Shares in Twitter have risen after it reported a better than expected rise in quarterly ad revenue to more than $1bn.

Twitter said the increase had been helped by improvements in its ad targeting as well as higher demand from companies to reach consumers as economies open up.

The US tech company’s results also showed its number of “monetisable” daily active users – those who are shown ads – climbed by seven million to 206 million though they fell by one million in the US.

It comes after Twitter introduced products in new areas such as audio-only chat rooms and newsletter publishing as it seeks to revive growth.

Results for the second quarter showed ad revenues were up by 87% compared to the same period a year ago to $1.05bn, beating Wall Street estimates of $910m.

Twitter has been working to improve the effectiveness of its ads, introducing 2,500 new topic categories to help users find content that interests them.

That provides more advertising target data to the company.

Chief financial officer Ned Segal said: “We get great signal about what people are most interested in, where they are or the places they care about.”

Twitter bounced back into the black in the quarter, with a profit of $65.6m compared to a loss of $1.38bn a year ago.

It also lifted its forecast for spending this year as it invests in its engineering and product teams, but that did not hold back investor cheer, with shares climbing 5% in after-hours trading.

The results late on Thursday came as Snap, owner of Snapchat, reported revenue growth of 116%.

Ygal Arounian, research analyst at Wedbush securities, said that together the figures showed “that the overall digital ad market is on fire right now, with the reopening further strengthening advertisers’ budgets”.

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