Twitter ad revenue up 21% but warning of tougher months ahead

Twitter also confirmed it will begin putting warning labels on hate speech by elected politicians.

Twitter: profit fell despite double-digit revenue growth
Twitter: profit fell despite double-digit revenue growth

Twitter's ad revenue grew a healthy 21% in the second quarter of 2019 but the platform is predicting a tougher second half of the year.

The microblogging site's total revenue grew 18.3% year on year to $841m, driven by a 24% surge in the US market, which still accounts for more than half of the company’s business. 

International revenue grew by a more modest 12%, with Japan still Twitter’s strongest market outside the US (Japan grew 9% to $133m in Q2).

Twitter makes most of its money from ad revenue, which reached $727m. Its operating income was down 5% to $76m, which the company described as "better than expected". 

This was due to operating expenses increasing by 21% to $766m as headcount grew to 4,300 globally (up 20% year on year) and more investment in video content. Twitter reports a combined figure for sales and marketing expenses, which grew 28% year on year to $280m.

Meanwhile, Twitter's average monetisable daily active users reached 139 million in the second quarter of 2019, up 14% year on year.

However, the company forecast third-quarter revenue below either Q1 or Q2 of this year, partly because it was ending some older ad formats.

"Increasing the stability, performance and scale of our ads platform in general and our mobile application download product in particular will take place over multiple quarters, with a gradual impact on revenue," the company said.

Since launching 13 years ago, the platform has been a hit with journalists and celebrities who like communicating outside of traditional media channels. Twitter has tried to expand its user base by making it the go-to social media platform around live events and news topics. 

However, eMarketer senior analyst Jasmine Enberg said Twitter’s value proposition to advertisers was not the size of its audience, but user engagement.

Enberg added: "The strong growth in monetisable daily active users shows that Twitter users are sticking with the platform, and that should resonate with advertisers. Next quarter’s earnings will show whether Twitter can keep up the growth momentum amid negative user feedback over the website redesign rolled out in July."

Twitter said it made a number of product improvements in the three-month period, including better relevance in users' Home timelines and notifications, using machine learning models.

Several months ago it launched a beta-testing platform for product improvements, such as better labelling on replies to make conversations easier to follow.

Within the past quarter Twitter has also secured new video content partnerships with The Wall Street Journal and Time.

Twitter admits it 'has not been clear' over hate-speech decisions

Twitter also confirmed it will begin putting warning labels on hate speech by elected politicians.

In its letter to shareholders today, the social media platform admitted it had "not been clear" in the past over its decision to allow tweets to remain that had violated rules on hateful conduct. 

Twitter was roundly criticised earlier this month for not taking action after President Donald Trump tweeted that four ethnic minority congresswomen should "go back" to the countries "from which they came". Just weeks before, Twitter had announced it would downrank or hide tweets that broke its policy on hateful speech.

Because Trump is a verified public official with millions of followers, Twitter maintains there is a public interest in having his tweets remain. 

"We will now place a notice on top of tweets that violate our policies but serve the public conversation in cases where the tweet was written by a verified public official with 100K or more followers, thereby providing additional clarity and giving people the opportunity to see the tweet after understanding why it has been covered," the company said today.

Twitter currently hides tweets behind grey boxes if it feels the need to warn users about their content. Its hateful conduct policy bans "targeting individuals with repeated slurs, tropes or other content that intends to dehumanise, degrade or reinforce negative or harmful stereotypes about a protected category."

The platform has long been criticised for allowing bots and fake users to use the platform without verification checks. Twitter today said it had a an 18% drop in reports of spammy or suspicious behaviour across detail pages, which show the replies to any given tweet.