Twitter’s adtech focus helps reverse its fortunes as it posts first ever profitable quarter

The better-than-expected performance saw net profit in the fourth quarter of 2017 rise to $91.1m

Twitter is flying high after reporting the first ever profitable quarter in the company's 12-year history, with its leaders crediting investments in adtech, video, improved user features and better sales execution for the boost.

The better-than-expected performance saw net profit in the fourth quarter of 2017 rise to $91.1m, compared with a loss of $167.1m during the same period in 2016.

Last year, Twitter chief executive Jack Dorsey spoke of the company's ambition to bulk up its adtech capabilities. At the time, the move was a natural one, designed to bring brands better targeting, efficiency and measurement, as well as offering up an alternative to the Google and Facebook duopoly which accounted for in excess of 60% of the US digital ad market last year.

Now, it looks like the strategy is reaping rewards for Twitter, with Dorsey confirming to analysts and investors today (8 February) that in the final quarter of the most recent financial year Twitter had been "investing a lot in measurement" and it had helped the firm's bottom line.

He added that the business was scaling these abilities, having performed 62% more custom measurement studies for brands in Q4 2017 compared to Q4 2016.

Dorsey and chief financial officer Ned Segal said the firm’s 2% year-on-year quarterly revenue boost, which brought Q4 turnover up to $732m, was also influenced in-part by better targeting which had improved click-through rates (CTR).

In a letter to shareholders, Twitter indicated that improving its adtech stack will continue to be a focus throughout 2018.

The company said that over the next 12 months, along with as a focus on live and video, one of its revenue priorities was to improve its core ad offerings through upgraded performance and measurement. This, the letter said, would include "ad platform improvements, self-serve measurement studies, and third-party accreditation."

Despite overcoming cautious Wall Street financial estimates, Twitter's global user growth – which has been a jitter-inducing subject for investors for years – remained muted. In the final quarter of the year, Twitter reported 330 million active users a month, a rise of 4% on 2016 but a figure that has remained stagnant since Q3.

Overall, Twitter posted total revenue of $2.4bn in 2017; a drop of 3% on 2016's $2.5bn. However, it has managed cut its net losses from $457m to $108m over the past 12 months.

From a user perspective, Twitter told investors that doubling the character limit from 140 to 280 for all users in November improved engagement within its walls, adding that another key focus for the year ahead would be surfacing more relevant content on subscribers' timelines.

Jack Dorsey said AI would play a key part in this because it would allow his team to move a "whole lot faster" in 2018 and be "smarter" about how it introduces tweets, events and accounts to people.

Segal noted that honing these abilities would also work to Twitter's advantage when courting new users. “One of the things that we don’t do well today is match [users] with [their] interests very quickly," he said, adding that Twitter was experimenting with how to make this an integral part of the on-boarding process.

Finally, Dorsey said he had no plans to replace outgoing chief operating officer Anthony Noto, noting that his duties have been absorbed by others.

“We’re not going to have to do any back-filling,” Dorsey asserted.

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