Twitter may turn a profit at the end of 2017

At first glance, you could be forgiven that Twitter’s Q3 results were another torrent of bad news for the beleaguered social media company.

But in among the admission of that it has been overstating its user numbers for years and logging its third straight quarterly revenue decline, there was an interesting piece of information.

The company stated that it may actually turn its first profit at the end of 2017. That’s right, after 11 years and losses of around $2.5 billion, Twitter might be about to become a profitable business.

The news sent shares shooting upwards by 18% on 26 October when the announcement was made.

The reason for this increased confidence? Firstly, there was a rise in the number of monthly users by 4% year-on-year to 330 million. The more valuable daily user number also increased by 14%.

Secondly, advertising sales came in higher than expected at $503 million. This is still a decrease of 8% year-on-year, but beat far more gloomy predictions from Wall Street. Data licensing revenue grew by 22% to $87 million.

On the right path

“Twitter have learned from their mistakes in the past quarter, and this is shown in the results presented today,” Yuval Ben-Itzhak, CEO at Socialbakers said.

“The introduction of the new 280-character tweet limit is already paying off. This departure from their traditional character limit is a huge step forward to marketers. They have now more room to get their message across and drive targeted engagement with specific audiences.  This demonstrates to marketers that advertising on Twitter is still valuable.”

While the 3% a share loss for Q3 is not exactly a great result for the company, it is far better than the 11% loss Wall Street had predicted. According to FactSet, this means that the company has beaten expectations for the last three quarters.

“Twitter is definitely on the right path to regain commitment from marketers. Yet, they need to continue proving they are still a worthwhile investment by innovating and adding new features such as the recently successful 280-character tweet trial,” continued Ben-Itzhak.

“But why stop at 280? 560 characters would add even more context to Twitter’s algorithms to better understand the audience, improve targeting quality and help marketers personalize their message. This​ will ultimately reassure marketers that the platform can appeal to their audiences and offer ROI.”

Source: Marketing Tech News

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