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Twitter Inc (TWTR) 3Q17 Earnings Send Shares Soaring

Twitter Inc (NYSE:TWTR) 3Q17 earnings were released before opening bell this morning, and the company posted non-GAAP earnings of 10 cents per share on $589.6 million in revenue. Analysts had been looking for earnings of 6 cents per share on $587 million in revenue. In the year-ago quarter, Twitter Inc (TWTR) reported 9 cents per share in non-GAAP earnings and $615.93 million in revenue.

twitter inc (TWTR) 3q17 earnings
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Twitter Inc (TWTR) 3Q17 earnings

On a GAAP basis, the Twitter Inc (TWTR) 3Q17 earnings release revealed losses of 3 cents per share, but that was still an improvement from the year-ago loss of 15 cents per share. Adjusted EBITDA rose to $207 million, which was 35% of its total revenue, versus the $181 million and 29% of revenue reported in last year’s third quarter. Ad revenue declined 8% year over year to $503 million, while data licensing and other revenue grew 22% to $87 million. Total ad engagements grew 99% year over year, while cost per engagement fell 54% year over year.

Twitter Inc (TWTR) had 330 million monthly active users at the end of the quarter, a 4% year-over-year increase in monthly users. The number of average daily active users grew 14% year over year, an acceleration from the 12% that was recorded in the previous quarter.

The micro-blogging platform added 4 million monthly users during the quarter, which is about double the number Wall Street was expecting. Don’t get too expected yet though. Twitter also admitted that it has been overstating its user counts for years. The company claims it only recently discovered it had been counting users of a service for third-party apps since 2014. However, it added that this mistake inflated its third-quarter user count by 1 million to 2 million, so it still may have beaten the consensus for monthly user adds.

Twitter Inc (TWTR) provides guidance

For the fourth quarter, Twitter Inc (TWTR) expects adjusted EBITDA to be between $220 million and $240 million with an adjusted EBITDA margin of 35% to 36%. The company said that at the high end of that range, it should be profitable on a GAAP basis.

Following the Twitter Inc (TWTR) 3Q17 earnings release, the company’s stock skyrocketed in premarket trades, climbing by as much as 11.55% to $19.12.