Twitter Loses Users, But Will Advertisers Follow?

Twitter Loses Users, But Will Advertisers Follow?

Twitter Loses Users, But Will Advertisers Follow?

Twitter's EBITDA (Earnings before interest, taxes, depreciation, and amortization) was $265 million, up from $178 million previous year, but critically, their monthly active users for the quarter were 335 million, down from 336 million in the first quarter.

The knee-jerk rationale is to associate the MAU drop with Twitter's crackdown on bots and fake accounts, but the social network admits that it doesn't include inactive or potentially spammy accounts in its MAU tally anyway.

Both Twitter and Facebook moved to crack down on bots and fake accounts after learning of efforts to manipulate the social platforms during the 2016 U.S. presidential election. The company said its "value as a daily utility is enhanced when the conversation on the platform is healthy and people feel safe expressing themselves freely and openly". Twitter reports in US dollars.

The quarter marked the first time overseas revenue contributed the majority of Twitter's ad sales.

Revenue for the quarter was $710.5 million, up 24 per cent and beating expectations of $696 million. Analysts polled by Thomson Reuters had expected an adjusted income of 17 cents per share on almost $697 million in revenue.

Twitter's put its EBITDA guidance for the third quarter between $US215 million and $US235 million.

Shares in Twitter tumbled 20.5 percent to close at $34.12 despite a record profit for the short messaging service, as financial markets focused on the new realities for social media firms moving to curb abusive behavior and boost privacy.

The drop echoed that of Facebook on Thursday, when its shares ended down almost 19 percent after the company said spending to improve privacy and slower user growth in big markets would hit margins for years.

Twitter shares have risen 79 percent since the beginning of the year.

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Friday's report offered the most definitive evidence yet that the company's efforts are having a measurable impact on Twitter's ability to attract and maintain active users - the key metric in the company's valuation by Wall Street.

Twitter said daily active users rose 11 percent from a year ago, without giving a specific figure.

The company warned its monthly user number could continue to fall in the "mid-single-digit millions" in the third quarter.

Earlier this year Twitter admitted that more than 50,000 Russia-linked accounts used its service to post automated material about the 2016 United States election. The US grew just 10%, and brought in $US367 million.

They also reported a decline in the closely-watched metric of monthly active users.

"Investors are overreacting to (monthly active user) trends", BTIG analyst Richard Greenfield said about the share fall.

The company saw strong gains in advertising, with revenue up 23% year on year to $US601 million. "Last year's Q2 created an incredible buying opportunity in the stock".

Like Facebook, Twitter is working to comply with the General Data Protection Regulation, which took effect in Europe in the second quarter. Twitter also earns revenue from licensing data. Bloomberg LP produces TicToc, a global breaking news service for Twitter's site. The company again flagged its push to increase headcount this year. Markets outside the USA grew 44% year on year to $US344 million.

"Despite Trump being perhaps the most high-profile user possible, usage has not dramatically improved over the past couple of years", Benjamin Schachter, an analyst at Macquarie Securities, wrote in a note to investors before the earnings announcement.

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