Twitter Admits It Has Overstated User Metrics for 3 Years

Are things looking up for Twitter? CEO Jack Dorsey thinks so.                  James Martin  CNET

Are things looking up for Twitter? CEO Jack Dorsey thinks so. James Martin CNET

Naturally, Twitter was more inclined to emphasize the gains posted in its latest quarter, which included a 14 per cent year-over-year increase in daily active users and a quarterly net loss of $21 million (all figures USD), a significant improvement over the company's $103 million quarterly loss during the same period last year.

Shares of the social platform have rocketed up almost 15 percent in early morning trading on Thursday, after the company hinted at imminent profits in its third quarter earnings report - despite announcing it had been miscalculating its MAUs by millions. Digits users accessed Twitter through third-party apps-they should not have been included as part of the monthly active user count, but they were by mistake.

Twitter claims that the error in counting their monthly active users did not affect the count of their daily users, which they have reported as growing by 14 percent.

Another reason Wall Street is happy? "These third-party applications used Digits, a software development kit of our now-divested Fabric platform, that allowed third-party applications to send authentication messages via SMS through our systems, which did not relate to activity on the Twitter platform", the statement read. This comes after admitting it had overstated - and has revised - its user base going back three years, as it accidentally counted users of a third-party app as its own.

"We're pleased with the improvements made toward a return to revenue growth this quarter", Twitter's CFO Ned Segal said in a statement. As a result, it lowered previously reported user numbers by 1 million for the fourth quarter of 2016 and by 2 million for the first two quarters of 2017.

Total advertising revenue decreased eight percent compared to the same time a year ago to $503 million, but revenue from data licensing and other sources increased 22 percent to $87 million. The fact that the platform is President Trump's favored communications tool is also likely to have raised Twitter's profile among potential users. Twitter's current user base sits at approximately 330 million. That will see the burgeoning company report a positive income for the first time, and may prove to investors and the wider world that Jack Dorsey's plan to revive Twitter is worth persisting with.

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