Twitter subscribers up 24%

A portrait of the Twitter logo in Ventura, California. Twitter saw users increase to 271 million, still dwarfed by rival Facebook Inc’s 1.3 billion. — Reuters

Twitter Inc’s monthly active users rose a better-than-expected 24 per cent in the second quarter as the online messaging service mostly succeeded in stemming a dwindling pace of growth, sending its shares soaring almost 30 per cent.

Twitter, which has battled to reverse a steady decline in its once-heady pace of user growth, saw users increase to 271 million, still dwarfed by rival Facebook Inc’s 1.3 billion. Wall Street analysts had been expecting a pace of growth closer to 21 per cent.

Timeline views, a measure of the engagement of its users, also exceeded expectations with a 15 per cent increase, far outpacing the roughly eight per cent expected.

Twitter, whose rapid-fire format has always proven popular as a companion service to major global events, credited new products such as real-time scores built around the World Cup for helping galvanise growth.

“We remain focused on driving increased user growth and engagement,” chief executive officer Dick Costolo said in a statement. “And by developing new product experiences, like the one we built around the World Cup, we believe we can extend Twitter’s appeal to an even broader audience.” The world’s most popular sporting event peaked with the finals in July. For the current quarter, Twitter is forecasting revenue of $330 million to $340 million, again outpacing forecasts for around $323.7 million, according to analysts polled by Thomson Reuters I/B/E/S.Wall Street had been divided on whether Twitter can transform itself into a mainstream Internet platform on the same scale as Facebook. Some investors argue its reported user numbers do not fully reflect engagement, particularly with media viewers. Others say its inherently complex format deters wider adoption.

At its peak in December, Twitter enjoyed a $46 billion market capitalisation on just $665 million of revenue in 2013, making it one of the world’s priciest stocks.

User growth has stagnated since Twitter went public to much fanfare in November. Costolo has said that tweaks to Twitter’s product would result in better user engagement, and has asked Wall Street for time to show improvement.

It has granted more prominent placement to photographs to liven up its interface, simplified the sign-up process, and allowed ads touting mobile-app installations to drive up revenue.

On Tuesday, Twitter reported a 124 per cent jump in quarterly revenue to $312 million, beating Wall Street’s expectation for $283.1 million. Its shares rose 26 per cent to $48.80 in extended trading, from a close of $38.59 on the New York Stock Exchange.

The company reported a non-GAAP net income of $14.6 million or 2 cents a share, reversing a loss of $16.4 million or 12 cents a share a year earlier.