How Twitter finally became profitable
The social network has made a profit for the second consecutive quarter in its history. The result of a shift towards video advertising and international development, initiated since the return of Jack Dorsey in 2015 at the head of the ship.
The blue bird Twitter has therefore announced a second consecutive quarter in the green. Its turnover stands at 665.9 million dollars, an increase of 21% over a year. And the profits are there.
The good times are also coming for Twitter. The financial upturn noted in the last quarter of 2017 — a profit of $91.1 million, or nearly 75 million euros, putting an end to 16 consecutive quarters of losses since its IPO — was confirmed in the financial results for the first quarter of 2018.
In celebration, the bluebird thus announces a second consecutive quarter in the green. Its turnover stands at 665.9 million dollars, an increase of 21% over one year. Twitter even made a profit of 61 million dollars (about 50 million euros), whereas it lost 61.5 million dollars a year ago. Adjusted earnings per share, the benchmark on Wall Street, reached $0.16, whereas expectations were set at $0.11, a small surprise for the markets.
Twitter has even returned to growth in the number of users: the social network now has 336 million active twitters per month. This renewed vitality exceeds analysts’ expectations and is a relief for the markets: Twitter shares are now worth nearly 30 dollars, almost double what they were a year ago.
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Performance in video advertising and internationally
Twitter’s lack of growth had finally made the markets and analysts despair because of its inability to find a sustainable business model. Twitter lost 645 million dollars in 2013, 578 million in 2014, 521 million in 2015, 457 million in 2016 and 108 million in 2017.
A real haemorrhage that had resulted over the years in a flight of talent internally, multiple reorganisations and action plans, and the return of the historic boss Jack Dorsey in the autumn of 2015. This was followed by numerous strategic wanderings, to the point where there was brief consideration of turning Twitter into a public interest cooperative. In the midst of a stock market storm, Jack Dorsey asked in 2017 for “patience” to apply his strategy finally based on increasing video advertising and changing the site’s algorithm to value high value-added content.
Read also: Twitter rejects the idea of becoming a cooperative but considers a premium paying model
Time has finally proven him right. The hard work done internally to better understand advertisers’ expectations has enabled Twitter to generate 575 million dollars in advertising revenue in the first quarter, or 86.4% of the company’s overall turnover, and a gain of 100 million dollars over one year. Revenues from videos are up sharply and now account for “more than 50%” of advertising revenues. In France, the social network launched “pre-roll” advertising in the autumn, i.e. advertising that is launched automatically once the user launches a video from a partner media outlet. Damien Viel, Twitter’s CEO for France, told Stratégies that he wanted to make “in-stream video ads” Twitter’s “leading advertising product in the very short term”:
For the past eighteen months, Twitter has been engaged in a vast transformation plan: in media plans, we are leaving our social silo to seek out multiscreen TV and online video budgets,” he told Stratégies.
This growth is also driven by international business, which now accounts for 48% of Twitter’s total revenue (38% a year ago). International sales have increased by 53% in one year. It is also internationally that Twitter is gaining the most users: 5 million new members in the last three months, compared to only 1 million in the US.
