Twitter Inc for on Thursday, posted its first quarter results, which are rather surprising, as for the first time in its history as a public company it generated a hefty profit, thanks to its expansion outside the USA.
As soon as the results were announced, the social networking platform experienced a massive boost of 12 percent in its shares, breaking the two-years record. In the fourth quarter of 2017, Twitter made a net profit of $91.1 million against the loss of $167.1 million for the same period, one year ago.
Twitter has been running in consistent losses ever since it became a public company in 2013, is now expected to turn profitable all around the year 2018. Even though the number of people using the social media is going down, it is really promising that Twitter has found success with video and changes,deepening the experiences on offer, James Erkine, director at marketing firm The Social Circle, told the BBC.
“It’s now about taking that scalable model and using it to reach new user groups to increase their user base. Hopefully now they’ve made a profit once, they should be able to do it next quarter and carry on doing it.” he added.
But Recode also stated that this is not the only reason how Twitter got here, Twitter got here by not only deepening the experience but by “cutting-costs”.
Quartery Net Income
Twitter’s revenue grew at a rate of 2 percent from a year ago, as its user base only grew by 4 percent in 2017, while the company didn’t add any new users in Q4, the numbers remained 330 million.
As per the report, Twitter actually cut its cost, notably in three categories in the past year.
- Twitter just spent $102 million on stock-based compensation in Q4 as compared to $138 million in the previous year, a 26 percent decrease.
- In the previous year, it spent $202 million in R&D which came down to $134 million this year, a decrease of around 33 percent, which includes a decrease of roughly $26 million in stock-based compensation for R&D employees.
- This quarter it also spent less on sales and marketing, almost $70 million lesser than it did in Q4 in 2016.
If these figures are taken into account, it will be clear how the social giant Twitter made this quarter’s revenue. Twitter eventually got smarter in managing its expenditure, thereby boosting its revenue.
A good example for others indeed!