Twitter delivered a mixed bag of results for the first quarter of 2017 before markets opened on Wednesday.
On the bright side, the social media company exceeded Wall Street's (admittedly low) expectations and finally managed to reverse the momentum in terms of its audience growth. The number of monthly active users averaged 328 million for the first quarter, a 6 percent increase over Q1 2016. Perhaps even more encouraging, Twitter’s audience growth (both in terms of monthly and daily active users) accelerated for the fourth consecutive quarter. Daily active usage increased by 14 percent in the first three months of 2017, indicating an uptick in user engagement.
So, is everything well in Twitter’s San Francisco headquarters? Well, not quite. While stalling audience growth had been a huge concern for the company, another key issue has yet to be resolved: despite the latest uptick in usage, Twitter failed to translate that into actual advertising dollars. Ad revenue declined by 11 percent year-over-year, leading to Twitter’s first ever year-over-year sales decline. In its letter to shareholders, the company informed shareholders that it expects revenue growth to lag behind audience growth for all of 2017, but expects to reverse this trend in the long term.
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