Twitter posted record profit on Friday with high second quarter revenue and said penalizing misbehaving users this year had paid off even though monthly usage had dropped.
Twitter, like Facebook, has been under pressure from regulators in several countries to weed out hate speech, abusive content and misinformation, better protect user data and boost transparency on political ad spending.
The social media firm increased removals and suspensions of accounts in recent months, saying this was one reason the number of monthly users fell by 1 million to 335 million in the second quarter from the previous three months.
"Our second quarter results reflect the work we're doing to ensure more people get value from Twitter every day," said Jack Dorsey, Twitter's CEO. "We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviors that distort and distract from the public conversation. We're also continuing to make it easier for people to find and follow breaking news and events, and have introduced machine learning algorithms that organize the conversation around events, beginning with the World Cup. These efforts contributed to healthy year-over-year daily active usage growth of 11 percent and demonstrate why we're investing in the long-term health of Twitter."
"We are pleased with our performance in the second quarter in DAU growth and delivering for advertisers," said Ned Segal, Twitter's CFO. "We're maintaining profitability while we make investments in the business, achieving strong revenue growth and introducing product updates that make Twitter both healthier and easier to use. Looking ahead, we remain optimistic about our ability to execute on our priorities and deliver value for advertisers and shareholders."
Second Quarter 2018 Operational and Financial Highlights
- Q2 revenue totaled $711 million, an increase of 24% year-over-year, or an increase of 27% year-over- year when excluding the approximately $14 million of revenue in Q2'17 from Twitter's fully-deprecated TellApart product (which did not have any contribution to revenue this quarter).
- Advertising revenue totaled $601 million, an increase of 23% year-over
- Total ad engagements increased 81% year-over-year.
- Cost per engagement (CPE) decreased 32% year-over-year.
- Data licensing and other revenue totaled $109 million, an increase of 29% year-over-year.
- US revenue totaled $367 million, an increase of 10% year-over-year.
- International revenue totaled $344 million, an increase of 44% year-over -year.
- Advertising revenue totaled $601 million, an increase of 23% year-over -year.
- Average monthly active users (MAU) were 335 million for Q2, compared to 326 million in the same period of the previous year and compared to 336 million in the previous quarter, reflecting impact from decisions Twitter have made to not move to paid SMS carrier relationships, prioritizing the health of the platform, and, to a lesser extent, GDPR.
- Average US MAUs were 68 million for Q2, compared to 68 million in the same period of the previous year and compared to 69 million in the previous quarter.
- Average international MAUs were 267 million for Q2, compared to 258 million in the same period of the previous year and compared to 267 million in the previous quarter.
- Average daily active users (DAU) increased 11% year-over-year, compared to 10% year-over-year growth in Q1, marking another quarter of double
-digit year-over-year growth.
- Profit was $100 million, with a $42 million boost due to a tax accounting move.
Facebook is still well ahead of Twitter in turning usage into money, generating $5.89 in revenue on average per user in the second quarter compared to $1.79 for Twitter.
Twitter has said increased video programming, including news shows and live sports, and investing in technology that automatically surfaces interesting content with limited user intervention should make the service appealing to first-timers.
Twitter said it lost some users due to the introduction of the General Data Protection Regulation in Europe in May but it did not note any revenue impact. Facebook has said it expects to take a moderate hit in coming quarters due to the new rules.
Twitter also saw usage fall after saying it would not subsidize users who accessed its application through text messages without paying messaging fees to wireless carriers.