Twitter shows strong user, revenue growth in second quarter
People are still flocking to Twitter daily, even as countries start reopening.
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The number of daily users logging on to Twitter jumped 11% in the second quarter, demonstrating that people are still turning to the short-message service even as some countries start reopening after coronavirus lockdowns.
The company said Thursday that daily users who can see ads, Twitter's key metric for visitors, grew to 206 million in the quarter ending in June. Twitter attributed the strong year-over-year growth to product improvements and interest in current events.
The rise in users helped the social media site, which makes most of its revenue from ads, post a 74% increase in quarterly revenue, to $1.19 billion. The performance beat Wall Street expectations of $1.065 billion, according to analysts surveyed by Thomson Reuters.
Twitter earned 8 cents per share, better than estimates of a loss of 13 cents per share. Excluding certain expenses, Twitter earned 20 cents per share, beating estimates of 7 cents per share.
Shares in Twitter shot 7% higher, to $74.40 per share, in after-hours trading.
As countries reopened after pandemic lockdowns, analysts and observers had questioned whether people would tweet as regularly as they did when they were restricted to their homes. The growth suggests Twitter remains an important part of people's lives as the pandemic eases in some parts of the world. New waves and variants also prompted users to turn to the service.
"With the onset of the second wave of COVID-19 in India, Twitter emerged as a real-time lifeline as people turned to the service seeking and offering help to secure life-saving facilities, medicines, food and credible information," Twitter said in a statement.
Twitter's Chief Financial Officer Ned Segal said in a call with analysts it's "too early" to know how reopenings will impact the company's user growth. Twitter's US daily active users dropped by 1 million to 37 million from the first to second quarter.
"People are still merging their old pre-COVID habits with their new habits," Segal said.
Experimenting with new products
The strong performance comes as Twitter tries to move beyond its 280-character tweets, which have fundamentally changed the way politicians, celebrities and others communicate with the world. The company has experimented with live audio , exclusive content and newsletters to help its users share their thoughts broadly.
The company hopes the new products, some of which allow for payments, will give it new ways to make money outside of ads, which account for the bulk of Twitter's revenue.
For example, Twitter has been testing a way for users to charge money for tickets to exclusive live audio chats, part of a live audio product called Spaces. Twitter is also testing Super Follows, allowing users to charge a monthly subscription fee for extra content. The company will take a cut based on the amount of user earnings.
Twitter said it won't take more than a 3% cut until a user earns a total of $50,000 from both products. After that, Twitter's cut will increase to up to 20%.
The company tried using ads to monetize Fleets, a format that mimicked competitor Snap's flagship product and allowed users to post videos, photos and text that disappear in 24 hours. The product, however, isn't being widely used and will be shuttered in August.
Twitter CEO Jack Dorsey also said during the call he thought cryptocurrencies such as Bitcoin would help the company move faster with products that focus on subscription or tipping. "We can reach every single person on the planet," Dorsey said about cryptocurrency.
Twitter is also anticipating some challenges. The rollout of Apple's app tracking transparency tool could make it harder to target customers on social media sites such as Twitter. Segal, though, said he thought it was too early to determine the impact, noting that "it's just going to take a little time here."
Snap also reported earnings on Thursday, beating Wall Street's expectations. The company said revenue rose to $982 million in the second quarter, up 116% compared with the same period last year. Earnings rose 158%, to 10 cents per share. Snap's stock jumped more than 13%, to $71.07 per share, in after-hours trading.