By Sheila Dang

(Reuters) -Twitter Inc on Thursday reported higher revenue growth than Wall Street had expected, as the social media platform rolled out ad targeting improvements and said changes by Apple to keep iPhone user data private had hit ad revenue less than anticipated.

Shares of Twitter jumped 7% to $75 in trading after the bell.

Since the start of the year, Twitter has raced to introduce products in new areas like audio-only chat rooms and newsletter publishing in an effort to turn around years of business stagnation and reach its goal of doubling annual revenue by 2023.

Advertising revenue totaled $1.05 billion, up 87% from the year-ago quarter, and beat Wall Street estimates of $909.9 million.

Twitter has worked to improve the effectiveness of its ads, which have traditionally lagged larger rivals like Facebook, which holds vast troves of data on users.

Those improvements, along with higher demand from advertisers seeking to reach consumers as countries reopen from pandemic restrictions, helped propel ad revenue, Twitter said.

“As we enter the second half of 2021, we are shipping more, learning faster, and hiring remarkable talent,” Twitter Chief Executive Jack Dorsey said in a statement on Thursday.

Twitter reported 206 million monetizable daily active users (mDAU), its term for users who are served advertising, for the second quarter ended June 30, matching analyst targets of 205.9 million users, according to IBES data from Refinitiv.

The San Francisco-based company now expects headcount and total costs and expenses to grow at least 30% for the full year, up from its previous guidance of 25%, as the company invests in its engineering and product teams.

Its U.S. user base declined by 1 million over three months from the previous quarter due to a lighter news cycle in the United States, Twitter said, with total users worldwide in line with Wall Street targets.

‘ON FIRE’

Total revenue, which also includes revenue the company earns from data licensing, rose 74% year-over-year to $1.19 billion, beating analyst estimates of $1.07 billion.

Also on Thursday, Snap Inc reported its quarterly revenue grew 116% as advertisers flocked to its messaging app Snapchat to reach young consumers.

Twitter said new privacy controls that Apple Inc implemented in April, which are designed to limit digital advertisers from tracking iPhone users without their consent, had a lower-than-expected impact on revenue in the second quarter.

In the case of Snap, the company said it saw a higher percentage of users allow the app to track them for advertising purposes than industry-wide rates that have been reported.

The full impact of Apple’s changes have yet to be seen, and some concerns still linger, said Ygal Arounian, a research analyst at Wedbush Securities, adding Twitter is reaping the benefits of a strong ad market.

“What is clear from Twitter and Snap’s results though is that the overall digital ad market is on fire right now, with the reopening further strengthening advertisers’ budgets,” he said.

Twitter forecast third quarter total revenue to be between $1.22 billion to $1.3 billion, roughly in line with or slightly ahead of consensus analyst estimates of $1.17 billion.

On an adjusted basis, Twitter earned 20 cents per share, well above the estimate of 7 cents.

(Reporting by Sheila Dang in DallasEditing by Sonya Hepinstall)