Twitter posts first quarterly profts despite stall in user growth

For the first time in twelve years, the tech giant Twitter (NYSE: TWTR) made its first quarterly profit.

Boosted by a rise in video advertising sales, news of the profit boosted shares in the company by over 20 percent.

Twitter, which went public five years ago, made a profit of $91 million (£65 million) in the last quarter of 2017. This is compared to the $167 million loss in the fourth quarter of 2016.

Revenue was up by two percent, thanks to a boost in video advertising. However, the social media giant had a fall in user growth after a major crackdown on fake accounts.  In a letter to shareholders, Twitter said it was stepping up efforts to reduce spam and automated accounts.

Twitter had 330 million monthly active users in the last quarter of 2017. This was below expectations, which stood at 332.5 million.

James Erkine, director at marketing firm The Social Circle, said the group had increased profits after carefully deepening the experiences on offer through video and other changes.

“It’s now about taking that scalable model and using it to reach new user groups to increase their user base,” he said.

“Hopefully now they’ve made a profit once, they should be able to do it next quarter and carry on doing it.”

As well as new features, Twitter also sought a profit through major cost-cutting. One example was seen through the amount the company spent on research and development. In 2017, the group spent just $134 million compared to the $202 million it spent the year previously.

“We’re investing to make 2018 a year of growth and expect our expenses to more closely align with revenue after a year of significant margin improvement,” said CEO Jack Dorsey on Thursday.

The site also announced recently that it was taking online abuse more seriously and will crack down on inappropriate behaviour.

The group’s shares were trading at around $32 per share during the mid-morning trade.