Ahead of Twitter's (TWTR) third-quarter earnings report, investors were looking for the company's turnaround to gain some meaningful traction -- and the social network delivered exactly that. Twitter's revenue decline moderated, users increased sequentially, and the company edged closer to GAAP profitability.

Here's an overview of the quarter's results:

Woman using a smartphone while sitting by her laptop and a coffee cup

Image source: Getty Images.

The raw numbers

Metric

Q3 2017

Q3 2016

Year-Over-Year Change

Revenue

$589.6 million

$615.9 million

(4.3%)

Non-GAAP EPS

$0.10

$0.09

$0.01

GAAP EPS

($0.03)

($0.15)

$0.12

Monthly active users

330 million

317 million

4.1%

Data source: Twitter quarterly shareholder letter.

While Twitter's revenue was down about 4% year over year, this marked an improvement from the company's 8% and 5% year-over-year revenue declines in the first and second quarters of 2017, respectively. Twitter had warned in its second-quarter shareholder letter that it did not expect its total revenue growth rate to improve in the second half of the year, due to approximately $75 million of headwinds associated "primarily with de-emphasized revenue products." So a sequential improvement in Twitter's year-over-year revenue growth rate in Q3 is encouraging.

Twitter's GAAP earnings per share improved from a loss of $0.15 in the year-ago quarter to a loss of $0.03 in Q3. In addition, the company's net margin improved from negative 17% in the year-ago quarter to negative 4% in Q3. Net margin also improved sequentially.

Non-GAAP EPS was a penny higher than in the year-ago quarter, increasing from $0.09 to $0.10.

Twitter's monthly active users for the quarter were 330 million, up 4% year over year. In addition, Twitter's monthly active users increased sequentially -- an encouraging trend after user growth stalled on a sequential basis in Q2.

Twitter's daily active users were also notably up 14% year over year, marking Twitter's fourth consecutive quarter of double-digit growth in the important metric.

Twitter's "data licensing and other" revenue was up 22% year over year. The segment now accounts for 15% of total revenue.

What management said

  • Twitter was happy with its record profitability for the third quarter. The result reflects "improved prioritization and disciplined execution across our strategic priorities," management said. 
  • Reflecting on Twitter's "improvements made toward a return to revenue growth," Twitter CFO Ned Segal noted, "Our momentum was driven by improved execution from our sales team, strength in video and direct response ad formats, as well as in our data business."
  • Management said growth in audience and engagement was driven by a wide range of factors, including organic growth, marketing, improved product relevance in email, push notifications, timeline improvements, an app redesign, and enhanced personalization in Twitter's Explore tab.
  • Management said its growth in data-licensing revenue was "driven by data and enterprise solutions, where year-over-year revenue growth accelerated for a third consecutive quarter."

Looking ahead

Based on Twitter's fourth-quarter guidance, profitability may be right around the corner. For Twitter's fourth quarter, management said it expects earnings before interest, taxes, and depreciation to be between $220 million and $240 million. The high end of this adjusted EBITDA range would likely make Twitter profitable on a GAAP basis, management noted.

Management also seems to be confident that revenue growth is on the horizon. While Twitter didn't provide a specific timeline for a return to revenue growth, it referenced its progress toward a "return to revenue growth" three times in its third-quarter shareholder letter.