Twitter, Inc.’s (NYSE: TWTR) shares surged over 13 percent shortly after open on Thursday after the social media company had beat estimates for its third quarter earnings.
Twitter reported revenue of $590 million, 4 percent decrease year over year, but beating Thomson Reuters analysts’ estimates of $586.7 million. The company reported non-GAAP diluted EPS of $0.10, up from the last year’s $0.09, and beating Thomson Reuters analysts’ estimates of $0.06.
The average monthly users was 330 million for the third quarter, up 4 percent year over year and an increase from 326 million quarter over quarter. Average daily users grew 14 percent year over year and a 12 percent increase growth rate year over year. This marks the fourth consecutive quarter of Twitter reporting double digit percentage growth rate.
Twitter did also report that an error caused more monthly users to be considered monthly active users, but the company says that the error made a very little impact on the large amount of users.
"This quarter we made progress in three key areas of our business: we grew our audience and engagement, made progress on a return to revenue growth, and achieved record profitability," said Jack Dorsey, Twitter's CEO.
"We're proud that the improvements we're making to the product continue to bring people back to Twitter on a daily basis. It's our job to help people stay informed about what’s happening in the world and what people are talking about, and we're focused on making our service faster, easier to use, and more relevant to more people every day."
Twitter’s CFO, Ned Segal, says the third quarter was driven by its improved sales team, strengthening its video, direct response ads, and its data business, leading the company to its third consecutive accelerating quarter.
The better than expected results caused Twitter to raise its guidance. For the fourth quarter, Twitter expects adjusted EBITDA to in the range of $220 million and $240 million, and the company states that it could possibly be a profitable quarter.
The positive third quarter earnings and the promising user accelerating growth rate has now positioned Twitter for what may be a profitable fiscal year. From year to date, shares are now up 18.5 percent, but still significantly down by over 50 percent since its IPO launch back in 2013.