Twitter Inc(NYSE: TWTR) stock surged over 19% on October 26th, 2017 (as of 1:27PM EDT; Source: Google finance) driven by their positive third quarter of 2017 performance. The group’s Average MAU rose 4% on a yoy basis to 330 million for the quarter, while Average DAU surged 14% on a year-over-year basis. This is the fourth consecutive quarter of double-digit growth for Average DAU.
Major drivers for this performance is in the increasing audience and engagement, ongoing improvements to the product for attracting users to use Twitter on a daily basis. The group is focusing on the strength in video and direct response ad formats, as well as in their data business, which witnessed a third consecutive quarter of accelerating year-over-year growth. The group’s Adjusted EBITDA was $207 million or 35% of total revenue, against $181 million or 29% of total revenue in the same period last year.
Twitter is also enhancing their core ad offerings through better performance and measurement of existing revenue products, including by making ad platform improvements, self-serve measurement studies, and third-party accreditation. They also looking into new channels of demand, such as online video, and introducing new ways to buy ads on Twitter including alpha testing of programmatic buying. The group continues to grow data and enterprise solutions revenue through their new product and channel segmented go-to-market approach.
Twitter forecasts Adjusted EBITDA to be in the range of $220 million and $240 million for fourth quarter of 2017 while Adjusted EBITDA margin would be in the range of 35% and 36%. Stock-based compensation expense is forecasted to be in the range of $90 to $100 million The group even forecasts the high end of their adjusted EBITDA range, would likely be GAAP profitable.
On the other side, the group also reported that they are adding labels to election-related advertisements and say who is behind each of them. This move is in response to the threat of regulation from the United States over the lack of disclosure for political spending on social media. Moreover, they also banned ads from accounts owned by Russian media outlets Russia Today (RT) and Sputnik. This move is in response to the allegations by U.S. intelligence agencies that both firms tried to interfere with the 2016 U.S. election.