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article imageTwitter returns to growth, surprising its investors

By James Walker     Apr 26, 2017 in Technology
Twitter has unexpectedly returned to growth, causing its stock price to rise significantly. Although the company is still losing money, it has made large gains in user activity. Its losses have consequently been reduced even though ad revenue has fallen.
Twitter made the announcement in its first quarter earnings call today. Its share price had fallen by over 10 percent earlier in the day amid shareholder concerns that the company would continue its downward trend. Instead, it reported a 14 percent increase in user growth, causing its shares to rise by over 13 percent in pre-market trading.
Despite still making a significant loss, Twitter's revenue also increased and substantially exceeded Wall Street expectations. It reported income for the quarter as $548 million, $36 million more than the $512 million anticipated by analysts. Overall, the company made a net quarterly loss of $62 million, an improvement over $80m in the same period last year.
Twitter CEO Jack Dorsey acknowledged there's still more to do before Twitter's business will be sustainable. The eight percent fall in advertising revenue over the first quarter of 2016 is particular cause for concern, suggesting brands are abandoning the platform even though it's now gaining users.
Dorsey said Twitter "continues to expect" revenue growth to lag behind audience growth throughout the remainder of the year. He's also optimistic that users will continue to join up though, stating he believes that gaining users will eventually lead to a revenue increase over time.
"We continue to face revenue headwinds," the BBC reports Dorsey said. "We believe that executing on our plan and growing our audience should result in positive revenue growth over the long term." Twitter also used its shareholders meeting to address one of the platform's other major issues. Addressing its longstanding reputation for harbouring abuse, Dorsey announced that overall reports of abusive and threatening behaviour are down across Twitter's services.
The company's recent commitment to improve in this area appears to be starting to deliver results. Dorsey admitted "there's a lot more to do" but Twitter now seems headed in the right direction to make further improvements.
With Twitter tackling its abuse problems, gaining users and beginning to cut its losses, the company is suddenly in a more positive position than it's been for a long time. Although its quarterly revenue declined for the first time, investors and analysts have noted the other highlights of the earnings call suggest Twitter is making gains across all its major problem areas.
Dorsey now intends to work on continuing to grow Twitter's audience, add more advertisers and connect with new third-party data partners. The company needs to convince users and ad providers to start placing their trust back into its platform, demonstrating its website and apps offer useful features to both kinds of customer. Dorsey said Twitter's now "focused on only what matters," abandoning distracting projects to get back to fixing its core product.
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