Twitter stock gains after strong user growth outweighs revenue miss

Shares of Twitter Inc. are up more than 6% in premarket trading Thursday after the company fell short of revenue expectations but saw a big surge in user growth.

monetizable daily active users (mDAUs) increased sequentially by 20 million to 186 million for the June quarter, while analysts had been projecting about 172 million.

The company posted a June-quarter net loss of $1.23 billion, or $1.56 a share, whereas it had recorded a GAAP profit of $1.12 billion, or $1.43 a share, in the year-earlier quarter. The year-earlier net income was driven by a large tax benefit. For the most recent quarter, Twitter said in its release that it recognized a $1.1 billion valuation allowance.

Twitter saw an adjusted loss per share of $1.39, while analysts surveyed by FactSet had expected the company to break even on a per-share basis. The company recorded $1.58 a share in adjusted earnings a year earlier.

Revenue for the quarter slipped to $683 million from $841 million, and came in below the FactSet consensus, which called for $702 million. Twitter generated $365 of revenue from the U.S. and $319 million from the rest of the world.

“With a larger audience and progress in ads, we are even better positioned to deliver for advertisers when the live events and product launches that bring many people and advertisers to Twitter return to our lives,” Twitter Chief Financial Officer Ned Segal said in the earnings release. He also said that the company saw a “moderate recovery in advertising demand relative to the last three weeks of March.”

Chief Executive Jack Dorsey addressed a recent breach, which saw hackers take over a number of prominent Twitter account and access data from eight of them. “We moved quickly to address what happened, and have taken additional steps to improve resiliency against targeted social engineering attempts, implemented numerous safeguards to improve the security of our internal systems, and are working with law enforcement,” he said in the release.”

Read: Twitter breach threatens to create ‘lengthy overhang on the stock,’ analyst says

Shares have risen 33% over the past three months as the S&P 500
has gained 17%.

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