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Comeback Time? Twitter Turns A Profit And Sees Advertiser Gains

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A budding sense of optimism around Twitter was substantiated Thursday when the social platform announced its first-ever quarter of profitability and a return to revenue growth.

Twitter saw 2% year-over-year revenue growth with a total of $732 million in the final quarter of 2017, after a string of revenue declines last year.

Twitter averaged 330 million monthly users, flat from the previous quarter but up 4% year over year. And it recorded the fifth consecutive quarter of daily active user (DAU) growth, though it doesn’t break out numbers for its DAU base.

The company still has to show it can sustain growth and compete with the top digital ad platforms, but the market seems to be buying the Twitter comeback story, with shares up more than 20% after the earnings disclosure – pushing Twitter’s market cap back above Snap’s.

Part of what helped drive the platform’s first profitable quarter was a cost-cutting program in 2016, including a 9% workforce reduction.

But now Twitter is looking to ramp up hiring with a focus on the sales group, CFO Ned Segal told investors.

“We’re having such different conversations with advertisers now than even a year ago,” he said, citing improved ad formats, audience engagement and attributable ROI as areas where the company’s pitch has strengthened.

Specifically, Twitter is working harder to demonstrate ad value. It ran 62% more custom measurement studies last quarter than it did the year before, said CEO Jack Dorsey.

Twitter also stressed its high expectations for live video and streaming content partnerships, an area championed by Anthony Noto, the former COO who left in January to take over as CEO at online lender SoFi.

Twitter ran about 1,100 streaming content deals last quarter, up from 800 the prior quarter.

Even the most prominent of Twitter’s content deals, like Bloomberg’s TicToc news stream and BuzzFeed’s “AM to DM” morning news program, aren’t powerful individual revenue drivers.

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But the news and streaming partnerships “have a positive impact on advertising,” Dorsey said. They raise positive sentiment for viewers, and the heavier video load has helped Twitter grow its average CPM.

Twitter won’t be replacing Noto, but it has tried to unify content and revenue strategy, Dorsey said, by handing global revenue VP Matt Derella more responsibility over content partnerships.

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