Twitter Revenue Soars Despite Dropping 9 Million Users

Shares of social media micro-messaging app Twitter soared more than 17 percent this week, on the heels of the company reporting higher-than-expected earnings and revenue in Q3.  As a matter of fact, this is the fourth consecutive quarter of profit, with Twitter reporting more than $758 million in revenue with a net profit of $106 million.

Now, Twitter uses its Monthly Active User figures (MAU) as the foundation for determining the network’s health.  Ironically, in Q3 Twitter said they had 326 million MAUs but that number fell from the 335 million in Q2.  Twitter says, however, that this drop was the result of a crackdown in automated traffic from bots and other hostile activity like opinion hacking. Also, Twitter said they opted to disengage paid-SMS carrier service in order to focus on the “health of the platform”. Also, they saw a drop in system-sent notifications, which they presume came out of a bug that hit many users in October.

In the quarterly filing, Twitter posited, “In Q3, we made progress preventing spammy or suspicious new account creation by requiring new accounts to confirm either an email address or phone number when they sign up to Twitter, and we improved the detection and removal of previously banned accounts who attempt to evade suspension by creating new accounts.”

Twitter’s profits, though, are likely a major consequence of successful marketing.  They pulled $650 million in from advertising, with video occupying a majority of that space. Obviously, then, we can probably expect to see more video ads popping up in the Twitter-sphere over the next coming months.

In a press release about the earnings, Twitter CEO Jack Dorsey said, “We’re achieving meaningful progress in our efforts to make Twitter a healthier and valuable everyday service. We’re doing a better job detecting and removing spammy and suspicious accounts at sign-up.  We’re also continuing to introduce improvements that make it easier for people to follow events, topics, and interests on Twitter, like adding support for US TV shows in our new event infrastructure. This quarter’s strong results prove we can prioritize the long-term health of Twitter while growing the number of people who participate in the public conversation.”

This is all particularly interesting because Twitter continues to expect user decline.  For example, next quarter they speculate4 another “mid-single-digit millions” drop.