The social network was losing money since its IPO in 2013. Its unprecedented profitability this fourth quarter earned it a jump on Wall Street.
It is rare for the CEO of Twitter to welcome the results of his company. But for the first time since its inception ten years ago, and its IPO 5 years ago, Jack Dorsey can announce good news. Twitter has finally become profitable and posted a net profit of $ 91 million in the fourth quarter of 2017, compared with a loss of $167 million in the same period last year. Its turnover reached 732 million dollars, while the market was more pessimistic in hoping “only” 681 million dollars. Advertising, at the heart of the company’s development strategy, represents $ 644 million in sales and is up 1%.
Such results immediately boosted the course of his action. In electronic trading before the opening of Wall Street, it jumped from 19.66% to 32.20 dollars in the afternoon French time.
“We achieved our profitability goal” and achieved a “strong year-end,” said boss Jack Dorsey in a statement. The CEO says he is confident for the future, although for the whole of 2017, the company remained in deficit with a net loss of just over $108 million. Since 2008, Twitter has lost $1.8 billion in total.
The video strategy pays off
Achieving profitability was one of the company’s key objectives in 2017, and one of the main reasons it fired 9% of its workforce in late 2016 and sold its development activitiesand closed his video application Vine. Throughout 2017, Twitter has also multiplied its strategies to grow its audience and reassure investors concerned about its growth. Thanks to various ergonomic changes, the social network has managed to attract 4% more users than in 2016 in 2017. With 330 million active monthly users, compared to 318 in the same period in 2016, the company, however, remains below the 332.5 million expected by Wall Street and fails to forget a worrying third quarter 2017. Twitter had to explain a growth rate of zero active users and a loss of 2 million users in the United States. The sanction of the Stock Exchange is not
Faced with the wall, Twitter has changed in all directions as the end of the year approaches: it has introduced new formats like the “thread” (or “thread”) to link several tweets, cleans up the fake accounts and has increased the character limit to 280 characters . This seemingly incidental feature was in fact a blocking factor for some users like the Germans, whose 140 historical characters made the expression more complicated.
To turn the tide on the side of advertising monetization, the company also relied on the video, which allows to spread more ads to users of the service – a strategy that has paid off for Facebook. In 2015, Twitter acquired Periscope and informed its investors that it would give priority to the treatment of live events throughout the year. Twitter has also struggled with the broadcast rights of the American Football League, the NFL. After this first success, the company sought to establish new media partnerships for live event broadcasts. Its 625 live streamings in the second quarter of 2017 reached 55 million unique viewers and attracted larger advertisers.
