Enterprise Products, Data Licensing Could Push Twitter to Profitability
Data licensing and enterprise-focused products proved to be Twitter's fastest-growing offerings in the third quarter of its fiscal year, helping to push the social media company closer to overall profitability, according to financial reports it released today.
Meanwhile, Twitter also reported growth in both daily and monthly user numbers. The company attributed those increases to a combination of factors, including a site redesign, more personalized content via the Explore tab, and improved relevance of the information users see via their timelines, push notifications, and emails.
With Q3 earnings that were better than analysts expected, Twitter said that further improvement would "likely" push the company toward profitability next quarter. The company also reported it had adjusted its monthly average user counts after discovering it had incorrectly included users of some third-party applications that had sent text authentication messages through Twitter's systems.
'Accelerating' Growth in Data Licensing
Video advertising and live-streamed content from premium partners both proved to be bright spots for Twitter in the third quarter, and the company said it plans to pursue new opportunities for continued growth in both those areas. It also intends to find more ways to target business users with new data and enterprise products.
"[I]n Q3, data and enterprise solutions was our fastest-growing product area with its third consecutive quarter of accelerating growth on a year-over-year basis," Twitter said today in its letter to shareholders. "We continue to benefit from our new tiered product and channel strategy, with a significant number of new enterprise deals signed in Q3. We expect data and enterprise solutions will continue to be an increasingly important contributor to revenue growth and overall profitability."
Twitter's data licensing business in particular has seen significant improvements recently, with Q3 numbers reflecting "our third consecutive quarter of accelerating year-over-year growth," according to CFO Ned Segal. That business line sells daily tweet data to analytics companies, news organizations, and other businesses that mine such information for actionable insights.
No More Russia Today, Sputnik Ads
During the third quarter, Twitter reported total revenues of $87 million from data licensing and other sources beyond advertising, a 22 percent increase over its earnings from those sources in the same quarter of 2016. With total quarterly revenues of $590 million, that means data licensing and related products accounted for about 15 percent of the company's earnings.
Twitter also reported that premium content partners in Q3 streamed more than 830 live events using the social media site. In addition, the company signed 30 new live-streaming partnership deals, including 10 with international partners, during that time.
In a separate announcement today, Twitter said it would immediately "off-board" site advertising from all accounts owned by the Russia-based media organizations Russia Today and Sputnik.
"This decision was based on the retrospective work we've been doing around the 2016 U.S. election and the U.S. intelligence community’s conclusion that both RT and Sputnik attempted to interfere with the election on behalf of the Russian government," Twitter said in a post on its public policy blog. "We did not come to this decision lightly, and are taking this step now as part of our ongoing commitment to help protect the integrity of the user experience on Twitter."
Twitter added that it plans to donate the $1.9 million it has earned from RT global advertising since 2011 to "support external research into the use of Twitter in civic engagement and elections, including use of malicious automation and misinformation, with an initial focus on elections and automation."
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