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Shares in Twitter Inc. rose in after-hours trading today after the microblogging company beat analyst expectations thanks to strong advertising growth.
For the quarter ended June 30, Twitter reported revenue shot up 74% from a year ago, to $1.19 billion. The growth in the revenue was driven by advertising, which came in at $1.053 billion, nearly double year-over-year, while digital licensing and other revenue came to $137 million.
Twitter earned a profit of $65.6 million or eight cents per share, compared with a loss of $1.38 billion or $1.75 per share in the second quarter of 2020. Analysts polled by FactSet had been expecting a seven-cent profit on revenue of $1.07 billion.
The number of monetizable daily active users, Twitter’s preferred metric, rose 11% to 206 million in the quarter, in line with market expectations. Twitter credited the user growth to ongoing product improvements and global conversation around current events.
While Twitter saw increased revenue in the quarter, expenses also rose. The company booked expenditures of $1.16 billion in the quarter, up 21% year-over-year, driven by higher sales-related expenses, headcount growth and infrastructure costs.
Highlights in the quarter included several new features, including Tip Jar, a service that allows users to make money from tweets, and the launch of Twitter Spaces, a rival service to Clubhouse’s audio chat rooms.
Addressing a common criticism of Twitter, that its conversations can be toxic, the company said that it continues to make conversations on its platform “healthier.”
“Our systems now consider the nature of the relationship between the author and replier, including how often they interact and better account for situations in which underrepresented communities may reclaim language,” Twitter said in a letter to shareholders. “We’ve also improved our ability to more accurately detect strong language, including profanity and created easier ways for people to let us know if they found the prompt helpful or relevant.”
For the third quarter, Twitter estimates revenue of between $1.22 billion and $1.3 billion and a range in earnings from breakeven to a loss of $50 million. Twitter did not provide revised estimates for the full year but noted that stock-based compensation expense is expected to be about $600 million and capital expenditures are expected to be between $900 million and $950 million.
Investors liked the numbers. Shares in Twitter rose more than 5% in after-hours trading.
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