SAN FRANCISCO _ Twitter on Wednesday reported its first revenue decline since going public in 2013, a sign the tech firm still faces an uphill battle to attract advertisers even as it lures in more users.
Twitter executives, pointing to the company's bump in users, said it's making progress.
"This past quarter is giving us a lot of confidence in our focus and execution and excitement for our path ahead," Twitter CEO Jack Dorsey said in a conference call.
While Twitter doesn't expect revenue growth to ramp up anytime soon, the tech firm has been talking to advertisers about the company's user growth and better ad pricing, Dorsey said. Focusing on the right areas should "result in positive revenue growth over the long term," he said.
Anthony Noto, Twitter's chief operating officer, said the company isn't seeing an improvement in revenue growth partly because it has discontinued or isn't investing in certain ad products such as those from TellApart, a startup it purchased in 2015.
"There are products that we invested in 2016 that we thought would meaningfully contribute in 2017 that we pulled investment from because we don't think they're going to be as successful as we had hoped and we would rather put those resources against higher probability bets," he said.
From January to March, the tech firm's sales dropped 8 percent, to $548 million, a performance that did beat the $509 million in revenue analysts surveyed by Bloomberg expected. Twitter saw a decline in its ad dollars and U.S. revenue in the first quarter.
Twitter posted a loss of 9 cents per share in the first quarter, which was better than the expected loss of 20 cents per share. Excluding certain one-time expenses, the company earned 11 cents per share, above the 1 cents per share projected.
Investors, though, showed some confidence in Twitter's ability to turn its business around. The company's stock jumped by more than 10 percent in pre-market trading to $16.27 per share after Twitter released its earnings.
Twitter, which has been cracking down on online abuse and striking deals to broadcast events live, has been making progress in becoming more profitable this year. The company reported a net loss of $62 million in the first quarter, a decrease of 23 percent compared to the same period last year.
Twitter is also seeing more people returning to use the site or log on for the first time. The company said tweaks it made to its timeline, notifications and other features helped fuel user growth along with marketing and seasonality.
The company grew its monthly active users to 328 million in the first quarter, adding 9 million monthly active users compared to the previous quarter. The number of people who use Twitter daily also grew by 14 percent, but the tech firm did not provide daily active user numbers.
The tech firm reaped the benefits of new and "resurrected" users beginning to follow more news and political accounts, especially in the United States, Noto said.
"We believe Twitter is the best at showing what's happening in the world and what's being talked about and having the political leaders of the world as well as news agencies participating in driving that is an important element to reinforcing what we're the best at. That said, our growth is broad based," he said.
Still, the tech firm is facing more competition from Facebook, Snap and other social media companies for ad dollars this year. It's also grappled with layoffs, a string of executive departures and takeover bids that didn't come to fruition.
"Twitter monetizes its user base at about half the rate of Facebook and we are not sure it can close the gap entirely," wrote Mark Mahaney, an analyst with RBC Capital Markets, in a note before Wednesday's earnings. "Further, its interest from advertisers appears to be waning."
