Twitter said Thursday it could hit profitability by the end of the year, delivering a stronger-than-expected update which sent its shares sharply higher.
Although third-quarter results showed ongoing losses and a dip in revenue, the upbeat outlook sparked a pre-market gain of 10.8 percent for Twitter. The social network, which has struggled to keep pace with rivals, posted a loss of $21 million in the third quarter, a marked improvement from the $103 million deficit a year ago.
Revenues were $590 million, a decrease of four percent from a year ago but not as bad as analysts had feared for the one-to-many messaging platform. Its monthly active user base rose slightly to 330 million, roughly in line with forecasts. Twitter said daily active users — a metric for which it has declined to offer details — rose 14 percent from last year.
The number of US monthly active users grew four percent to 69 million, and international users increase by the same level to 261 million, Twitter said.
Bringing people back
"We're proud that the improvements we're making to the product continue to bring people back to Twitter on a daily basis," chief executive Jack Dorsey said. "It's our job to help people stay informed about what’s happening in the world and what people are talking about, and we're focused on making our service faster, easier to use and more relevant to more people every day."
While Twitter has built a solid core base of celebrities, politicians and journalists, it has failed to achieve the broader appeal of Facebook and other social platforms, hurting its ability to bring in ad revenues.
Twitter has stepped up efforts to boost its user base and engagement, notably with some 30 video partnerships, as part of its turnaround efforts.
In a statement, Twitter said it would "likely" show its first net profit in the fourth quarter if growth reaches the high end of its target.
The rally came despite Twitter's acknowledgement that it had overstated its user base by as many as two million in the prior quarter by counting users of a third-party application.
Twitter, which has acknowledged some lift from President Donald Trump's use of the platform, has also been struggling with ways to filter out abuse and promotion of violence and has been caught up in the controversy over manipulation during the election campaign by automated accounts or "bots" directed from Russia.
Dorsey noted that Twitter has stepped up its efforts "to make Twitter a safe place for everyone." The company was the first social network to announce a policy of "transparency" for ads designed to influence elections.
Twitter made the announcement this week on stricter ad policies amid heightened scrutiny surrounding the news that Russian-backed entities used online platforms to spread disinformation during the US 2016 campaign.