Twitter reported a strong increase in third-quarter results, with better-than-expected EBITDA and a big net profit thanks to a tax asset gain. Daily active users of the service rose 9 percent, while monthly active users were again lower, as the company worked on preventing "unhealthy" users from accessing the platform.
Total revenues rose 29 percent to USD 758 million, including growth of 28 percent in the US and 30 percent in the rest of the world. Owned and operated advertising was up 36 percent to USD 617 million in revenue.
Adjusted EBITDA beat the company's forecast, growing 42.5 percent to USD 295 million and increasing the margin to 39 percent. Twitter said it still expects a higher margin over the full year, despite increased staff costs. Hiring is expected to be at the high end of its forecast for 10-15 growth in the workforce this year.
The company ended the period with 326 million monthly active users, down from 335 million in Q2 and 4 million less than a year ago. During the quarter the company implemented new techniques for detecting and preventing spam or malicious accounts, which led to a 20 percent quarterly fall in successful new sign-ups. It also blamed the decline in users on the EU's new data protection regulation, a move away from SMS carrier deals, a product change that reduced automated usage and a technical issue that temporarily reduced the number of notifications sent. Another mid single-digit sequential decline is expected in the fourth quarter for MAUs, for much of the same above reasons.
Instead, the company focused on its core users, who tend to drive more advertising revenue. Daily active users were up 9 percent year-on-year, and Twitter said the number grew in double digits in five out of its top ten markets.
At the bottom line, Twitter posted its fourth consecutive quarter of net profit, at USD 789 million or USD 1.02 per share. This included the release of deferred tax asset valuation allowances of USD 683 million, leaving an underlying net profit of USD 106 million, compared to a loss of USD 21 million a year ago. After nearly doubling free cash flow year-on-year to USD 327 million, Twitter finished the quarter with total cash of around USD 6 billion.
For the fourth quarter, the company forecast adjusted EBITDA of USD 320-340 million and a margin of 39-40. Capital expenditure is expected to fall to USD 60-85 million from USD 117 million in Q3.
