By Elizabeth Culliford
(Reuters) – Twitter Inc pulled in $1 billion in quarterly revenue for the first time on Thursday, beating expectations as efforts to make its platform more user-friendly brought in more people, and sending its shares up 14% in early trading.
Twitter recorded most of its revenue growth in the United States, a major market where the company will face scrutiny this year over how it tackles misinformation ahead of the presidential election in November.
The company has continued efforts to boost sign-ups through measures such as allowing people to follow topics, and by trying to clean up abusive content. Late last year, it launched a feature for users to hide certain replies on their tweets.
Twitter has also focused on relevant content and notifications, which has boosted average monetisable daily active users (mDAU), or users who see ads when logged in through twitter.com or Twitter applications.
That metric rose to 152 million in the fourth quarter through Dec. 31 from 126 million a year earlier, beating the average analyst expectation of 147.5 million, according to IBES data from Refinitiv.
Shares were up 14% at $38.03 in early trading.
Quarterly revenue https://fingfx.thomsonreuters.com/gfx/editorcharts/TWITTER-RESULTS/0H001R89JBSE/index.html?eikon=true grew 11% from a year earlier to $1.01 billion, also beating the expectation of $996.7 million. Total advertising revenue was $885 million, an increase of 12% year-over-year.
The company, however, forecast first-quarter revenue between $825 million and $885 million, largely below the Wall Street estimate of $872.6 million.
Rolling out new features at a faster pace is one of Twitter’s top priorities for the year, Chief Executive Officer Jack Dorsey said during an earnings call with analysts.
“The time it takes to go from an idea to shipping something remarkable to customers simply takes too long,” he said.
Twitter also posted fourth-quarter net income lower than expectations, at $119 million, or 15 cents per share, down from $255 million a year earlier. Excluding items, it earned 25 cents a share, below the expectation of 29 cents.
Twitter’s total U.S. revenue rose 17% to $591 million, compared with a 3% uptick in international revenue.
In November, Twitter banned political ads amid growing pressure on social media companies to stop accepting commercials containing misleading or false information.
But this week’s Iowa caucuses showed the platform was still being used to spread false allegations of voter fraud.
On Tuesday, Twitter said it would apply “false” warning labels to tweets containing synthetic or deceptively edited forms of media and remove such media if it is likely to cause harm.
Quarterly total operating expenses, including cost of revenue, rose by 22% year-over-year to $854 million, partly due to a planned increase in headcount.
Twitter said its total costs and expenses would increase 20% this year as it also plans to build a new data server, which executives said would help the company test new products and release them faster.
“Their guidance for an increase in operating expense means they won’t grow profits as fast as they have in the past,” said Michael Pachter, an analyst at Wedbush Securities, adding he believes investors are currently more interested in the company’s user growth.
The company expects first-quarter operating income of between breakeven and $30 million.
(Reporting by Elizabeth Culliford, additional reporting by Ambhini Aishwarya and Sheila Dang; Editing by Saumyadeb Chakrabarty and Bernadette Baum)