Twitter Shares Surge 10% As User Growth Beats Expectations

Twitter Shares Surge 10% As User Growth Beats Expectations

Social networking giant Twitter has reported its first ever year-over-year decline in revenue for its first quarter earnings on Wednesday. However, the company still managed to post better-than-expected user growth.

Twitter’s monthly active users has increased 6 percent, or 18 million, to reach 328 million. It also revealed active users rose 14 percent in the first quarter from a year earlier. In a letter to its shareholders Wednesday, Twitter pointed to simplifying its product, its new Explore tab and new reporting and moderation tools as key reasons behind the growth.

“We're delivering on our goal to build a service that people love to use, every day, and we're encouraged by the audience growth momentum we saw in the first quarter,” Twitter CEO Jack Dorsey said. “While we continue to face revenue headwinds, we believe that executing on our plan and growing our audience should result in positive revenue growth over the long term."

It wasn’t all good news for the San Francisco-based company. Its revenue fell 7.8 percent to $548.3 million, its first drop in its eleven year history. Its advertising revenue fell 11 percent to $474 million in the first quarter, above the average analyst estimate of $442.7 million.

“Twitter is becoming more relevant to consumers. They are making their products easier to use. And there is a global thirst for news and information that they are benefiting from,” BTIG analyst Richard Greenfield told Reuters. “We believe usage will drive meaningful revenue and profit growth in the next few years.”

Twitter’s user growth has been a hot topic of conversation in recent years. The company is working hard to address fears over stalling growth, introducing new features like live video broadcasting, the ability for users to poll followers and even post animated gifs. The company say that by “executing on our plan and growing our audience [this] should result in positive revenue growth over the long term.”

Shares of Twitter immediately surged over 10% in pre-market trading on Wednesday.

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