It took 12 years for the social media app to move into the green
Twitter was under immense pressure. For the last 12 years since its inception, the microblogging site has been haemorrhaging money. But, last week, Jack Dorsey and team finally had a good reason to cheer – Twitter turned a profit for the first time in its history.
In Q4 2017, Twitter reported that it made $91 million, which is commendable when you consider that for Q4 2016, it lost $167 million. Also, it reported a revenue of $732 million in the last quarter of 2017, a two per cent year-on-year increase.
It’s been four years since it went public, and the stock market was happy to reward Twitter’s performance. Its stock price rose 20 per cent last Thursday after the Q4 income statement was made public.
This doesn’t mean Twitter is entirely out of the woods yet. It still needs to figure a workaround against losing monthly users. The number of monthly active users in the US shrunk from 69 million to 68 million from Q3 to Q4. The overall number of monthly users stayed at 330 million, the same as Q3 2017, though that figure is still a four per cent year-on-year increase. In the four years since Twitter went public, its monthly active user base grew from 218 million users to 330 million users.
Twitter made its profit by cutting costs, and not by growing its business. Twitter is struggling to capture a larger share of the digital ad market. Facebook and Google, the two biggest players in digital ad space, control 26 per cent of the global share. Twitter, in comparison, controls just 1.2 per cent, about as much as Instagram.
But there are also signs that this growth could be sustainable. Twitter’s machine-learning advancements have reportedly led to an improvement in the click-through-rate of its targeted advertisements. In November, it also doubled its character limit from 140 characters to 280 in a bid to get people more engaged and to stay on the site for longer intervals.
If it stays the course and continues to innovate, 2018 might be far kinder to Twitter than any other year in its history.