Twitter Posts First-Ever Profit; Shares Rise But Problems Continue!
Though Twitter has finally managed to turn profitable, its user base has shrunk as it had to close down scores of fake accounts.
Twitter has turned profitable for the first time in twelve years. It had a difficult 2017 with a series of changes they brought to help it compete with other rival platforms for advertising dollars.
The San Francisco-based social media company has been repeatedly trying to increase its revenues and cut costs to reassure investors it can reach profitability amidst an increasing competition from Snapchat and Instagram.
Twitter’s Revenue Generation Attempts
Finally, Twitter has reported its first quarterly net profit last day and the topped Wall Street targets as the video ad sales have risen by a comparative margin. But the total number of accounts on the social network has come down as the company has shut thousands of fake accounts.
Twitter is now standing with a net profit of $91.1 million at the end of fourth quarter, from a loss of $167.1 million a year back. The total revenue rose 2 percent year-over-year (YoY) to $731.6 million, the first increase since the last quarter of 2016.
The company has continuously been pushing to diversify its sales beyond advertising. Apart from advertising, the company has reported a $87 million snatch from data licensing and other revenues, up by 10 percent from a year a back, while the advertising revenue is up by 1 percent to $644 million.
The microblogging website was previously unable to turn a profit in spite of ubiquitous presence of popular celebrities, athletes, and politicians.
So far, Twitter has struggled to build an active user base and has repeatedly failed to bring up more advertising revenues compared to its larger social media rivals like Facebook and Google.
While Twitter has a strong core base of famous personalities, the social media platform has failed to build a broader appeal like Facebook, Instagram or other social media platforms among the masses, which has repeatedly hurt its ability to bring in more ad revenues.
Last year the company unveiled multiple new features on its platform such as live streaming video function for sports and news by video partnerships and also doubled the character limit to 280 characters for tweets in a bid to attract more users and revenues.
The monthly active users in the last quarter were flat at 330 million compared to the previous quarter. In comparison, Facebook had two billion and Instagram had 800 million users in the last quarter.
Stricter Policies & Enforcement
Though the profitability marks a milestone for the microblogging company, which has kept losing its ground and money consistently since its first public offering, and it was being speculated whether Twitter needed to sell itself to keep running.
Twitter has stepped up efforts to crack down on the “bots” and make the platform safer by improving enforcement and communication. Recently, the company closed down multiple fake accounts on its platform, and as a result the total number of users went down.
While engagement on Twitter has gone up, it hasn’t translated into user additions. The young users are still mostly interested in Snapchat and Instagram instead. Twitter needs to keep innovating to add more users!