Twitter shares surged more than 17 percent Thursday after the company reported higher-than-expected earnings and revenue for the third quarter. It closed up 15.47 percent.
"We're achieving meaningful progress in our efforts to make Twitter a healthier and valuable everyday service," CEO Jack Dorsey said in the earnings release. "We're doing a better job detecting and removing spammy and suspicious accounts at sign-up. We're also continuing to introduce improvements that make it easier for people to follow events, topics and interests on Twitter, like adding support for U.S. TV shows in our new event infrastructure. This quarter's strong results prove we can prioritize the long-term health of Twitter while growing the number of people who participate in public conversation."
Twitter revenue went up 29 percent year over year. Advertising revenue in particular reached $650 million, also a yearly increase of 29 percent.
However, it was the second quarter in a row that Twitter missed monthly active user estimates.The company purged "locked-accounts" in an effort to get rid of bots and fake accounts on the platform in July. It had warned in last quarter's earnings report that these actions could have a negative effect on MAUs. It also said the decline could be "impacted by a number of factors including: GDPR, decisions we have made to prioritize the health of the platform and not move to paid SMS carrier relationships in certain markets, as well as a product change that reduced automated usage and a technical issue that temporarily reduced the number of notifications sent. " Monthly active users were down about 1 percent from the year-earlier quarter.
While MAUs are declining, Twitter sees potential to grow its daily active user rate (DAUs). Twitter daily active users (DAUs) went up by 9 percent this past quarter, marking eight quarters of consecutive growth for the metric. Twitter chief financial officer Ned Segel told CNBC less than half of MAUs access the site daily. Every day 2 million or more people come to Twitter that haven't been on the service at least a month, he noted. One -third of them have never been on the platform before.
"There's lots of opportunity to convert them into daily users as we continue to improve all kinds of things around the service, from the notifications you get around Twitter to continuing to improve the timeline," Segel said. "Our onboarding process can get much better as well. We just need to make it easier for people to find the things that people are looking for on Twitter."
In September, Dorsey testified alongside Facebook COO Sheryl Sandberg before the Senate Intelligence Committee regarding foreign meddling during the 2016 U.S. election. The company has also faced claims it participates in "shadow banning," or making sure certain accounts don't show up in search results. Twitter had strongly denied those reports. Dorsey did admit the company contributes to "filter bubbles," where people only see opinions from one perspective, and vowed to fix that issue.
The company has recently purged a network of bots and other abusive accounts on its platform, including a suspected bot pro-Saudi government network and more accounts affiliated with Infowars founder and conspiracy theorist Alex Jones. Twitter also said it found more than 10 million posts that may have been backed by the Iranian and Russian governments, which it had previously said were sources of spreading misinformation.