to 333 million. Twitter said daily active users increased 12 percent from a year earlier, marking its fifth consecutive quarter of double-digit increases. The company doesn’t disclose the specific number of daily active users, arguing that showing growth is more important. Twitter gave a first-quarter outlook for adjusted earnings before interest, taxes, depreciation and amortization of $185 million to $205 million. Analysts estimated $188.3 million.

The report adds to positive momentum in recent months for Twitter. After aggressively slashing spending over the past few years, Twitter will invest in products this year that increase audience engagement, which will causes expenses to "more closely align with revenues," CFO Ned Segal said during a conference call. The shares soared as much as 30 percent, the most since Nov. 7, 2013, bringing gains over the past 12 months to about 66 percent.