Twitter Inc posted better-than-expected quarterly revenue and a surprise increase in monthly users on Tuesday, sending shares up 13 percent to a nine-month high as its campaign to clean up fake and abusive accounts continued to attract advertisers.
The microblogging site’s results caught the attention of U.S. President Donald Trump, a prolific tweeter with nearly 60 million followers, who called for the creation of “more, and fairer” social media companies, repeating his claim that Twitter is biased against Republicans, without presenting evidence.
Twitter’s monthly active users (MAU) rose 9 million to 330 million in the first quarter from the previous quarter, much better than Wall Street’s average estimate that it would lose 2.2 million users, according to IBES data from Refinitiv.
“Twitter is on a path to sustainable revenue growth and accelerated profit expansion, driven by improvements to the user experience and tools enabling direct response and search advertising,” said analyst Michael Pachter at Wedbush Securities.
It was Twitter’s last quarter of disclosing MAUs. From now on it will only provide what it calls “monetizable” daily active users (mDAUs), created to measure the number of people exposed to advertising on a daily basis and exclude those who access Twitter via text messages or aggregating sites like TweetDeck.
For the first quarter, Twitter said mDAUs rose to 134 million, up 12 percent from a year ago.
Analysts were encouraged by signs Twitter had turned a corner in monthly user growth, but said that the new way of measuring users could make comparisons between Twitter and rivals like Facebook Inc more difficult.
“People are not impressed with a made up metric and their reluctance to give us actual users,” said Pachter. “I don’t think the stock can get out of its own way until they come clean and report the same metrics everyone else does.”
The company also forecast revenue for the second quarter largely below analyst estimates, and said that it would need to continue to spend heavily on cleaning up Twitter as well as new ad products.
Like larger rival Facebook, Twitter has been under pressure over privacy concerns and political influence activity on its service. Twitter has worked to remove thousands of spam and suspicious accounts, which it had blamed for sequential declines in monthly users in recent quarters.
Advertisers, which provide Twitter with nearly all of its revenue, have welcomed those moves, but the company is still grappling with the prospect of regulation in the United States and overseas and allegations that its clean-up amounts to censorship.
“The best thing ever to happen to Twitter is Donald Trump,” Trump tweeted on Tuesday, after Twitter reported its results, attributing the comment to Fox Business Network host Maria Bartiromo. “So true, but they don’t treat me well as a Republican. Very discriminatory, hard for people to sign on. Constantly taking people off list. Big complaints from many people.”
Trump cheered the involvement of U.S. lawmakers who have called on tech executives to testify in Congress.
“No wonder Congress wants to get involved - and they should. Must be more, and fairer, companies to get out the WORD!” he tweeted.
The White House did not immediately respond to a request for comment.
“We enforce the Twitter Rules dispassionately and equally for all users, regardless of their background or political affiliation,” a Twitter representative said. “We are constantly working to improve our systems and will continue to be transparent in our efforts.”
On a conference call after earnings, Chief Executive Jack Dorsey said Twitter was open to regulation “when it makes sense” after an analyst pointed to Facebook recently saying it was receptive to governments taking a more active role.
“Regulations like GDPR has been a net positive and not just for our service, but also for our broader industry in general,” he said, referring to Europe’s General Data Protection Regulation, which imposes stricter transparency on how companies store and monetize user data.
Twitter has said compliance with those rules increases the company’s expenses.
For the first quarter of 2019, Twitter’s revenue rose 18 percent to $787 million from the year-ago quarter, topping Wall Street’s average estimate of $776.1 million.
Ad sales jumped 18 percent to $679 million. In the United States, ad revenue rose by 26 percent, thanks in part to video ads.
But Twitter forecast current quarter revenue largely below Wall Street targets. The company expects revenue of between $770 million and $830 million, compared with $819.5 million estimated by analysts.
Total operating expense including cost of revenue rose by 18 percent from the first quarter a year ago. The company reiterated that operating expenses would grow about 20 percent in 2019.
Twitter reported quarterly profit of $191 million, or 25 cents a share, compared with $61 million, or 8 cents per share, a year earlier. Excluding a $124.4 million tax benefit, the company earned 9 cents per share.