Twitter reported better-than-expected results for the second quarter, saying its product improvements are paying off. Revenues rose 18 percent to USD 841 million, while operating profit fell slightly to USD 76 million, but was still ahead of the company's guidance. Twitter noted that growth will slow in the second half, due to a tougher comparison with last year and further efforts to phase out old ad formats.
The company ended the quarter with 139 million monetisable daily active users, up 14 percent from a year ago and 5 million more than in Q1.
Twitter said its focus remains on the "health" of the social media platform. In Q2 the company said it made its rules easier to understand and continued to work on proactively identifying and addressing malicious activity. This resulted in an 18 percent drop in reports of spammy or suspicious behavior.
Advertising revenue rose 23 percent at constant currency rates, with growth accelerating in the US to 29 percent. Total ad engagements increased 20 percent, resulting from increased usage and improved clickthrough rates across most ad formats.
During the quarter, the company decided to "deprecate" certain legacy ad formats in order to drive greater focus in revenue product. Those decisions will likely have a negative near-term revenue impact, leading to the forecast for slower growth in H2 compared to the first two quarters of the year. Efforts to increase the stability, performance, and flexibility of its ads platform, and in particular the mobile application download product, are expected to gradually improve revenues over the coming quarters.
The above is expected to lead to Q3 revenues of USD 815-875 million. Twitter also reiterated a forecast for operating costs to rise around 20 percent over the year, after a 21 percent increase in Q2. The forecast for Q3 operating profit is USD 45-80 million.
