Twitter’s revenue jumps as ad revamp pays off

Twitter’s revamp of its advertising offering bore fruit in the second quarter as it reported a sharp jump in revenue and forecast sales in the current quarter above analysts’ estimates.

The San Francisco-based social media group said its second-quarter revenue jumped 74 per cent year-on-year to $1.19bn, surpassing consensus expectations of $1.06bn. 

It also estimated that third-quarter revenue would be between $1.22bn and $1.3bn, above current analyst estimates of $1.17bn, according to S&P Capital IQ.

However Twitter’s user numbers in the US fell by 1m since the first quarter, to 37m, which Ned Segal, chief financial officer, attributed to a calmer news cycle and people emerging from lockdowns, among other factors.

Twitter shares rose nearly 5 per cent in after-hours trading following the earnings release.

In a letter to shareholders, Twitter cited “revenue product improvements, strong sales execution and a broad increase in advertiser demand” as primary drivers of the revenue rise. 

The company recently overhauled its offering to advertisers in an effort to improve its targeting capabilities and make it simpler for smaller businesses to run campaigns. User engagement with adverts rose 32 per cent, while cost-per-engagement rose 42 per cent year-over-year, it added.

Twitter also said monetisable daily active users — a homegrown metric that counts the number of logged-in users to whom the platform shows advertising — rose 11 per cent year-on-year to 206m, in line with analyst expectations.

The company has been developing a number of features, including tools for tipping or subscribing to content creators, in a bid to boost engagement and diversify revenue sources beyond advertising. It now expects headcount and expenses to grow at least 30 per cent for the full year, an increase from the 25 per cent guidance it gave the previous quarter.