Twitter’s first-ever profit came at a hell of a price
By Nicolas Vega
February 8, 2018 | 9:39pm
Twitter shares escaped the market carnage and popped 12 percent on its first-ever profit, but the gain came at a helluva a price -- cost cutting by CEO Jack Dorsey in these key areas.
As the old saying goes: It doesn’t matter how you get there as long as you get there.
Twitter was living proof on Thursday, posting the first-ever profit in its 12-year history — albeit one that was a result of Chief Executive Jack Dorsey swinging the cost-cutting ax and not from business actually growing.
Nonetheless, investors cheered the green shoots — sending Twitter shares up 12 percent, to a more than two-year high, at $30.18.
The social network surprised Wall Street by reporting $731.6 million in revenue, handily beating analyst estimates of $686.4 million and squashing predictions that called for a fourth consecutive quarter of revenue decline.
The popular Web site — a favorite of celebrities, athletes and President Trump — had long confounded investors with its inability to turn a profit or log consistent growth.
Revenue from outside the US rose 17 percent, making up for an 8 percent decline in domestic revenue.
Revenue from Japan rose 34 percent, to $106 million, and Chief Financial Officer Ned Segal said Chinese exporters were strong advertisers abroad.
Twitter reports its first-ever quarterly profit, shares surge
Twitter said revenue was helped by the company’s use of data to make the targeting of ads more individualized. The company also cited higher video ad sales and redesigned ad formats as helping to build revenue.
“They are showing the right tweets to the right people at the right time, and as you do that, not only do you drive consumers to use Twitter more, but you attract more and more advertisers to want to be on the platform,” BTIG Research analyst Richard Greenfield said.
Twitter reported a net profit of $91.1 million, or 12 cents per share, compared with a loss of $167.1 million, or 23 cents, a year earlier.
Twitter, which has doubled the number of characters allowed per tweet and made other changes to attract new users, said the number of daily active users increased 12 percent.
It didn’t, however, add any net new users in the past quarter, keeping steady at its monthly user count of 330 million.
But despite its better-than- expected results, not everyone has bought into the turnaround narrative.
James Cakmak, an analyst for Monness, Crespi, Hardt & Co., told The Post that the company’s first profit is an effectively meaningless milestone.
“It means nothing toward answering the question of Twitter’s sustainability,” Cakmak said. “It’s in a situation where the turnaround is not broad-based by any means. It’s a function of one market [Japan] overseas.”
Cakmak added that Twitter’s announcement that it would not be replacing the recently departed chief operating officer, Anthony Noto — who was long considered to be the brainchild behind the microblogging site’s positive growth — is a red flag.
“Now Twitter is in a situation where there will be growing responsibility for Jack Dorsey on a day-to-day basis while his focus remains diluted between two companies,” Cakmak said.
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