Twitter has finally posted its first quarterly profit in history. It has taken the social media giant nearly 12 years to finally have a profitable quarter. But what’s going on?
On Thursday, Twitter announced that it made a profit of $91 million in the fourth quarter of 2017, a major victory for the company that posted a $167 million loss in the same period last year, according to the Guardian.
Financial analysts argue that Twitter has been able to have its first profitable quarter in its near 12-year history largely thanks to cutting costs. In addition to its profitability, which the company predicted late last year, Twitter also experienced revenue growth.
In 2017, the company’s revenue rose to $732 million, up 2 percent from $717 million the year before. The revenue growth was stronger than expected, as analysts polled by FactSet predicted $687 million in revenue.
The company, which has been a major headache for investors ever since its public debut in 2013, is turning the tide with its stock performance. Twitter Inc. shares surged as much as 25 percent in pre-market trading, according to the Financial Times.
However, Twitter’s performance is not all sunshine and roses. The company is lagging behind in terms of monthly users, largely due to its crackdown on fake accounts. The ongoing special counsel investigation into Russia’s alleged meddling in the U.S. 2016 presidential election triggered social media giants, including Twitter, to clamp down on fake accounts and trolls suspected of spreading propaganda.
The company had 330 million monthly active users in the quarter. Even though Twitter gained 4 percent monthly users growth year on year, growth stalled compared with the previous quarter.
In the U.S., Twitter actually lost a million of its monthly users, dropping from 69 million to 68 million. Fortune estimates that Twitter has roughly 125 million daily users, compared to Facebook’s 1.4 billion.
Analysts at Market Watch argue that Twitter’s revenue gains and profitability have been fueled by Facebook’s news feed overhaul. The social media giant announced it would be tweaking its news feed, displaying fewer viral videos and pieces from publishers in feeds.
As a result of Facebook’s news feed overhaul, Twitter would appear more appealing to marketers, luring more publishers and online advertisers from Facebook.
Twitter continues to attract plenty of attention from around the globe thanks to U.S. President Donald Trump’s presence on the platform. Ever since his election, the U.S. president, who boasts over 47 million followers, has actively used the social media platform to bypass the media — which he has called out for publishing “fake news” about him on numerous occasions — and to speak directly to the public.
Despite Twitter being a regular part of the national conversation, its competitors leave it in the dust. Statista estimastes that as of January 2018, Twitter and its 330 monthly active users is behind Facebook (2.1 billion), YouTube (1.5 billion), Instagram (800 million), and even Tumblr (794 million). However, Twitter managed to surpass Snapchat with its 255 million monthly active users.