Twitter shares balloon on another quarter of ho-hum results

Still not making money, but since when did that matter?

TwitterIPO

Despite continued growth, Twitter's earnings report for the second quarter of its fiscal 2014 didn't look much better than the first quarter's results, with the company still bleeding money even as it continues to ramp up its advertising and user-engagement efforts.

Twitter's earnings beat analysts' estimates at $0.02 per diluted share for the three months ending on June 30. Yet while it's probably more telling that Wall Street expected it to post a net loss of a penny per share, investors still seemed excited by the news, triggering a feeding frenzy that sent the microblogging site's stock price soaring in after-hours trading.

The revenues do keep rolling in. Twitter booked sales of $312m in the second quarter, which was 124 per cent higher than the same period a year ago and beat the analysts' prognostications by 10 per cent.

But as much money as the company makes, it still needs more. It posted a net loss for the quarter of $145m, which was 245 per cent greater than its loss from Q2 of 2013 and 10 per cent greater than this year's first-quarter loss.

There were some encouraging signs, though. Excluding such items as taxes, depreciation and amortization, and stock-based compensation expenses, Twitter actually did make some net income in the quarter – $14.6m, to be precise, or 5 per cent of revenue.

The company's revenues from advertising increased 129 per cent, year-on-year, reaching $277m – and 81 per cent of that figure came from mobile advertising.

What's more, some investors seemed buoyed by the fact that Twitter's usage figures continue to show significant growth over last year's numbers. Average monthly active users hit 271 million in the second quarter, a 24 per cent year-on-year increase, while mobile monthly active users were up 29 per cent, to 211 million.

Similarly, timeline views, which Twitter claims are indicative of how engaged users are with its service, reached 173 billion in the second quarter, a 15 per cent increase.

Yet while timeline views were also up 15 per cent in the first quarter of 2014, that period saw higher percentage increases in both monthly active users and mobile monthly active users, indicating yet again that Twitter's ability to grow its user base in a sustained way may be limited.

Nonetheless, despite the mixed results, Twitter shareholders saw this as a very solid quarter for the company and they sent its shares rocketing up more than 30 per cent following Tuesday's closing bell. ®

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