Revenue Is Up, But Twitter Is Still Struggling In Slow Growth Mode
Twitter’s slow growth woes continue.
The social media network reported an anemic increase in monthly users in its third quarter earnings report today — up only four million from the second quarter, for a total of 320 million. The total is only 307 million when you discount “Fast Followers,” the people mostly in the developing world who sign up using SMS. Growth in the US remained flat at 66 million, the same number reported in the first quarter.
The news was better in terms of revenue. The company reported $569 million in revenue for the third quarter, which beat the Wall Street consensus of about $560 million and was up 58 percent over the third quarter of 2014. Earnings per share, minus certain expenses, were 10 cents, which was twice what analysts had predicted. Including those expenses, Twitter’s loss was 20 cents per share in the quarter.
Advertising revenue was up 60 percent to $513 million, with 86 percent of that total coming from mobile advertising. In comparison, last quarter, 88 percent of ad revenue came from mobile ads.
However, those solid revenue results were tempered by Twitter’s fourth quarter guidance; the company said it expects to hit in the $695 to $710 million range next quarter. Analysts had expected $740 million.
In after-hours trading, Twitter stock was down more than 10 percent.
Twitter has been struggling with slow growth and has disappointed investors for most of the year, and its stock has suffered, dropping at times below its $26 IPO price. This summer, it replaced CEO Dick Costolo with founding CEO Jack Dorsey (first in an interim role, then this month as permanent CEO). Under Dorsey, the company has made a series of moves to boost revenue, cut expenses and attract more casual users to Twitter.
The most prominent effort to grab more regular users, Moments, curated feeds for live events launched this month. However, CFO Anthony Noto warned in the second quarter earnings call in June that it would take “a considerable period of time” for such efforts help improve user growth.