Twitter Inc. said it didn’t add new users in the fourth quarter and forecast first-quarter revenue that will fall short of analysts’ estimates, evidence the company’s struggle to make its site more accessible is affecting advertising sales growth.
Revenue in the present period is going to be US$595 million to US$610 million, the San Francisco-based social network said Wednesday inside a statement. That compared with an average analyst projection of US$627.Six million, according to data published by Bloomberg. Monthly active users were 320 million in the last three months of the year – exactly the same number the company reported within the third quarter – while analysts had estimated 324 million.
Twitter shares have dropped 35 percent this season amid deepening skepticism concerning the company’s turnaround efforts under Jack Dorsey, a co-founder who returned late last year as chief executive officer. Dorsey, who started his tenure in October with staff cuts and the appointment of a new chairman, has been rallying his teams to help make the site more accessible and helpful for following news stories and live events, but the company has so far been slow to attract a wider audience – and the potentially higher advertising spending that comes with it.
“This is the critical period for Twitter, plus they need to show more than just optimism,” said Rob Sanderson, an analyst at MKM Partners LLC. “It’s very vulnerable at this time, and particularly if we are heading right into a recessionary environment, those ad money is going to become more difficult to get – for everybody.”
The company’s shares slid around 14 per cent after the earnings report. They rose 4 percent to US$14.98 at the near the coast Ny, bringing the decline for the past year to 68 percent.
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In your fourth quarter, sales rose 48 percent to US$710.5 million, in line with analysts’ predictions. Excluding certain costs, fourth-quarter profit was 16 cents a share, in contrast to a typical analyst estimate of 12 cents. The business’s net loss narrowed to US$90.Two million, or 13 cents, Twitter said in the statement.
Twitter appointed Dorsey as permanent CEO in October after a search to replace Dick Costolo, who resigned amid pressure from Wall Street over slowing growth. Dorsey, who also runs payments company Square Inc., has been pushing the staff to change even the facets of Twitter’s site that seem untouchable. For instance, Twitter has considered lifting a 140-character limit in posts, which has been the format because the company started. Earlier Wednesday, Twitter said hello would start displaying more popular tweets towards the top of a user’s feed, instead of keeping them within the company’s traditional reverse- chronological stream.
“They definitely required to make a move to be able to boost new user growth,” said Orli LeWinter, vice president of strategy and network marketing at digital marketing agency 360i. “Hopefully here it is.”
The company is also trying to deal with its user-growth challenge another way: by making it feasible for non-members to see advertisements if they click on a tweet, say, inside a Google search or a news article. Opening advertising to that audience adds 500 million people, Twitter has said, and makes its business model more like YouTube’s – it’s not necessary to log in to be valuable to the company.
Still, Dorsey’s job was not easy. Per week after he officially retook the helm, Twitter cut 8 percent of their staff. In January, five executives, such as the heads of product and engineering, announced their departures during the same weekend. The company has lost a minimum of 20 high-level executives since its November 2013 initial public offering.
“The continuing management instability is likely to further delay the development of we’ve got the technology and product that Twitter must drive user growth, engagement, and monetization,” Heath Terry, an analyst at Goldman Sachs, said in a January note to investors.
Dorsey is trying to build out the leadership at Twitter – including his bosses on the board. After he took the CEO job, the board appointed Omid Kordestani, formerly of Google, to become executive chairman. Kordestani continues to be involved in many key decisions in the company since. The board is getting near to adding two other members, people familiar with the matter have said.
Meanwhile, social-media competitors like Instagram and Snapchat are amassing larger audiences and focusing many more about what Twitter does best: real-time information and news. Larger rivals, like Facebook and Google, have built out real-time advertising capabilities, too.
Twitter is anticipated to capture 9 percent of worldwide social-media advertising spending this year, compared with Facebook’s 65 per cent, based on EMarketer.
Bloomberg News
