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Twitter records its first annual profit, but it is losing millions of users

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Twitter turned its first annual profit in 2018, but the company has a problem it doesn't want to talk about.The company said Thursday it had 321 milli...

Posted: Feb. 7, 2019 10:47 AM

Twitter turned its first annual profit in 2018, but the company has a problem it doesn't want to talk about.

The company said Thursday it had 321 million monthly active users in the final three months of last year, down five million from the prior quarter and nine million from the same period a year ago.

That marked the third consecutive quarter of user declines. And soon, the company will stop disclosing the figure entirely.

In its earnings report, Twitter said it plans to stop disclosing the monthly active user number after the first quarter of this year in favor of a newly introduced figure on "monetizable" daily active users.

Snapchat and Facebook also disclose daily active user numbers, though Twitter says its own figure is "not comparable" as it only includes users who are seeing ads.

Twitter said it had 126 million daily users, up from 124 million in the prior quarter and 115 million a year ago, suggesting modest growth in engagement on the platform.

Shares of Twitter fell as much as 8% in pre-market trading Thursday following the earnings report.

Twitter said the declining monthly active user trend was because of a mix of factors, including efforts to improve "the health of the service" as well as changes made to comply with sweeping data privacy protections in Europe.

In the last year, Twitter has focused on safeguarding the service amid scrutiny of its role in spreading fake news and election meddling as well as the broader data privacy backlash hitting the tech industry.

On a conference call with analysts Thursday, CEO Jack Dorsey reiterated his belief that Twitter's ongoing health initiatives will be a "long-term growth vector" for the company.

Even as Twitter's overall user base declines, the company is finding ways to make more money out of it. The company made $1.2 billion in profit for the year, its first profitable year since going public in 2013.

It's a hard won milestone for the company. In recent years, Twitter went through multiple rounds of layoffs and eliminated projects like Vine in an effort to cut costs and prove its viability as an independent company.

At the same time, Twitter has seen renewed growth in its advertising business driven in large part by traction for video advertising. Twitter's revenue for the holiday quarter jumped 24% to $909 million.

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