Twitter posted a record profit of $100 million in Q2 FY2018 in its third straight profitable quarter — which is also the third profitable quarter since it began operations 12 years ago. However, this wasn’t enough to please the stock market; Twitter’s share nosedived nearly 20% after it reported its financial results for the quarter, owing largely to the fact that the company lost one million monthly active users QoQ as it continues efforts to fight spam, fake accounts and improve the ‘health’ of the platform. Note that the million lost monthly users were American accounts.
The company’s executives did attempt to elevate the highlights of the quarter — Twitter posted a revenue of $711 million, and increase of 24% YoY. Remember that at the end of FY2017, Twitter’s revenue stood at the highest in Twitter’s history at $732 million. The company reported that its daily user count grew by 10% YoY and 1% QoQ. The company reported international (countries apart from the US) ad revenue of $308 million, up by 40% YoY. Ad revenue from US increased by a marginal 9% YoY.
Focus on ‘health’ of platform
CEO Jack Dorsey told investors that the effort to clean up the platform will “enable long-term growth as we improve the health of the public conversation on Twitter.” Twitter is positive that it has to and will “prioritize long-term health of the platform over near-term metrics.”
As you [an investor] point out, we do believe that our health work and focus on improving the health of the public conversation on Twitter is a growth factor over the long term. We want to make sure that we’re building this into our DNA. We want to make sure that we are being – we’re able to measure it and held accountable to it as well, but one of the big reasons that we’re doing it is when we do focus on removing some of the burden of people reporting or blocking or muting, we do see positive results in our numbers and it’s still early
–Jack Dorsey, CEO, Twitter
The company is anticipating another drop in the next quarter as it continues to double down on fighting spam, complying with the newly enforced GDPR, and bots its platform. It expects MAU to decline sequentially in Q3 owing to its decision “to allocate resources towards GDPR and health.” The company reports that it has “identified and challenged” over 9 million potentially spam or automated accounts per week as of May 2018, up from 6.4 million in December 2017. Remember that one fine morning when Twitter acquired Smyte? Smyte offered tools to address online abuse, harassment, spam, and security to various platforms (Twitter also ditched Smyte’s clients overnight, but that’s a different matter). The company has spent years battling slow user growth with numbers remaining well below the 350 million mark, which has hampered the company’s stock.
Meanwhile, any potential challenge to Facebook’s dominance will not be materializing anytime soon.
(Official transcript of investor call yet to be released)