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Why Twitter's User Growth Is So Impressive

By Daniel Sparks – Updated Apr 24, 2019 at 9:34AM

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The social network's growth in monetizable daily active users highlights its momentum.

Twitter's (TWTR) just-released first-quarter results included a lot to be excited about. The social network's top and bottom lines easily beat analysts' expectations, with revenue increasing 18% year over year and non-GAAP earnings per share soaring 131% over the same time frame. The quarter was driven by strength in the U.S. and appealing video ad products. No wonder Twitter shares surged Tuesday.

But one metric revealed during the quarter is worth a closer look. The company saw its growth in monetizable daily active users (mDAU) accelerate.

A group of people looking at their smartphones

Image source: Getty Images.

Daily active users jump

Twitter said its mDAU increased 11% year over year in its first quarter -- an acceleration from 9% growth in the key metric in Q4. This put total mDAU at 134 million. Furthermore, this growth was on top of 10% growth in the year-ago quarter.

Growth in the metric was impressive on a sequential basis, too. Twitter's first-quarter mDAU increased 6% sequentially -- a significant increase from the 1% sequential growth Twitter saw in its fourth quarter of 2018.

Better than peers

Twitter's growth in daily active users looks particularly good when compared to that of its peers.

Facebook's (META 1.23%) daily active users were up 9% year over year and 2% sequentially in its most recently reported quarter. (We'll find out how daily active users performed in Q1 when Facebook reports earnings after market close on Wednesday.)

Sure, Facebook is growing on a much larger base, but Twitter is also performing well compared to Snap (SNAP 1.07%). Snapchat's daily active users fell in its first quarter, declining from 191 million in the year-ago quarter to 190 million. Sequentially, daily active users were up a paltry 2%. 

Quality growth

Making the social network's growth even more notable, it comes as the company is actively improving the health of its platform, even if it means removing spammy and suspicious accounts from its service. With platform health currently Twitter's top priority, any growth in its important daily active user metric likely represents quality accounts.

On a similar note, Twitter says its daily active user metric goes a step beyond its peers in how it qualifies its users, making reported growth valuable to investors.

"Monetizable DAU are Twitter users who log in and access Twitter on any given day through or our Twitter applications that are able to show ads," management said about the new metric in its fourth-quarter shareholder letter. 

The letter continued:

Our mDAU are not comparable to current disclosures from other companies, many of whom share a more expansive metric that includes people who are not seeing ads. We considered changing our disclosure to be comparable to other companies, but our goal was not to disclose the largest daily active user number we could. We want to align our external stakeholders around one metric that reflects our goal of delivering value to people on Twitter every day and monetizing that usage.

With revenue, earnings per share, and user growth on a roll, Twitter investors should be pleased with the company's progress -- especially since it's coming hand and hand with improvements in the overall health and quality of the service.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. The Motley Fool has a disclosure policy.

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