The company reported its second-quarter earnings today. The stock is soaring, up 20% in extended trading.
Eric Gaillard / Reuters
Shares of Twitter exploded in extended trading, jumping more than 20%, after the company reported its second-quarter earnings that were much better than what Wall Street analysts were expecting.
Twitter said it earned 2 cents per share on $312 million in revenue. Analysts were expecting a loss of 1 cent per share on revenue of $282.8 million. The company's user growth rate actually rose on a quarter-over-quarter basis, with the company saying it had 271 million monthly active users. That would imply that Twitter has managed to at least, for the time being, hold off a continued decline in its user growth rate – a point of frustration for both the company and its investors.
It was a busy quarter for Twitter, which not only saw a huge amount of activity around the World Cup, but also rolled out its own Mobile App Install Ad product. The company also bought Tap Commerce, a firm that specializes in getting a user who has already installed an app to go back to that app through advertising, for $100 million.
By introducing new advertising products and improving targeting, Twitter can build its advertising business. The company has had trouble keeping up with Wall Street's expectations for user growth, but it can make the case to investors that its ad targeting is improving and is competitive with larger platforms like Facebook. Twitter says its advertising network, powered by an advertising company called MoPub that it acquired in September last year, reaches more than one billion mobile devices.
Twitter is also searching for new metrics to demonstrate its growth beyond the monthly active user, which has become a go-to among investors and the technology community for gauging growth. While it's those users that are tweeting, Twitter is making the case that its overall reach is actually much higher thanks to the company's tweets — and the content in those tweets — being published on other web sites and services on the Web.
While the stock is off from its highs after its mobile active user growth was lower than expected, Twitter's share price has found some stable footing through much of July. Twitter's lockup also expired earlier this quarter, leading to a flood of new shares available for public trading as employees were able to rake in their IPO winnings.
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