Twitter recently silenced doubts about its shrinking user growth with strong results in the second quarter.
This is welcome news for media buyers who have come to rely on the social network for valuable advertising space with social customers. Twitter’s strong results across the board in the second quarter caused shares to surge 29 percent to $46.92, which was more than its first-day closing price of $44.90.
What growing pains? Twitter’s second quarter results showed that the social media giant may be weathering its growing pains better than expected. The company posted its second straight quarter of a growing user base. It added 16 million, or 6.3 percent, more users worldwide. These users logged in at least once per month.
“We made progress on multiple fronts across the business and our financial performance was truly exceptional,” said Chief Executive Dick Costolo on a call with analysts after the announcement.
Shifting to mobile too, of course. Twitter is riding the consumer shift to mobile devices – and taking media buyers along with them. Mobile media buys fueled a company revenue growth of $312.2 million, which is double previous revenue. However, it still remains unprofitable. Twitter posted a loss of $144.6 million in the last quarter. But despite these losses, it continues to build out the business and hire even more engineers to support growth. If you back out costs such as stock compensation, Twitter was actually able to post a small profit.
This welcome news is good for investors who have been worried about the service’s ability to keep users and advertisers. In the past few years, the user growth has leveled off, which caused speculation about the company’s future. As a result, Mr. Costolo and the rest of the Twitter higher-ups have had to focus on touting engagement and the potential reach of Twitter’s content. In addition, they’ve tried to quiet comparisons to Facebook, which has had a steady increase of users over the past several years.
Peter Koeppel is president of Koeppel Direct, a full-service media buying agency based in Dallas. He can be reached at 972-732-6110 or online at email@example.com, twitter, Facebook, LinkedIn, and Google+.