Twitter on Wednesday beat analysts' expectations for its first-quarter earnings and revenue before the opening bell.
The San Francisco-based social media company, led by CEO Jack Dorsey, reported earnings of 11 cents per share on revenue of $548 million, down 8 percent from $595 million in the year-ago period. Both figures exceeded Wall Street consensus estimates.
Analysts expected Twitter, the 140-character messaging service often used by U.S. President Donald Trump, to report earnings of 1 cent per share, compared with 15 cents per share in the first quarter of 2016, on revenue of $511.9 million.
Despite the company's quarterly revenue loss, Twitter saw its shares rise nearly 9 percent to $15.94 in early pre-market trading on the New York Stock Exchange on the strength of its earnings beat.
User growth as well as accompanying advertising revenue - which dipped 8 percent to $474 million year-over-year - were on the minds of investors Wednesday morning ahead of the company's earnings conference call. Twitter said its monthly active user count, a key metric for any social media company, rose by 9 million to 328 million, exceeding projections of a gain of 2 million.
Daily active usage grew 14 percent year-over-year, but Twitter didn't reveal a daily active user number. Twitter COO Anthony Noto during a morning analyst call said the accelerated audience growth was due to the workings of Twitter's timeline algorithm launched a year ago, and users continuing to turn to the social media app to follow breaking news around politics and world events.
"We want to be the first place people hear about things," Dorsey added in his own comments to analysts. The Twitter boss also talked about bringing third-party audience measurement to the platform, and the continuing importance of live video streaming in wooing advertisers.
The company also told analysts it was taking measures to shut down "fake accounts" and continuing efforts to reduce "abuse" of users on the platform. Dorsey told analysts that less than 5 percent of Twitter accounts are "spam related" when talking about bots on the platform.
On the revenue front, Twitter saw U.S. revenue fall 13 percent to $341 million, while international revenue rose 2 percent to $208 million. For the current second quarter, Twitter forecast financials below analyst estimates.
Even so, the first-quarter earnings surprise drew cheers from investors on Wednesday as shares in Twitter were trading up 10 percent to $16.17 in mid-day trading.
The social messaging app has been trying to improve its user experience and keep people more engaged, a challenge now that the dramatic U.S. election campaign is over. "We're proud to report accelerating growth in daily active usage for the fourth consecutive quarter, up 14 percent year-over-year," Dorsey said ahead of the analyst call.
At the same time, the Twitter boss said the company continued to face "revenue headwinds." Analysts were lukewarm on Twitter's prospects heading into the quarterly results, underlining significant revenue roadblocks.
Wedbush analyst Michael Pachter forecast anemic user growth offset by hard-won engagement gains. "The ubiquitous presence of tweets across news headlines further dilutes the need for new users to actually join the site, while digital ad budgets remain concentrated among larger peers," Pachter wrote in a recent note.
Analyst Brian Wieser at Pivotal Research Group agreed that Twitter remained a key player in the social media field, but in his own investors' note cautioned "benefits don't look like they will be realized by investors any time soon."
April 26, 9:00 a.m. Updated with comments Twitter execs made during analysts' call.