Not so fast. 

It's easy to look at the 18% gain Twitter Inc.'s (TWTR) - Get Report shares posted following the company's Q3 report and assume that the company announced a giant improvement in one field or another. Indeed, quite a lot of the initial coverage of the report jumps to that conclusion, more often than not while singling out user growth.

But arguably, Twitter's numbers and earnings call commentary don't reveal one big improvement in the company's performance, but rather a few smaller ones. And while the microblogging platform's report is certainly more encouraging than many of the ones it has issued over the last couple of years, it still has a lot to prove before one can declare a turnaround has happened.

Twitter reported Q3 revenue of $589.6 million (down 4% annually) and adjusted EPS of $0.10, topping consensus analyst estimates of $587.2 million. The company also forecast it will "likely" be profitable in Q4 on a GAAP basis. The pre-earnings consensus was for GAAP EPS of negative $0.06 and adjusted (non-GAAP) EPS of $0.10.

In addition, Twitter reported its closely-watched monthly active user (MAU) count grew by 4 million sequentially and 12 million annually to 330 million. While the consensus for total MAUs was near 330 million, the consensus for sequential adds was only around 2 million.

What accounts for this discrepancy? For Q3 as well as prior quarters, Twitter revised its MAU accounting to remove users of its Digits service (launched in 2014), which lets people sign into third-party mobile apps via their phone numbers, who weren't using Twitter's core services. As a result, the company now says it had 326 million MAUs in Q2, rather than the 328 million announced previously.

Though Twitter's MAU growth was still from spectacular -- on an annual basis, MAUs only rose about 4%, far less than the 16% MAU growth Facebook Inc. (FB) - Get Report delivered in Q2 -- there was some meaningful improvement. In addition, Twitter's daily active users (DAUs) rose 14% annually, a growth rate better than Q2's 12% and on par with Q1's. The company still refuses to disclose just how many DAUs it has; the sole analyst estimate picked up by FactSet (from JMP Securities) is at 162 million.

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In the Q3 shareholder letter, Twitter attributes its user and engagement growth to "a combination of organic growth, marketing, and product, including the ongoing benefits of improved relevance in email, push notifications, and the timeline." The "push notification" part of this explanation might especially warrant attention, since (anecdotally) Twitter appears to have gotten much more aggressive over the last few months in sending mobile and in-app notifications regarding things that followed accounts have tweeted.

Also: Twitter's U.S. MAUs, which revenue-wise remain much more valuable than its international MAUs, rose by just 1 million sequentially and 2 million annually to 69 million. International MAUs rose by 3 million sequentially and 11 million annually to 261 million.

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That said, some other Twitter moves do seem to be paying off a bit, even if there's still a lot that needs fixing for its core services. These moves include improving Twitter's algorithmic Timeline view, personalizing the content shown via the Explore tab and striking an array of live-streaming deals.

Going forward, Twitter's plans to double its character limit to 280 (still in testing) could also help its cause. Doubling the limit might be taking things too far -- I've felt a limit in the area of 200-to-220 characters would make sense -- and it would still be nice if Twitter made it easier to attach longer, searchable pieces of text that could be accessed by clicking a tweet. But on the whole it's a positive step, one that could win back some former Twitter users (there are a lot of them out there) who found the 140-character limit too constraining. And over the long run, considering how the 140-character limit lends itself to stripping out nuance from tweets and writing glib one-liners, it might even improve the quality of discourse on Twitter a bit (one can hope, anyway).

Twitter's ad business continues showing modest improvement with the help of decent video ad traction. Ad revenue fell 8% annually to $503 million, but rose by 3% sequentially and beat a $498 million consensus. U.S. ad revenue remains heavily pressured by Facebook's social ad dominance -- a dominance that has much to do with Facebook's scale, data/targeting and ad product advantages -- and fell 18% annually to $264 million. But international ad revenue grew 7% to $239 million.

The growth rates would look better if not for the fact that lost revenue from Twitter's TellApart ad business (it delivered retargeted ads, was acquired in 2015 for $479 million, and was shuttered earlier this year) had a $7 million sequential and $20 million annual impact. On the earnings call, COO Anthony Noto reported revenue from Twitter's top 100 global advertisers grew 23%, and its top 100 U.S. advertisers 7%. Twitter's ad business still faces major challenges, but execution does seem to have improved since Noto became COO in late 2016.

Meanwhile, Twitter's data licensing business continues humming along, as enterprises, marketing firms and third-party data service providers continue to find plenty of business value in the company's content "firehose." The company's "data licensing and other" revenue rose 22% annually to $87 million, after growing 26% in Q2.

And -- as signaled by Q4 guidance -- cost cuts are providing a healthy boost to Twitter's bottom line. The company's adjusted cost of revenue (heavily tied to capital spending) fell by $10 million annually to $195.7 million; sales/marketing spend fell by $29 million to $147.6 million and R&D spend fell by $11 million to $78.5 million.

However, new CFO Ned Segal suggested on the call that spending will tick higher going forward. "We are at the point though where after a lot of hard decisions made over the last couple of years...where [the] expense base will selectively grow as we invest against our priorities," he said.

While looking at Twitter's latest numbers , it's worth keeping in mind that while shares remain down 22% from their $26 2013 IPO price, they're still not especially cheap for a company struggling to deliver revenue growth. After backing out net cash, Twitter still trades for about 5 times a 2018 revenue consensus of $2.54 billion.

Markets are still assigning Twitter a premium on account of the untapped potential of its one-of-a-kind platform, and perhaps also on account of continued M&A hopes. Twitter seems to have made a small amount of progress in Q3 towards tapping that potential, and might just make some more in Q4. But it still has a ways to go.

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