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Twitter posts minor uptick in revenue and user growth in Q4 earnings, fails to beat Wall Street estimates

In stark contrast to Facebook, Twitter has been facing much trouble to make people understand the micro-blogging platform and grow the business. This is self-evident from the company’s Q4 earnings, which shows that most numbers fell short of Wall Street estimates but their live-streaming business managed to amass over 31 million unique visitors.

For the said Quarter, Twitter posted Revenue figures of $717 million as compared to $710.5 million in the same quarter a year ago. This was coupled with earnings of 16 cents per share as compared to 13 cents per share in the last quarter. Wall Street analysts had estimated that the micr0-blogging would show growth and report revenues close to $740 million and earnings of 12 cents per share.

Talking about their fourth quarter earnings report, Twitter CEO Jack Dorsey says,

In the fourth quarter, daily active usage accelerated for the third consecutive quarter, and we see this strong growth continuing. While revenue growth continues to lag audience growth, we are applying the same focused approach that drove audience growth to our revenue product portfolio, focusing on our strengths and the real-time nature of our service. This will take time, but we’re moving fast to show results.

Being a social networking giant, the number of monthly active users — those who logged in, accessed or otherwise authenticated Twitter in last thirty days — is an important metric to define growth. And Twitter has been lacking on this front, stalling an increase in numbers even after multiple changes introduced to simplify the platform.

The average number of monthly active users (MAUs) grew just 4% year-on-year to reach 319 million in the current quarter as compared to 317 million in the previous one. This means it added only 2 million new users in the last three months. Even u.S President Donald Trump’s daily social antics have been unable to grab the attention of the masses. This could’ve been one good reason to a massive surge in numbers.

Though Twitter has been able to refine and streamline its business by recent workforce layoff and sale of developer platform, the company has still been unable to project growth on the face of it. It did perform efficiently but failed to monetize the current user base. Ad revenues for the fourth quarter ended in December 2016 amounted to $638 million, which is slightly down on a yearly basis. Over 89 percent of this ad revenue was contributed by the mobile platform. Data licensing and other revenue, on the other hand, grew 14 percent YoY to reach $79 million.

Talking about the same, Twitter COO Anthony Noto says,

Twitter gives advertisers the ability to reach the most engaged audiences in the right context at the right time, and we’re focusing our investments on revenue products that strengthen our unique value proposition, especially in live and video. We’re hearing positive feedback from our ad partners about our continued acceleration in audience growth and engagement.

Everybody makes mistakes one time or the other. The micro-blogging platform also made mistakes and it is now trying to redeem the same with an aggressive push in new segments. And the biggest highlight would definitely have to be live video streaming, which saw Twitter sign partnerships and closely integrate Periscope into the platform. It was sadly also the reason for Vine’s demise and the launch of a dedicated app on Apple TV.

In a letter to its shareholders, Twitter mentioned that 31 million unique viewers visited their platform to view more than 600 hours worth of live video content across 400 events in the three-month period from September to December. This has been made possible due to Twitter’s efforts of publicizing itself as a prominent news source that can effectively turn into a global TV network. Its partnerships with BuzzFeed to stream the presidential election, Thursday night NFL games and others alongside a live Twitter feed helped achieve the figures. Speaking on the same, the letter reads,

We’re providing significant value to our live premium content partners, helping them extend their reach globally with approximately 33 percent of unique viewers outside the US, and helping them reach a younger audience with approximately 50 percent of viewers under the age of 25.

Thus, Twitter’s less-than-impressive earnings report has cautioned investors to take measures and stock prices have tanked in the after-hour trading session. The stock closed at $18.72 the previous day and can now be seen trading at $16.91 in after-hours. This price is expected to go down way further when the market opens this morning. Continuing to talk about their lackluster quarterly earnings, Dorsey adds,

2016 was a transformative year as we reset and focused on why people use Twitter: it’s the fastest way to see what’s happening and what everyone’s talking about. We overcame the toughest challenge for any consumer service at scale by reversing declining audience trends and re-accelerating usage.

Towards the end of last year, the market had been abuzz with Twitter being up for grabs by some pretty impressive suitors. These included Google, Salesforce, Disney and Apple among others who eventually backed out from the transaction due to abusive and hate speech issues that plague the platform. But, Twitter is now tightening its grip on such offenders by moderating tweets and replies. It has also decided to permanently ban them from the platform for their unjustified online behavior.

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Twitter posts minor uptick in revenue and user growth in Q4 earnings, fails to beat Wall Street estimates


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