Twitter reported its quarterly earnings showing a doubling of its revenue over the same quarter a year ago. Revenue for the quarter was $250 million, while the company incurred a loss for the quarter of $132 million. Advertising, the key component to Twitter’s future growth prospects (at least financially, which, of course, is all that Wall Street cares about) account for the vast majority of the quarterly revenues.
What the analysts on the Street were most interested in was the amount and growth of active users. For this quarter just ended, Twitter was able to grow its active users to 255 million – a seemingly impressive increase of 25% from the same quarter a year previous and a 5.8% increase over the immediately preceding quarter. This was the first quarter out of the most recent that had shown an increase in this vital statistic.
Analysts were disappointed in the figures as they had anticipated greated growth in active users – truly the metric as this is where the advertising dollars are going to be directed and advertisers pay for active users.
As a result of the earnings announcement, Twitter’s stock dove 11%, and, although it is still significantly above its IPO price, it is not performing as well as expected in this tech sector hot market. Indeed comparisons to Facebook are rampant amongst the investor set and Twitter’s comparatively minute number of active users relative to Facebook is being brought to the fore – this chart provides a good illustration:
The CEO of Twitter, Dick Costolo said in an interview that Twitter isn’t necessarily driven to get a certain number of users.
“I think the way we’ve articulated our thinking about the future of our user growth efforts, [it’s] very much in the context of bridging this gap between what seems to be the global awareness and almost ubiquitous presence in the culture about Twitter and migrating that awareness of Twitter into engagement on the platform,” Costolo said.
This tact is different from that pubically articulated by Facebook which is driven to grow its Userbase at all costs (see purchase of Whatsapp). Costolo, with his remarks, may be trying to deflect critics who view Twitter and Facebook similarly from a valuation standpoint. So far this hasn’t panned out in the stock price.
One thing is clear, is that Twitter is trying to be more accessible for people and the recent redesign of its “themes” and is allowing its users greater flexibility in how their Twitter page appears to others. A page (so to speak) taken directly from Facebook and other social networks. But Twitter Followers are followers and the audience and critic all at once. Just like its Users, Twitter is trying to grow its followers.