Twitter reveals strong growth in active users but continues to struggle with revenue

Chief executive Jack Dorsey speaking on Twitter’s 10th anniversary last year. Picture: Esten Hurtle (@esten) for Twitter, Inc.

Twitter has reported its strongest growth in monthly active users in more than a year and a better-than-expected quarterly profit, despite competition from Facebook and Snapchat, sending its shares up 11% on the announcement. The company said average monthly active users increased 6% to 328m in the first quarter from a year earlier, compared with 321.3m predicted by analysts.

Revenue fell 7.8%  to $548.3m, its first drop since its initial public offering. “While we’ve made progress toward building a better, more cohesive user experience that is driving accelerating audience growth, there is still work to be done to translate that into revenue growth,” the company said in its letter to shareholders.

Net loss narrowed to $61.6m, or 9 cents per share, in the first quarter ended 31 March, from $79.7m, or 12 cents per share, a year earlier. Twitter’s advertising revenue fell 11% to $474m in the quarter, above analysts’ estimate of $442.7m, according to market research firm FactSet StreetAccount.

Twitter’s user growth had stalled in the past few quarters and the company has been trying to convince advertisers that it will strengthen its user base. As part of its efforts, the company has updated its product offerings including live video broadcasts from its app and launched new features to attract users.

The company’s weak performance had raised questions about chief executive Jack Dorsey’s leadership and whether the company would be bought by a bigger media firm. Financial markets speculated about a sale of Twitter last year, but no concrete bids were forthcoming.