Twitter (NYSE:TWTR) just put the wrap on an impressive 2018. The company's fourth quarter represented yet another period of strong, double-digit revenue growth and meaningful profitability. In addition, the company continued its efforts to improve the health of its platform, identifying and removing millions of spammy and suspicious accounts.

Making the company's fourth-quarter update particularly interesting, management announced it would soon stop reporting monthly active users, and it introduced a new metric that gives investors a better understanding of the company's daily active users. Here's an overview of the quarter's financial results, as well as a look at the company's reporting change.

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Image source: Getty Images.

Twitter's fourth-quarter results: The raw numbers

Metric

Q4 2018

Q4 2017

Year-Over-Year Change

Revenue

$909 million

$732 million

24%

Non-GAAP EPS

$0.31

$0.19

63%

Monthly active users

321 million

330 million

(3%)

Data source: Twitter fourth-quarter earnings release.

What happened with Twitter this quarter?

  • Revenue and non-GAAP earnings per share increased 24% and 63%, respectively.
  • This was Twitter's fifth consecutive quarter of GAAP profitability.
  • GAAP net income was $255 million, up from $91 million in the year-ago quarter.
  • Monthly active users were 321 million, down from 330 million in the year-ago quarter and 326 million in the third quarter of 2018.
  • Twitter's data licensing revenue increased 35% year over year to $117 million.

What management had to say

Twitter's 24% revenue growth, which is a slight deceleration from 29% revenue growth in Q3, reflects "better-than-expected performance across most products and geographies," management said in the company's fourth-quarter shareholder letter.

Management also pointed to the company's progress with profitability in 2018, noting that its net margin (net income as a percentage of revenue) when excluding the benefit of a deferred tax asset valuation improved from negative 4% in 2017 to 12% in 2018.

Looking ahead

In an effort to better align the metrics Twitter discloses to investors with the ones management uses to make strategic decisions and to evaluate its business, the company said it will now share more insight into its daily active users while discontinuing its monthly active user metric after the first quarter of 2019. The company will now disclose monetizable daily active users, previously referred to simply as daily active users, in absolute numbers for the first time. In addition, Twitter will continue sharing the year-over-year growth rates for the metric.

"Twitter defines monetizable daily active usage or users (mDAU) as Twitter users who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com or Twitter applications that are able to show ads," Twitter said in its fourth-quarter shareholder letter.

Monetizable daily active users increased 9% year over year in Q4 to 126 million.

For its first quarter of 2019, management said it expects revenue of $715 million to $775 million. The midpoint of this guidance range implies 12% year-over-year revenue growth. Management also forecast a 20% year-over-year increase in full-year 2019 GAAP and cash operating expenses to "support our existing priorities of health, conversation, revenue product and sales, and platform."

Daniel Sparks 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.