If you’re a Twitter (NYSE:TWTR) investor, you should feel great about the first quarter the company just reported for fiscal 2018 — an unmitigated success by virtually every metric.
Revenue growth has returned, up 21% from a year ago to $665 million, and the company reported its second consecutive GAAP-profitable quarter with 8 cents per share. Monthly active users grew by 6 million from the previous quarter to 336 million, and daily active users saw another quarter of double-digit growth at 10%, indicating continued strong engagement.
Ad revenue provided $575 million, and data/licensing contributed $90 million. Ad engagements were up 69%, while cost per engagement fell 28%, indicating strong ROI for ad clients.
A metric that won’t garner as much attention — but should, given that it’s been (rightly) held against Twitter for so long — is that stock-based compensation as a percentage of revenue for the quarter of 11% was down from 21% a year ago. This is management keeping their word, and it matters.
The market seemed to nitpick initially over some sequential growth comments from management in the call. However the disparity is not significant and is simply management staying conservative.
The quote of the conference call in my opinion was when CEO Jack Dorsey said, “We are not a social network and we do not benefit from the same social graph that social networks do. People come to us because they’re interested in something and they’re interested in seeing what’s happening within the world or within a particular topic or within a particular niche interest.”
Investors should expect decision making to be based around this thinking in the years to come. Profitability is expected to continue going forward, leaving investors with plenty to be excited about.
As of this writing, Jason Moser, a senior analyst for The Motley Fool’s flagship real-money portfolio service, Million Dollar Portfolio, held shares of TWTR.