Twitter's ad revenue shoots up 28% driven by audience growth and new ad products

Twitter may have turned a corner, posting its second profitable quarter in a row on the back of strong ad revenue growth of 21% to $575 million.

The social media platform's owned and operated (O&O) advertising revenue was $533 million, an increase of 28% year-over-year and drop of 10% from the previous quarter.

This contributed to overall revenue growth of 21% totalling $665 million and a net income of $61 million versus a net loss in the first quarter of 2017 of $62 million.

These results were in tandem with growth in Twitter's daily-active-users (DAUs), which grew 10% year-on-year. The company did not disclose the actual number of its DAUs.

Monthly active users (MAUs) grew more moderately by 3% to total 336 million. Of this, 69 million were from the US, and 267 million from the rest of the world.

"The first quarter was a strong start to the year," Jack Dorsey, Twitter chief executive, said. "We grew our audience and engagement, marking another quarter of double-digit year-over-year DAU growth... We also introduced a new framework to think more cohesively about the issues affecting our service, including information quality and safety."

By region, non-US markets grew 52% to draw close to US advertising revenue posting totals of $287 million and $288 million, respectively.

This was thanks to strong growth in Asia-Pacific, driven by growth in video in Japan and performance ad products in China.

"We expect these trends to continue, such that international ad revenue is expected to exceed US ad revenue in future quarters," Twitter said in a letter to shareholders.

"We're pleased to report growth across all major products and geographies in the first quarter... driven by continued audience growth, differentiated ad product features, improved ROI, and better sales execution," Ned Segal, Twitter's chief financial officer, said.

Twitter's strong performance was expected, Nick Fletcher, vice-president of Rakuten Marketing, commented.

"Marketers are becoming more aware of the scale of their audiences at an international level and Twitter has become synonymous as the hub of conversation around major global events. While a high-end fashion brand might still plough its advertising budget towards Instagram’s buy buttons, there’s no end to the potential for fast-moving consumer goods brands on Twitter," he said.

The platform's turnaround success is also reflective of its ability to ride the wave of the quarter's tent-pole events such as the Winter Games, the Super Bowl, Oscars, Grammys and Brits,  Aaron Goldman, chief marketing offier of 4C Insights, noted.

"We saw steady growth for brands using 4C to manage their Twitter campaigns in Q1 with spend going up and cost per click going down, which advertisers are getting savvier with their optimisations. We expect the strong results to continue as Twitter innovates to deliver an experience that keeps audiences engaged with updates like threading tweets and new offerings like Video Website Cards," he said.