Twitter's growing MAU base. Source: Twitter.

Yesterday, Twitter reported strong second-quarter results, sending shares higher today by as much as 24%. Social media peers Facebook and LinkedIn are also enjoying gains, as investors bid up the sector.

Twitter posted the strongest sequential user-growth metrics in five quarters, and now has 271 million monthly active users, or MAUs. That includes 211 million mobile MAUs, or 78% of Twitter's total MAU base. User engagement also continues to rise, with timeline views reaching 173 billion during the quarter. The company is also improving its ability to monetize that engagement, generating $1.60 in advertising revenue per 1,000 timeline views.

A beat...
Total revenue came in at $312.2 million, jumping an impressive 124% from a year ago. Growth in the core advertising business drove that increase, with ad revenue soaring 129%, to $277 million. Mobile advertising now comprises 81% of ad revenue, which is an even higher proportion than Facebook. The smaller data licensing business continues to grow nicely, as well, rising 90%, to $35 million. A third of revenue came from abroad.

On a non-GAAP basis, Twitter generated $14.6 million in net income, or $0.02 per share. On a GAAP basis, the company lost $144.6 million, or $0.24 per share. Stock-based compensation during the quarter totaled $158.4 million, which is the bulk of the difference between Twitter's GAAP and non-GAAP bottom lines.

Both top and bottom lines registered a beat compared to Wall Street expectations. Analysts were expecting Twitter to report $283 million in revenue, and lose an adjusted $0.01 per share. The high-end of Twitter's own guidance was $280 million, so the company easily bested its internal forecast, as well.

... and raise
It gets better. Twitter also raised its full-year 2014 guidance, giving investors even more confidence in the business. Revenue for 2014 is now expected in the range of $1.31 billion to $1.33 billion, up from a prior range of $1.2 billion to $1.25 billion.

The higher expected sales should also translate into higher adjusted EBITDA. Twitter's revised outlook calls for adjusted EBITDA of $210 million to $230 million, up from the previous outlook of $180 million to $205 million.

Guidance for capital expenditures and stock-based compensation for the year are unchanged.

Twitter is bigger than you think
In recent quarters, investors have been fretting over Twitter's slowing user growth. The market seems impressed that user growth appears to be reaccelerating. Furthermore, CEO Dick Costolo also pointed out on the conference call that Twitter's total audience is actually much larger than its MAU figures would suggest.

"Hundreds of millions of additional unique visitors" visit the site every month without logging in. When including these visitors, Twitter's total audience is approximately two-to-three times larger. Costolo believes that this aspect puts Twitter among the "top ten largest digitally connected audiences in the world."

Costolo wants to cater to these unique visitors, with the hopes that improving the experience will bring them back, and potentially register if they haven't already. For example, Twitter improved profile pages last quarter, making them more engaging and aesthetically pleasing.

All aboard
Wall Street analysts are now scrambling to boost price targets to accommodate the latest figures. While some remain overall neutral, today's pop does necessitate some valuation adjustments.

The broader social-media sector is trading higher today, thanks to Twitter's results. Facebook's ad business is very similar to Twitter's, while LinkedIn is now growing its own professional marketing business.

Evan Niu, CFA owns shares of Facebook and LinkedIn. Evan Niu, CFA has the following options: long January 2016 $150 calls on LinkedIn, short January 2016 $200 calls on LinkedIn, long January 2016 $125 puts on LinkedIn, short January 2016 $140 puts on LinkedIn, short January 2015 $60 puts on Facebook, and long January 2015 $35 puts on Facebook. The Motley Fool recommends Facebook, LinkedIn, and Twitter. The Motley Fool owns shares of Facebook and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.