Twitter beats on revenue and earnings but confirms layoffs

Twitter beat analysts' expectations for both revenue and earnings per share in its third quarter, but the company confirmed it plans to lay off 9% of its workforce as it looks to cut costs and work towards profitability in 2017.

The company posted an 8% lift in revenue to $616 million year-over-year and adjusted profit of $0.13 per share in the three months to September 30.

The platform's monthly active users grew 3% year-on-year to 317 million — up 4 million from last quarter.

But despite these gains, Twitter continues to be a loss-making company. It posted a GAAP net loss of $103 million, or $0.15 per share.

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Jack Dorsey, Twitter CEO, said in the earnings release: "Our strategy is directly driving growth in audience and engagement, with acceleration in year-over-year growth for daily active usage, tweet impressions, and time spent for the second consecutive quarter."

He continued: "We see a significant opportunity to increase growth as we continue to improve the core service. We have a clear plan, and we're making the necessary changes to ensure Twitter is positioned for long-term growth. The key drivers of future revenue growth are trending positive, and we remain confident in Twitter's future."

Twitter confirmed previous reports that the company is looking to slim down its workforce again — a year after last initiated layoffs, eliminating 8% of staff. The headcount reduction this time will affect more than 300 staff (or 9% of its global workforce) within the company's sales, partnerships, and marketing teams. The sales division, for example, will be reorganized from three teams down to two.

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The company expects to incur cash expenditures of between $10 million to $20 million as a result of the restructure, plus a $5 million to $10 million hit in non-cash expenditures, related to stock-based compensation.

Here are the key numbers from Twitter's Q3 earnings:

Q3 revenue: $616 million, up 8% year-over-year — versus $605.84 million expected by analysts.

Q3 EPS (adjusted): $0.13 — versus $0.09 expected by analysts.

Q4 revenue guidance: Twitter opted not to offer Q4 revenue guidance, owing to the restructure — analysts estimated Q4 revenue of $763.47 million (although this was ahead of the reorganization announcement).

Q3 monthly active users: 317 million, up 3% year-on-year.

Q3 daily active users: Up 7% year-on-year

Twitter announced its earnings at the unusual time of 4 a.m Pacific Time before the market opened. Usually, tech firms based on the West Coast post their results after the market close.

The company said in press release earlier this week the rescheduling was "in response to analyst requests, to avoid overlapping with several other earnings announcements in the Internet sector scheduled for Thursday afternoon." Google and Amazon will report their earnings later on Thursday.

The company did not make any mention of a much-rumored sale. Dorsey and Twitter's other executives will no doubt be asked questions about that topic on the earnings call, which is scheduled for 5 a.m. PST.

Big name suitors that have reportedly taken a look at buying Twitter in recent weeks included Disney, Softbank, and Salesforce. The latter company's CEO, Marc Benioff, explained he walked away from a deal owing to Twitter's price, work culture, and the amount of abuse on the site.

More to follow ...

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