Twitter gets a surprise beat in Q3 on sales of $590M and EPS of $0.10

Ingrid Lunden
Twitter gets a surprise beat in Q3 on sales of $590M and EPS of $0.10

Twitter reported its earnings this morning for Q3, and watchers of the company, used to seeing declines across the board, got an unexpected piece of news: the social media platform reported revenues of $590 million on adjusted earnings per share of $0.10.

Total monthly active users for Q3 were 330 million, up 4 million from the prior quarter and an increase of 4% year-over-year. US MAUs grew 1 million sequentially to 69 million, while international MAUs grew 3 million sequentially to 261 million, the company said.

But, notably, the company also slipped in some bad news about MAUs, too: it had been overstating the numbers since Q4 2014 due to a flaw in Digits, and SDK that was part of its now-divested Fabric platform, and how it reported third-party access:

"We discovered that since the fourth quarter of 2014 we had included users of certain third-party applications as Twitter MAUs that should not have been considered MAUs," Twitter noted. "These third-party applications used Digits, a software development kit of our now-divested Fabric platform, that allowed third-party applications to send authentication messages via SMS through our systems, which did not relate to activity on the Twitter platform. The table below presents the impact for the periods beginning in the fourth quarter of 2016. Due to our data retention policies, we do not have data to reconcile periods prior to the fourth quarter of 2016, but our estimates suggest the prior period adjustments are smaller than those in the fourth quarter of 2016."

The Q3 revenues were still a decline over a year ago of about four percent compared to a year ago, when Twitter reported EPS of $0.09 on revenues of $615.93 million. But it still appears to have been a surprise turn of events as far as analysts were concerned: they collectively were expecting EPS of $0.07 on revenues of $586.73 million.

Other notable metrics for today are that daily active users are up 14 percent over last year, and monthly active users are up four percent, with the absolute increase working out to 4 million users.

Advertising revenue totaled $503 million, a decrease of 8% year-over-year, with data licensing accounting for $87 million, up 22 percent.

US revenues were $332 million, down 11 percent, while international revenues were $258 million, up 6 percent.

The two areas where Twitter continues to get hit publicly are in the fact that its service continues to present itself as a hotbed for harassment and spreading false information, alongside its important role in providing a communications platform, which remains the problematic paradox of the service.

"We’re committed to making Twitter safer, and we continue to improve and leverage our technology to reduce the reach of abusive Tweets," CEO Jack Dorsey wrote in the shareholders letter out today. "This quarter, we further refined our machine-learning algorithms in order to better identify and act on accounts demonstrating abusive behavior. Moving forward, we're focused on addressing this issue from a policy, enforcement, and product perspective, and we'll be taking a more aggressive stance on our abuse rules and on how we enforce them. We published a roadmap of the upcoming changes we plan to make to the Twitter Rules, how we communicate with people who violate them, and our enforcement processes, and we will share regular, real-time updates about our progress."

Similarly, the company has to keep working on making its service easier, especially with a focus on onboarding those who are not regular existing users.

"We remain focused on making Twitter easier to use," the letter continues, "and this quarter we launched new product features aimed toward helping people find and engage with Tweets that are relevant to them. In Q3, we further personalized the Twitter experience by launching new topic modules in the Explore tab tailored to people’s interests. We also increased the relevance of our notifications by adding new, interest-based notification types to the notifications tab, and applied machine learning to further personalize Trends. In September, we began testing longer character limits for a small percentage of people in certain languages, based on research that indicates that running into the character limit can sometimes lead people to abandon their Tweets. We expect to see fewer Tweets running into the character limit over time, and we’ll be sharing the results of this experiment publicly in the coming weeks."

More to come.

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