NEW YORK (Reuters Breakingviews) - Twitter just gave investors a new glimpse of its endgame: to be a profitable niche. Jack Dorsey’s $24 billion social network enumerated its daily users for the first time on Thursday – 126 million and rising. It will stop reporting monthly users, which are falling. One conclusion is that Twitter is nearing maximum size, but doing a good job of retaining devotees.

Companies often report metrics that make them look good, and hide those ones that don’t. Twitter is now prepared to say how many users it can show ads to on a daily basis, a number that rose 9 percent from a year ago in the most recent quarter. This figure pales beside Facebook, which has 1.5 billion daily users. Twitter’s odd mix of conflict, humor and topical content may at times resemble an inescapable circle of Dante’s "Inferno," but its daily aficionados are producing steadily improving financial results. Sales grew 24 percent to $909 million in the last reported three-month period, and Twitter earned $255 million.

Yet it now looks like the company’s future is constrained. Monthly users fell for the third quarter in a row to 321 million. That suggests that the pool from which loyal users are drawn over time is shrinking. People usually try digital services, and become gradually more hooked. That’s reflected too in the fact that the newly disclosed daily-user number, while growing, is doing so more slowly than it was. Twitter is an acquired taste, but at least it’s one that sticks.

CONTEXT NEWS

- Twitter said on Feb. 7 that revenue for the fourth quarter was $909 million, an increase of 24 percent from the same period last year. The company earned $255 million, or 33 cents per share, compared to $91 million, or 12 cents per share.

- The company said in the fourth quarter it had 126 million monetizable daily active users, which it defines as customers who log into the service daily, and to whom the company can serve ads. That figure grew 9 percent from the same quarter last year.

- The company’s monthly active users declined for the third quarter in a row to 321 million, a decline of 9 percent from a year ago. Twitter said it will no longer report this figure.

(Editing by John Foley and Martin Langfield)

(( robert.cyran@thomsonreuters.com ; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net ))

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