Twitter exceeded Wall Street forecasts in the second quarter despite a slight downturn in users compared with the previous quarter.
Total revenue of almost $1.2 billion and diluted earnings per share of 8 cents both came in well ahead of expectations. The company’s daily active user base was 206 million as of the June 30 end of the quarter, slide of 1 million from the previous quarter but up 11% from the year-ago period.
Among other reasons for the downward quarter-to-quarter trajectory of daily users, the breakneck pace of news in 2020, which extended into the initial months of 2021, has eased up of late. After the January 6 assault on the U.S. Capitol, the company decided earlier to ban former president Donald Trump after flagging an increasing number of his tweets as inaccurate or in violation of safety policies.
As a business, Twitter has a goal of doubling annual revenue by 2023. It has introduced a series of new products and features, including audio chat rooms and newsletters in pursuit of that goal.
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Advertising revenue of $1.05 billion soared 87% in the quarter compared with year-ago levels, blowing away forecasts. The company signaled ongoing investments that will boost the expense side of the ledger. Twitter now expects its total expenses and headcount to rise 30% in 2021, up from prior guidance of 25%.
Investors were undeterred by the predictions for increasing costs, boosting Twitter shares by 6% in after-hours trading.
In the company’s earnings release CFO Ned Segal cited “significant progress on our direct response and brand products with updated ad formats, improved measurement, and better prediction.”
Video continues to be a strategic focus. The company noted in its report that it launched a new prediction model capable of predicting the likelihood that a viewer will watch a video to completion. Based on this prediction model, it also rolled out a new bidding unit for 15-second views with a goal of prioritizing higher-engagement, longer-form video views.
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