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2018-02-08 11:59:03
Twitter Reports First Quarterly Profit, Despite User Stagnation

Twitter reported its first profit as a public company on Thursday, a major step as it grapples with persistent criticism over fake accounts on its social network and questions over its prospects for long-term growth.

The surprise announcement, which sent the company’s shares sharply higher on Wall Street, comes with social media companies facing political inquiries on both sides of the Atlantic for their role in spreading fake news during elections and referendums. Twitter’s earnings, which beat analysts’ expectations, came just days after another struggling social media company, Snap, also posted positive results with revenue and user growth rising.

The fourth quarter “was a strong finish to the year,” Jack Dorsey, the Twitter chief executive, said in a news release. “I’m proud of the steady progress we made in 2017, and confident in our path ahead.”

Twitter reported a profit of $91 million in the last three months of 2017, compared with a loss of $167 million in the corresponding period of 2016. The company had posted a loss in every quarter since it went public in 2013.

Overall revenue rose 2 percent to $732 million in the quarter. Revenue from advertising, which makes up the bulk of its revenue, rose 1 percent in the quarter.

The company said it had 330 million average monthly users in the fourth quarter, up 4 percent from the prior-year period, but flat from the third quarter.

Twitter has struggled with a variety of challenges in recent months.

Most recently, an investigation by The New York Times detailed the business practices of a company called Devumi, which helped entertainers, athletes and others build up their follower count using fake accounts. Twitter had previously said it would take action against such practices. More than a million such followers have disappeared since the Times article was published.

Federal and state authorities are now scrutinizing companies that sold millions of fake followers on Twitter and other social media platforms.

The company has also faced criticism for failing to adequately police online bullying, abuse and harassment of its users, and questions over its role in both the 2016 United States presidential election, and Britain’s 2016 referendum in which the country voted to leave the European Union.

In October, the company said that it had overstated its monthly-user figures since 2014 after mistakenly including data from third-party applications in its counting.

And last month, Anthony Noto, Twitter’s chief operating officer and one of Mr. Dorsey’s most trusted deputies, left the company to become chief executive of the embattled online lender Social Finance.

Jim Cridlin, the global head of innovation at Mindshare, a unit of the advertising giant WPP, said that, although Twitter’s momentum had continued into the fourth quarter, the company still faced “significant headwinds.”

“The slower user growth doesn’t necessarily surprise me,” Mr. Cridlin said. “However, this slow user growth, less-than-compelling ad products, brand safety concerns, and a lack of the rich audience data that other platforms have may continue to hinder Twitter’s ability to attract advertisers.”