Twitter earns $68m net profit in Q1

San Francisco-based company's stock down more than 11% in after-hours trading

In the first quarter, Twitter invested more than $250.7 million on research and development. AP

Twitter reported a net profit of $68 million in the first quarter, compared with a loss of $8.3m during the same period a year ago, as the company saw an rise in the number of monetisable daily active users (MDAUs).

The San Francisco-based microblogging site's total revenue surged 28 per cent on an annualised basis to $1.04 billion, exceeding the analysts' average estimate of $1.03bn.

The advertising sales for the first quarter surged 32 per cent from the same period a year ago to $899m.

“People turn to Twitter to see and talk about what’s happening and we are helping them find their interests more quickly while making it easier to follow and participate in conversations,” said Jack Dorsey, Twitter’s chief executive.

The average mDAUs – the term for users who can view ads – reached 199 million, an almost 20 per cent annual rise from the first quarter a year earlier.

But it was almost 1 million less than the forecast by FactSet.

Users growth was driven by “ongoing product improvements and global conversation around current events”, Mr Dorsey said.

Twitter’s stock was more than 11 per cent down in after-hours trading as the company missed user-growth expectations and offered lower revenue guidance.

In its guidance for the current quarter ending on June 30, Twitter expects to earn revenue between $980m and $1.08bn. Analysts were expecting $1.06bn on average, according to Refinitiv.

The company predicts capital expenditure in the range of $900m to $950m in the 2021 financial year.

“Q1 was a solid start to 2021 … reflecting accelerating year-over-year growth in MAP [mobile app promotion] revenue and brand advertising that improved throughout the quarter,” said Ned Segal, Twitter’s chief financial officer.

“Advertisers continue to benefit from updated ad formats, improved measurement and new brand safety controls."

The company invested more than $250.7m on research and development during the quarter, more than $50m above that in the same period last year.

Most of the R&D allocation was spent on engineering, product optimisation, design and research, the company said.

“We are attracting more great people to Twitter than ever before and investing in our highest priorities to deliver on our long-term goals across consumer product, revenue product and platform,” Twitter said in a note to its shareholders.