Sarah Frier San Francisco
TWITTER reported another quarter of decelerating user growth, triggering a sell-off in shares and putting pressure on chief executive Dick Costolo to prove that he can attract more users and advertisers.
Active members on the social network rose 23 percent to 284 million, the company said in a statement on Monday. That compared with an increase of 24 percent in the prior period and follows at least a dozen quarters of slowing growth. The stock fell as much as 15 percent in early trading.
“It’s the number that we delivered into the market and it’s our number one priority,” Costolo said following the earnings announcement. “We have an aspiration to build the largest daily audience in the world.”
To reach that goal, Twitter would have to quadruple its audience to challenge Facebook’s audience of more than 1.32 billion people.
Costolo has replaced executives and introduced new products this year as he sought to reassure investors that Twitter, which went public in November, has room to grow. The company has pushed further into mobile advertising and services for other application developers, moving away from relying on its main website to generate traffic and ads.
Nate Elliott at Forrester Research said: “They are moving in the right direction, considering this time last year we were wondering if they could kick-start growth at all. But they’ll want to move faster.”
Sales more than doubled to $361.3 million (R3.9 billion), topping the $351m average analyst projection.
Costolo said he was planning to make Twitter easier to use, develop a better messaging service, draw more visitors with exclusive Hollywood content and work with mobile-application developers to expand the services. Still, it “must increase our overall pace of execution”.
Twitter shares dropped to $41.29 at 7.58am in New York before the start of regular trading, after closing at $48.56 on Monday. While the shares are down from a record of $73.31 on December 26, they have climbed from a May 23 low of $30.50 this year on signs that user growth is recovering.
The company said third-quarter net loss widened to $175.5m from $64.6m the previous year.
Members viewed Twitter timelines more often, with 181 billion views up from 173 billion the prior quarter, the company said. Mobile advertising was 85 percent of total ad revenue in the third quarter. International revenue more than doubled to $121m, making up 34 percent of total sales.
The expansion comes after Costolo replaced his top executives to speed up product introductions and figure out ways to make money from the service.
“They’re changing the narrative of… Twitter,” Brian Wieser at Pivotal Research said. “There is an attempt… [by] the company to position itself as a platform first as opposed to this place where people happen to tweet.” – Bloomberg