NEW YORK (REUTERS) - Twitter Inc announced on Thursday that it would discontinue the video-sharing mobile app Vine, as it moves to cut nine per cent of its workforce worldwide to keep costs down after beating Wall Street quarterly earnings expectations.
The decision comes on the heels of a failed attempt to sell Twitter as it fights against stagnant user growth and mounting competition from other social media platforms.
In a post published jointly by Twitter and Vine to the blog platform Medium, the social media services said that the Vine website would stay live even after the mobile app is discontinued, giving users the chance to download and save any videos.
A Twitter spokeswoman told Reuters the app will shutter in coming months but did not specify a date.
Twitter introduced Vine in January 2013 as a way for users to share small snippets of video that were six seconds or less. The service was popular with members of the microblogging site and spawned several so-called "Vine stars," attracting millions of followers.
Social media users reeled over the news and Vine quickly became the top-trending topic on Twitter in the U.S. with over 1.64 million tweets. "RIP VINE #GoneTooSoon," tweeted Patricia Laire (@patricialaire). "VINE IS A QUARTER OF MY LIFE I'M SO UPSET," wrote Twitter user moon (@hrtbreaker-mp3).
Others, however, saw the news as inevitable. "We all knew Vine was not forever," tweeted Tyzano (@Tyzano). "It just could not compete with other platforms."
More than 300 Twitter employees will be affected by the layoffs, a figure similar to an earlier round of reductions announced a year ago.
Third-quarter revenue growth slowed sharply but topped analysts' expectations. Its stock was up 0.5 per cent to US$17.38 (S$24.26), after rallying 5 per cent in premarket trading.
Revenue rose about 8 per cent to US$616 million, above the average analyst estimate of US$605.8 million. The company had reported a 20-per cent rise in revenue in the previous quarter and 58 per cent in the year-ago quarter.
Twitter, which has seen user growth stall amid competition from nimbler rivals such as Instagram and Snapchat, said its user base ticked up 3 percent to 317 million average monthly active users in the quarter.
Analysts, on average, had expected 316.3 million monthly active users, according to market research firm FactSet StreetAccount. "The building blocks for revenue are increasing the number of users, and Twitter is not doing a particularly good job of that," Wedbush Securities analyst Michael Pachter said. He added that Twitter needed to grow revenue by US$200 million to US$300 million a quarter to achieve 2017 profitability. "The run-rate for the year is under US$100 million in profit, so it is really hard to justify spending US$15 or US$18 billion to buy a US$100-million profit (company)," Pachter said.
Total advertising revenue of US$545 million grew 6 per cent year-over-year, and 90 per cent of it came from mobile.
Excluding items, the company earned 13 cents per share, beating the average estimate of 9 cents, according to Thomson Reuters I/B/E/S.
The company is "more disciplined about how we invest in the business" and intends to be profitable in 2017, said chief financial officer Anthony Noto.
Among its priorities, Twitter is dedicated to growing its burgeoning live video offerings through partnerships with organisations such as the National Football League, Noto said. Advertisers are increasingly interested in live video because of its potential to reach new and younger audiences, he added.
Twitter hired bankers last month to field acquisition offers, but it has seen a dearth of potential bidders. Salesforce.com Inc, the last of a small cohort of companies including Walt Disney Co and Alphabet Inc believed to have been interested, said recently it would not pursue a deal.
The apparent lack of interest forced the social media company to consider a route anathema to aspiring tech startups: a major restructuring.
Twitter had 3,860 employees globally as of June. The reduction of more than 300, chiefly in its sales, partnerships, and marketing efforts.
The cuts come about a year after a similar wave of layoffs of up to 336 employees were announced when Jack Dorsey, its co-founder who had been serving as interim chief executive, took over as permanent CEO. Since then, Dorsey has drawn criticism from some analysts for splitting his time between Twitter and Square.
The company said it expected cash expenditures of about US$10 million to US$20 million in the fourth quarter, mostly for severance costs.
On an investor call on Thursday, Dorsey said he would not comment on speculation about a potential sale. He said in a statement that the company has "a clear plan, and we're making the necessary changes to ensure Twitter is positioned for long-term growth."
Asked by investors whether major events such as presidential debates or the Olympics affected Twitter's quarterly growth in metrics, Noto said there needed to be such an event "every day" on the platform to meaningfully improve numbers, and "that's where we're headed."
The popular but money-losing microblogging service spent aggressively on product development and marketing in recent years, betting it could afford losses as long as it attracted new users. But that growth stalled this year after it exceeded 300 million active monthly users, less than a fifth of Facebook Inc's users and below Facebook's Instagram.
The company's net loss narrowed to US$102.9 million, or 15 cents per share, in the third quarter, from US$131.7 million, or 20 cents per share, a year earlier.
Twitter also said it would roll out "meaningful updates" next month affecting how it protects users from abusive content, an issue for which the company has endured growing criticism.