The social media company, led by CEO Jack Dorsey, also saw quarterly revenue exceed expectations, but decline as it faces rivals Snapchat and Facebook in the war for online advertising.
Twitter on Wednesday beat analysts’ expectations for its first-quarter earnings and revenue before the opening bell.
The San Francisco-based social media company, led by CEO Jack Dorsey, reported earnings of 11 cents per share on revenue of $548 million, down 8 percent from $595 million in the year-ago period. Both figures exceeded Wall Street consensus estimates.
Analysts expected Twitter, the 140-character messaging service often used by U.S. President Donald Trump, to report earnings of 1 cent per share, compared with 15 cents per share in the first quarter of 2016, on revenue of $511.9 million.
Despite the company’s quarterly revenue loss, Twitter saw its shares rise nearly 9 percent to $15.94 in early pre-market trading on the New York Stock Exchange on the strength of its earnings beat.
User growth as well as accompanying advertising revenue – which dipped 8 percent to $474 million year-over-year – were on the minds of investors Wednesday morning ahead of the company’s earnings conference call. Twitter said its monthly active user count, a key metric for any social media company, rise by 9 million to 328 million, exceeding projections of a gain of 2 million.
Daily active usage grew 14 percent year-over-year, but Twitter didn’t reveal a daily active user number. Elsewhere, U.S. revenue fell 13 percent to $341 million, while international revenue rose 2 percent to $208 million.
For the current second quarter, Twitter forecast financials below analyst estimates. But the first-quarter earnings surprise drew cheers from investors as the stock was up 11 percent at around 7:30 a.m. ET, a couple of hours before the stock market opening.
The social messaging app has been trying to improve its user experience and keep people more engaged, a challenge now that the dramatic U.S. election campaign is over. “We’re proud to report accelerating growth in daily active usage for the fourth consecutive quarter, up 14 percent year-over-year,” Dorsey said ahead of an analyst call.
At the same time, the Twitter boss said the company continued to face “revenue headwinds.” Analysts were lukewarm on Twitter’s prospects heading into the quarterly results, underlining significant revenue headwinds.
Wedbush analyst Michael Pachter forecast anemic user growth offset by hard-won engagement gains. “The ubiquitous presence of tweets across news headlines further dilutes the need for new users to actually join the site, while digital ad budgets remain concentrated among larger peers,” Pachter wrote in a recent note.
Analyst Brian Wieser at Pivotal Research Group agreed that Twitter remained a key player in the social media field, but in his own investors note cautioned “benefits don’t look like they will be realized by investors any time soon.”