Twitter Reports Profitable Quarter for the First Time

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Category: Business

Listening

Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. stark / stɑrk / (adj) – clear or obvious
    Example:

    I can see the stark contrast between the company’s performance this year and last year.


  2. microblogging / ˈmaɪ kroʊˌblɔ gɪŋ, ‐ˌblɒg ɪŋ / (n) – a method of posting very short social media entries
    Example:

    I prefer microblogging over traditional blogging because I dislike posting heavy content.


  3. layoff / ˈleɪˌɔf, -ˌɒf / (n) – the act of ending someone’s employment in a company
    Example:

    I need to find a new job soon; I was not prepared for the layoff.


  4. on a high note / ɒn ə haɪ noʊt / (idiom) – in a positive way
    Example:

    I ended my day on a high note because I learned that I got promoted.


  5. revenue / ˈrɛv ənˌyu, -əˌnu / (n) – a company’s income
    Example:

    The company’s annual revenue exceeded $1 billion.


Article

Read the text below.

Social networking service Twitter reported its first-ever profitable quarter in its 12-year history.


In the final quarter (Q4) of 2017, the company reportedly made $91 million—a stark contrast to the $167 million it reportedly lost in the final quarter of 2016. This turnaround has attracted investors to buy shares in the company, thus driving up the company’s stock price by over 25%.


The popular microblogging site did not make its gains by expanding its business. Instead, it used cost-cutting measures in three areas: stock-based compensation, research and development (R&D), and sales and marketing.


The company disclosed that in Q4 2017, it spent only $102 million on stock-based compensation—an arrangement wherein a company uses its shares to reward employees—compared to the $138 million it spent in Q4 2016. R&D-related expenses were also reduced to $134 million from $202 million. Lastly, Twitter cut back on its sales and marketing expenditures from $233 million to $163.5 million.


In addition, the layoffs that involved around 9% of Twitter’s employees in the latter part of 2016 are also believed to be a factor behind the profit increase in 2017.


Twitter ended 2017 on a high note not only because of its first profitable quarter but also because of an increase in its revenue. The company’s actual earnings in Q4 2017 amounted to $732 million, an increase from Q4 2016’s $717 million. In addition, the company’s revenue from ads alone in Q4 2017 reached $593 million, which is a 30% increase from the preceding quarter. The company said that this boost in revenue can be attributed to higher user activity and improved sales strategy.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

• Do you think cost cutting is the best way for companies to become profitable? Why or why not?
• What other strategies do you think Twitter can use to further increase its profit?

Discussion B

• In your opinion, is profit the only indicator of a business’ success? Explain your answer.
• How can companies maintain a healthy profit while paying attention to other areas of its business (e.g. employee welfare, customer service)?