For once in the social media giant’s twelve-year history, Twitter has achieved a profitable quarter in the last three months of 2017.
Twitter made $91 million, meaning that the company headed by CEO Jack Dorsey, has been able to raise its stock by almost 16 percent. However, it is not growth which has contributed to Twitter’s profit gain, but cutbacks and cost decreases. Twitter’s user base did not grow in Q4 of 2017, with no rise in monthly users from the previous quarter, which is also moderately surprising. As any financial guru or those writing for the best financial blogs in personal-finance can tell you, Twitter’s situation is certainly unique.
In terms of Twitter’s cost cutting efforts, their financial statement shows how the social media operator has reshaped its approach. The key areas that twitter targeted were:
- Stock compensation and incentives which were awarded to employees, or provided in part to make up their salary
- Research and development
- Sales and marketing
Twitter effectively cut down on these areas in order to make an overall profit in the final quarter of last year. In terms of stock compensation to staff, the company cut down from $138 million to $102 million in Q4, indicating a 26% fall from the prior year.
Research and development was down from $202 million to $134 million, which also contains approximately $26 million to employees who have a hand in producing Twitter’s content. Minus the stock-based compensation, there was a decrease of around 35%.
Sales and marketing spending was down by $70 million in Q4 in comparison to the final quarter of 2016. Conferences, external agency assistance and public events were targeted for cutbacks, making the sales and marketing output around 30% less than the previous year.
According to the company, it is not explicitly cutbacks where Twitter has managed to make profits. With new changes and amendments to the way the social media platform operates, there is hope that the outfit can increase its revenue in the US, where numbers of users had dropped by approximately 1 million in a year.
Twitter confirmed that it had 330 million monthly active users in the quarter, which was up 4% but below the figure of 332.5 million which was reportedly expected by Wall Street. It has been confirmed that a change made by Apple to its web browser, Safari, was responsible for a2 million reduction in users as a result. How Twitter can continue to compete with Facebook, Instagram and other social media outfits will remain to be seen. With younger users also using the platform as a means to learn, there is reasonable debate as to how content can be moderated.
Twitter has also initiated an approach to tackling online abuse, or behaviour which it classes as being in breach of its terms and conditions. Michael Connor, the man behind the Open Mic group who had pushed for measures to do more to combat abusive language, behaviour and hate speech, believes that Twitter has more work to do in convincing that the company are doing enough to prevent such actions:
“They are playing whack-a-mole with these problems,” he told AP. “They say they have the problem under control, but they don’t know what the problem is exactly.”
Twitter has also made the headlines in recent years for its permanent suspension of those who appear to espouse views and language which the company deems unacceptable. “Alt-Right Provocateur” Milo Yiannopoulos received a permanent ban in 2016 following several warnings from Twitter regarding his behaviour. This level of care and attention, as polarising as it may be, is being pushed by the company to attract a higher number of users.
New initiatives such as sports streaming will also be introduced to the Twitter-sphere, in the hope that activity among users will grow in the future.