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Twitter stock rises on better-than-expected performance in new user metric

Photo: Omar Marques/SOPA Images/LightRocket/Getty Images

Twitter's stock was up nearly 4% in pre-market trading Friday, after the company said it added more "monetizable" daily users than investors had anticipated.

Yes, but: The company said it has been making investments in health and safety features on the platform, and forecasted that those investments would increase operating costs by 20% over the course of the entire fiscal year.

Why it matters: Part of Twitter's turnaround story over the past two years since going public in 2013 is that it's been able to consistently turn a profit. These kinds of investments may continue to eat at the company's margins moving forward.

  • In a statement, Twitter CEO Jack Dorsey said that health remains Twitter's top priority and that the company's investments resulted in an 18% drop in reports of spammy or suspicious behavior.

By the numbers, via CNBC:

  • Earnings per share: 20 cents, adjusted, vs. an expected 19 cents per share, per a Refinitiv survey of analysts.
  • Revenue: $841 million vs. an expected $829.1 million, per Refinitiv
  • Average monetizable daily active users (mDAUs): 139 million

Between the lines: This was the first quarter in which Twitter stopped reporting a monthly active usage metric, after the company missed its analyst expectations during the two prior quarters.

  • Its new metric is called "monetizable daily active usage (mDAU)," which the company says takes into account whether a user was exposed to advertising.
  • The company said ad engagements were up 20% year-over-year, suggesting improvements to its ad products are working.

Be smart: Despite gains, Twitter's daily active user base is smaller than its peers, and it is much more international, which is typically tougher to monetize. For comparison, Snapchat said Tuesday that it now has 203 million daily active users, while Facebook has 1.59 billion.

Go deeper: How Jack Dorsey plans to change Twitter