What happened

Shares of Twitter (NYSE:TWTR) jumped 19.5% in October, according to data from S&P Global Market Intelligence, after the budding social media giant announced encouraging progress in its turnaround.

More specifically, Twitter revealed that its third-quarter 2017 revenue fell 4.3% year over year, to $589.6 million, which translated to a GAAP net loss of $0.03 per share, narrowed significantly from a net loss of $0.15 per share in the same year-ago period. Adjusted EBITDA climbed 14.4% to $207 million. And adjusted for items like stock-based compensation and restructuring expenses, Twitter's net income was $77.8 million, or $0.10 per share, up from $0.09 per share in the same year-ago period.

For perspective, both the top and bottom lines arrived comfortably ahead of analysts' consensus estimates at the time, which called for adjusted earnings of $0.06 per share on revenue of $586.7 million.

Wooden Twitter bird mascot surrounded by green bushes


So what

Twitter reminded investors that it still expects to endure a total of $75 million of headwinds in the second half of the year, largely related to its decision earlier this year to deemphasize certain products to foster its most promising revenue streams.

But arguably most encouraging was that Twitter saw daily active users climb 14% year over year, marking its fourth straight quarter of double-digit percent growth and demonstrating the increasing stickiness of the platform. Monthly active users also grew 4%, to 330 million.

Twitter CFO Ned Segal credited its strength to improved sales execution, as well as sustained momentum in video, direct-response ads, and Twitter's data business.

Now what

Twitter also told investors that adjusted EBITDA in the fourth quarter should arrive at between $220 million and $240 million. And if it manages to reach the high end of that range, Twitter believes it will achieve its first-ever period of GAAP profitability.

In short, Twitter's numbers might not have looked encouraging at first glance. But with shares still trading more than 70% below their post-IPO high set in early 2014, the market is rightly excited for the prospect of the social media leader finding sustained, profitable growth. If it can manage to maintain this momentum in the coming quarters, Twitter stock could continue to handsomely reward patient investors in the process.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter. The Motley Fool has a disclosure policy.