Home >companies >company-results >Twitter’s third-quarter user growth slows, shares decline

San Francisco: Twitter Inc.’s third-quarter user growth slowed and its loss widened as chief executive officer (CEO) Dick Costolo struggles to speed up the addition of new members.

Active users on the social network rose 23% to 284 million, the San Francisco-based company said in a statement on Tuesday. That compared with 24% growth in the prior period. Sales more than doubled to $361.3 million, topping the $351 million average analyst projection compiled by Bloomberg.

Costolo 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. While the number of monthly active users matched analysts’ estimates, growth has been slowing at least since the company went public last year.

“They need user growth to be higher if they want to keep attracting the attention of marketers," said Nate Elliott, an analyst at Forrester Research Inc. “They’re 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 in that direction."

Costolo said he’s 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 company’s services. Still, the company “must increase our overall pace of execution," he said on a conference call on Tuesday.

Shares drop

Twitter shares fell as much as 12% in extended trading. The stock declined 2.8% to $48.56 at the close in New York. While the shares are down from a record at $73.31 on 26 December, they have climbed 59% from a 23 May low of $30.50 this year on signs that user growth is recovering.

The company said its third-quarter net loss widened to $175.5 million, or 29 cents a share, from $64.6 million, or 48 cents, a year earlier, compared with analysts’ average projection for a loss of 29 cents.

Members viewed their Twitter timelines more often, with 181 billion views, up from 173 billion in the prior quarter, the company said. Mobile advertising was 85% of total ad revenue in the third quarter, Twitter said. International revenue more than doubled to $121 million, making up 34% of total sales.

Wider platform

The expansion comes after Costolo replaced his top executives to speed up product introductions and figure out more ways to make money from the service. After internal disputes, Costolo replaced the chief financial officer (CFO) and heads of consumer product and engineering, and ousted CEO Ali Rowghani.

For the fourth quarter, Twitter forecast revenue of $440 million to $450 million, compared with the average estimate for $448.1 million.

Twitter last week made a pitch to developers to work with its tools in a bid to get more applications using its mobile-advertising marketplace, MoPub. The company is also aiming to sell more ads as Twitter messages gain impact outside of the website, on news sites and TV shows.

“They’re changing the narrative of what Twitter is," said Brian Wieser, an analyst at Pivotal Research. “There is an attempt on the part of the company to position itself as a platform first as opposed to this place where people happen to tweet."


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