Twitter Adds 5 Million Users; Sales Top Estimates

Twitter reported sales that beat Wall Street expectations as the company attracted millions of new users, according to Bloomberg. The shares rose 8.7%.

Second-quarter revenue came in at $841 million, up 18% from the same quarter last year and higher than the $829 million analysts estimated. The company added 5 million daily users in the period, bringing the total to 139 million. That was the biggest year-over-year increase since the summer of 2017. Net income, excluding certain items, was $37 million, or 5 cents a share. That compares with $58 million, or 8 cents a share, a year earlier, Twitter said.

The most notable blip in the report was guidance. The company expects third-quarter revenue to be between $815 million and $875 million. On average, analysts were looking for sales of $872 million. One reason for the softer forecast is that Twitter plans to retire some ad formats in coming quarters.

“We’ve made the decision to shut down some revenue products that were big enough that they might impact near-term revenue, but small enough that they weren’t long-term priorities,“ CFO Ned Segal said. “Instead, we are focused on our most important products, delivering higher performing, better formats for our customers.“

Future sales growth may come from expanding advertising overseas. Just 21% of Twitter’s daily users are based in the U.S., yet 52% of its revenue comes from the country. That means the company can either show more ads to international users, or try to raise ad prices in other countries.

A second opportunity is the 2020 U.S. election. President Donald Trump is Twitter’s most famous user, and the social media service has already hosted numerous spats between candidates. That keeps people logged on to Twitter, but also raises free speech questions.