Twitter overcounted active users since 2014, shares surge

Posted October 28, 2017

Monthly active users: 330 million, up from 326 million in the previous quarter and an increase of 4% from the year-ago period.

Shares of Twitter soared over 18 percent on Thursday after the company reported that it expects to be profitable for the first time ever during the next fiscal quarter.

Twitter slightly beat Wall Street's expectations for its third-quarter earnings with $590 million in revenue vs. $587 million expected. The company has seen monthly active user figures increase, arresting the slide that it had to report across the summer.

These results are a much-needed improvement over Twitter's dismal performance last quarter, when it didn't add any new users.

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But investors let it slide, after Twitter reported it had added 4 million MAUs during the third quarter - a 14 percent jump year-over-year.

Wall Street rejoiced at Twitter's performance-company stock was up almost 15 percent in morning trading.

"We discovered that since the fourth quarter of 2014 we had included users of certain third-party applications as Twitter MAUs that should not have been considered MAUs", Twitter said in a regulatory filing Thursday.

Twitter has never had a profitable quarter based on generally accepted accounting principles (GAAP), but it said yesterday, "we will probably be GAAP profitable" in the fourth quarter, if it reaches the high end of its own estimates. Users of those third-party applications were able to send authenticated messages via SMS through Twitter's systems, but that didn't relate to activity on the Twitter platform, according to the company's explanation.

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It now says the issue was first there in the fourth quarter of 2016, and has made adjustments for it and the following quarters.

The social network's losses have fallen to just $21.1 million in the last quarter, and its revenues of $589.6 were better than expected due to the success of its video advertising and data-licensing platforms.

The earnings report also addressed Twitter's ongoing problems with harassment.

Twitter has introduced several features in hopes of attracting more users and improving the overall experience.

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