Twitter beats revenue targets with ad improvements, shares jump 5%

(Reuters) - Twitter Inc reported higher revenue growth than Wall Street had expected, as the social media platform rolled out ad targeting improvements to help brands reach potential customers.

Shares of Twitter rose 5% to $73 in trading after the bell.

Since the start of the year, Twitter has raced to introduce products in new areas like audio-only chat rooms and newsletter publishing in an effort to turn around years of business stagnation and reach its goal of doubling annual revenue by 2023.

Advertising revenue totaled $1.05 billion, up 87% from the year-ago quarter, and beat Wall Street estimates of $909.9 million.

"We get great signal about what people are most interested in, where they are or the places they care about," said Twitter Chief Financial Officer Ned Segal during the call.

Those improvements, along with higher demand from advertisers seeking to reach consumers as countries reopen from pandemic restrictions, helped propel ad revenue, Twitter said.

The strong results from both Twitter and its tech peer Snap Inc, which reported quarterly revenue growth of 116% on Thursday, shows "that the overall digital ad market is on fire right now, with the reopening further strengthening advertisers' budgets," said Ygal Arounian, a research analyst at Wedbush Securities.

Its US user base declined by 1 million over three months from the previous quarter due to a lighter news cycle in the United States, Twitter said, with total users worldwide in line with Wall Street targets.

Total revenue, which also includes revenue the company earns from data licensing, rose 74% year-over-year to $1.19 billion, beating analyst estimates of $1.07 billion.

FUTURE INVESTMENTS

Chief Executive Jack Dorsey, a longtime proponent of bitcoin, said during the earnings call the digital currency "is a big part" of Twitter's future and could be used for ecommerce transactions on the platform or to tip popular content creators.

Twitter added that new privacy controls that Apple Inc implemented in April, which are designed to limit digital advertisers from tracking iPhone users without their consent, had a lower-than-expected impact on revenue in the second quarter.

The full impact of Apple's changes have yet to be seen, and some concerns still linger, Arounian said.

On an adjusted basis, Twitter earned 20 cents per share during the second quarter, well above the estimate of 7 cents.