Twitter Disappoints With Slowing Growth

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Twitter shares plummet as investors take fright at its slowing growth and usage figures

Twitter is facing up to the harsh realities as a public traded company, as its share price plummeted alarmingly following the announcement of its first quarter results.

Shares in the micro blogging service fell more than 10 percent in after hourstrading on 29 April to $38.05 (£22.63). Shares are now back up to $42.62 (£25.35).

Positive Results

That share fall came after the San Francisco-based company reported mixed financial results for the quarter ending 31 March.

twitter-promoted-adsThe company is still operating deep in the red, after it posted a larger net loss of $132.4m (£79m), up from a net loss of $27m (£16m) in the same year-ago period.

But revenues grew a very healthy 119 percent to $250m (£149m), compared to $114m (£68m) in the same period last year. Analysts had been expecting revenues of $241.5m (£143.6m).

This revenue growth was mostly made up of advertising revenue ($226m/£134m), up 125 percent year-on-year. Mobile advertising revenue was approximately 80 percent of the total advertising revenue.

“We had a very strong first quarter. Revenue growth accelerated on a year over year basis fuelled by increased engagement and user growth,” said Dick Costolo, CEO of Twitter. “We also continue to rapidly increase our reach and scale. With the integration of MoPub, we now reach more than 1 billion iOS and Android users each month, making us one of the largest in app mobile ad exchanges in the world and the only one at scale to offer native in-app advertising.”

Yet despite the positive spin put on the results by Twitter’s management, there was no disguising its slowing growth and usage figures.

Investor Concerns

Twitter said that it has 255 million Average Monthly Active Users (MAUs), an increase of 25 percent year-on-year. So far so good then, but this user growth was only up 5.8 percent on the previous quarter and was below analyst expectations.

Investors are worried that with growth rate like, it would take Twitter three and a half years to reach the 500 million users that WhatsApp has already.

Another concern is that these people are tweeting less frequently than a year ago, after monthly active users rose by less than 4 percent – again less that some analysts had been expecting.

Twitter said that viewers had refreshed their timelines 157 billion times in the first quarter. Last quarter it had 148 billion views of Twitter timelines and in Q3 2013 it had 159 billion views.

Twitter meanwhile has taken steps to try and make updates on the micro-blogging platform easier to find, share and reshare. Twitter executives have warned that some of the usability changes it has made may also be contributing to the user engagement slowdown.

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Author: Tom Jowitt
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