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Is Twitter Still Profitable?

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Profits in focus

Twitter (TWTR) is set to report its results for the fourth quarter of 2018 on February 7. Twitter was posting losses until little over a year ago, so its bottom line will likely be in the spotlight.

Twitter made its first-ever quarterly profit in the fourth quarter of 2017, delivering a profit of $91.1 million in the period. The company has been posting profits ever since. It delivered a profit of $106 million in the third quarter of 2018, up from $100 million in the second quarter. Snap (SNAP) suffered a $325 million loss in the third quarter. Alphabet (GOOGL), Facebook (FB), and Yelp (YELP) posted profits of $9.2 billion, $5.1 billion, and $15 million, respectively, in the same period.

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Twitter’s net margin

In Twitter’s upcoming earnings report, investors will be looking to see not only whether it’s still profitable but also whether its profitability is improving. Its results will provide the first year-over-year comparison of its profitability.

Twitter’s net margin was 12% in the fourth quarter of 2017. This margin contracted to 9.0% in the first quarter of 2018 but expanded to 14% in the second quarter and remained steady in the third.

Although Facebook and Alphabet make much higher profits than Twitter, their profits have been coming on shrinking operating margins amid soaring costs in recent quarters. For instance, Facebook’s operating margin in the third quarter contracted to 42% from 50% a year earlier.

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