(Reuters) - Shares of Twitter Inc soared on Wednesday after the microblogging service reported better-than-expected user growth in the first quarter, although its revenue fell for the first time since the company's market debut.
The surprising acceleration followed several quarters of stalled user growth that raised questions about Chief Executive Jack Dorsey's leadership and speculation the social media platform may be bought by a bigger company.
Twitter reported yearly growth of 6 percent in its monthly active users, a key performance indicator for social networking services typically calculated by taking the number of users who have logged in and logged out during the 30-day period, to 328 million.
On a quarterly basis, Twitter added 9 million monthly users.
Dorsey said changes to Twitter's timeline function in the past year to list content by themes instead of in chronological order helped boost user engagement.
"We want to get to a place where we're the first place they hear of something," he said on a conference call with analysts.
Analysts on average had expected 321.3 million monthly active users, according to market research firm FactSet StreetAccount.
Twitter's daily active users also rose 14 percent in the first quarter from a year ago. Twitter does not disclose the number of total daily active users.
Twitter's revenue, however, fell 7.8 percent to $548.3 million in the first quarter, its first drop since its initial public offering.
Net loss narrowed to $61.6 million, or 9 cents per share, in the quarter ended March 31, from $79.7 million, or 12 cents per share, a year earlier. (bit.ly/2phNNZH)
Excluding items, the company earned 11 cents per share, beating the estimate of 1 cent per share.
Twitter's advertising revenue fell 11 percent to $474 million in the quarter, but came in above the average analyst estimate of $442.7 million, according to market research firm FactSet StreetAccount.
"I think that (U.S. President Donald) Trump drives a lot of awareness about Twitter among people who otherwise wouldn't be paying attention," said Michael Pachter, managing director at Wedbush Securities.
"But again, one quarter isn’t a trend, so let’s see if it’s sustainable."
Livestreaming, one of Twitter's biggest pushes since last year, also jumped in the first quarter, with more than 800 hours of live video across more than 450 events.
Twitter said the content reached 45 million unique users, up 31 percent from the fourth quarter which was the first full quarter of live content to be streamed on the social media platform.
Of those hours, 51 percent were sports, 35 percent were news and politics, and 14 percent were entertainment, Twitter said.
Twitter shares were up 11 percent at $16.23.
Reporting by Angela Moon in New York and Rishika Sadam in Bengaluru; Editing by Saumyadeb Chakrabarty and Meredith Mazzilli