As the social media site brought out ad targeting changes to help marketers reach potential customers, Twitter reported higher revenue growth than Wall Street had predicted Friday night.
After the bell, Twitter's stock surged 5% to $73 in after-hours trading.
Since the beginning of the year, Twitter has been rushing to launch new products in areas such as audio-only chat rooms and newsletter publishing in order to reverse years of income stagnation and meet its aim of doubling annual revenue by 2023.
Advertising revenue came in at $1.05 billion, up 87 percent from the previous quarter and exceeding Wall Street expectations of $909.9 million.
Twitter has been working to improve the effectiveness of its adverts, adding 2,500 new topic categories to assist users to locate the material that they are interested in during the quarter.
All of this offers Twitter more ad targeting data, according to a conference call with analysts.
During the call, Twitter's chief financial officer, Ned Segal, stated, "We get a great signal about what people are most interested in, where they are, or the places they care about,"
These enhancements, combined with increased demand from advertisers looking to reach customers as countries reopen following pandemic restrictions, boosted ad income, according to Twitter.
The strong results from Twitter and its tech rival Snap, which reported a 116 percent increase in quarterly revenue, show "that the overall digital ad market is on fire right now, with the reopening further strengthening advertisers' budgets," according to Ygal Arounian, a research analyst at Wedbush Securities.
For the second quarter ending June 30, Twitter reported 206 million monetizable daily active users (mDAU), the term for users who are fed ads.
According to Refinitiv's IBES statistics, this matched analyst forecasts of 205.9 million users.
Twitter's US user base fell by one million in three months due to a lighter news cycle in the US, according to the company, with total users worldwide meeting Wall Street objectives.
Total revenue, which includes revenue from data licensing, increased 74% year over year to $1.19 billion, exceeding analyst expectations of $1.07 billion.
As it invests in its engineering and product teams, the San Francisco-based business now expects headcount and total costs and expenses to expand at least 30% for the whole year, up from its previous projection of 25%.
During the results call, Twitter CEO Jack Dorsey, a longtime proponent of bitcoin, said the digital currency "is a big part" of the company's future and may be used for retail transactions or to tip famous content creators.
Twitter also stated that revenue in the second quarter was lower than projected due to new privacy rules adopted by Apple Inc in April, which are aimed to prevent digital advertisers from following iPhone users without their agreement.
According to Arounian, the entire impact of Apple's modifications has yet to be seen, and some concerns remain.
Twitter expects overall revenue of $1.22 billion to $1.3 billion in the third quarter, which is in line with or slightly ahead of consensus analyst projections of $1.17 billion.
Twitter earned 20 cents per share on an adjusted basis in the second quarter, well exceeding the consensus forecast of seven cents.