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Twitter earnings show growth, despite bot questions

The company’s user numbers and revenue tick up despite lingering concerns about harassment and fake accounts.

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Twitter the service may be hugely influential, but Twitter the company has struggled.

James Martin/CNET

Twitter the company has always struggled to live up to the hype of Twitter the product.

It's a world-changing service, whose instant communication has helped bring life to social and political movements like the Arab Spring, #BlackLivesMatter and #MeToo. It's brought people to the front lines of some of the world's most important stories. And it's the communication service of choice for President Donald Trump.

The company, meanwhile, has had a hard time finding growth, both in terms of profits and in terms of users. So its latest numbers may offer a ray of hope.

For the quarter that ended March 31, Twitter counted 336 million users who log in at least once a month. That's less than a sixth of the more than 2 billion that Facebook counts, but it's up from 330 million in the final quarter of 2017.

The question is whether that'll amount to anything more than a blip. In a March note to investors, analysts at Oppenheimer Equity Research declared that even if Twitter regains user growth momentum and increased advertising, "long-term utility" is "still unknown."

Twitter itself saw its latest figures in a positive light. "We are pleased with our growth this quarter," CEO Jack Dorsey said Wednesday on a conference call with Wall Street analysts.

Trying to reform

Twitter the company still faces fundamental questions that some people believe could, if not addressed, undermine its service and ultimately drive people away.

One key concern is about bots, automated computer programs posing as real people to tweet and retweet messages in an effort to amplify everything from a celebrity's latest missive to divisive messages from Russian trolls. Twitter has said for years that it's battling the problem, but an investigation published in January by The New York Times uncovered companies that make money by inflating the number of followers for celebrities, business executives and even one of Twitter's own board members. Twitter responded by purging millions of fake accounts.

It also still struggles with pervasive harassment some people experience on the platform. Twitter's tried to find a fix for this too, prohibiting people from using offensive account names, stepping up enforcement of its rules and making those rules clearer. It's even gone so far as to solicit ideas from its users about how best to promote and measure more-civil conversation.

"We made meaningful progress in our ongoing safety and information quality work in Q1, and we are continuing to invest in improving the quality of content and the overall health of the conversation on Twitter," the company said in a statement Wednesday.

On the conference call, Chief Financial Officer Ned Segal acknowledged that Twitter's continuing efforts to remove suspicious accounts would affect its monthly average users.

For the quarter, Twitter posted revenue of $665 million, outpacing the $605 million that analysts surveyed by Thomson Reuters had expected. Revenue was up 21 percent from a year ago. However, the company's 8 cents per share in profits in the first quarter, after adjustments for items like stock-based competition, fell short of the 12 cents per share that was forecast.

Still, this marked the second consecutive quarter of profits for Twitter.

The company's revenue surge was driven in large part by growth in advertising, which GBH Insights analyst Daniel Ives described as the "star of the show."

"This quarter was another major step in the right direction that shows the monetization and ad growth machine at Twitter is finally heading in the right direction after years of a 'one step forward two steps back' strategy," Ives wrote in a note to investors Wednesday.

In early trading Wednesday, Twitter shares dipped 3 percent to about $29.50 a share.

First published April 25 at 4:24 a.m. PT.
Update, 6:18 a.m. PT: Added more earnings information and quotes from Twitter executives.
Update, 6:50 a.m. PT: Added analyst comment and share movement after market open.

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