Stocks/Earnings

Twitter Struggles for Growth

Stock Drops as User Base Stalls in Q4 2/10/2016 5:00 PM Eastern

Shares in Twitter were down more than 2% in after-hours Wednesday as the social network struggled to grow its user base in the fourth quarter of 2015. 

 

Twitter disclosed an SEC filing that it ended Q4 2015 with 320 million average monthly active users (MAUs), the same it had in the previous quarter, missing analyst expectations that it would grow to 325 million. Twitter’s MAUs rose 9% on a year-over-year basis, however. 

 

Mobile MAUs represented approximately 80% of total MAUs, Twitter said.

 

“We saw a decline in monthly active usage in Q4, but we've already seen January monthly actives bounce back to Q3 levels,” Twitter said in the filing. “We're confident that, with disciplined execution, this growth trend will continue over time.”

 

Twitter’s Q4 story was a bit better on the revenue and advertising front. The company posted Q4 revenues rose 48%, to $710 million. Q4 advertising revenue rose 48%, to $641 million. Twitter said mobile ad revenue made up 86% of total ad revenue, and that its total active advertisers reached 130,000 in Q4, up about 90% year-over-year.

 

Twitter also swing to a Q4 GAAP net loss of $90 million (13 cents per share).

 

For full-year 2015, revenues rose 58%, to $2.2 billion. It ended the year with $3.5 billion in cash and cash equivalents.

 

Another bright spot was video.Twitter said the addition of native video capabilities led to video views rising 220x from December 2014 to December 2015.

 

“As a sign of how far we’ve come: when Disney chose to release its first full trailer for ‘Star Wars: The Force Awakens’, they did it first on Twitter,” the company noted.

 

Looking ahead, Twitter expects Q1 revenues of $595 million to $610 million, and adjusted EBITDA of $150 million to $160 million.

 

Twitter also outlined five priorities for 2016: the refinement of its core service, live streaming video, a stronger focus on Twitter “creators and influencers,” safety, and developers.

 

As for the core service, it pledged, for example, to “fix the broken windows and confusing parts, like the .@name syntax and @reply rules, that we know inhibit usage and drive people away.”  It also will look to make tweets “more expressive with both text and visual media.”

 

On the video side, Twitter touted its live streaming platform, Periscope, noting that it recently added the ability to broadcast from a GoPro camera, and to watch any broadcast live from a tweet. “We're going to invest heavily in these first-screen, connected audience experiences.”

 

Regarding safety, Twitter will also spend more resources educating people about safety tools, including new technologies that help the platform detect the use of repeat abusive accounts and to help users curate and control their experience on Twitter. 

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