Twitter turns first profit

Photo: The Canadian Press

Twitter beat Wall Street's cautious expectations with its first quarterly profit in history, but that isn't going to solve the company's broader problems any time soon.

The company isn't alone in dealing with abuse, fake accounts and attempts by Russian agents to spread misinformation. But with its troubles compounded by a revolving door of executives and stagnant user growth, Twitter has been facing questions about just who's minding the store. Every time Twitter tries to respond to a problem, it's either not good enough, or some other problem emerges.

"They are playing whack-a-mole with these problems," said Michael Connor, whose Open Mic group helps investors push tech companies to address privacy, abuse and other issues. "They say they have the problem under control, but they don't know what the problem is exactly."

User growth has stagnated at Twitter, even as President Donald Trump's no-holds barred tweets have attracted plenty of attention to it from around the world. Twitter faces stiff competition for people's attention from much bigger and more established rivals like Facebook along with younger services such as Snapchat and Instagram.

On Thursday, the company said it had an average of 330 million monthly active users in the final three months of last year, unchanged from the previous quarter and below Wall Street's estimate of 333 million.

In some good news, the company grew revenue by 2 per cent to $732 million, above the $687 million that analysts polled by FactSet were expecting. Its net income — a first in the company's nearly 12-year history — was $91 million, or 12 cents per share. Adjusted earnings were 19 cents, above analysts' expectations of 14 cents. The company's stock jumped 25 per cent in pre-market trading.

The quarter "was a breath of fresh air for investors that have patiently awaited for this turnaround story to manifest after years of pain," said Daniel Ives, head of technology research at GBH Insights.