Twitter's shares down as revenue misses estimates

Twitter has struggled with stagnant user growth, with the complex interface making it less attractive. The user base grew modestly to 310 million monthly active users, from 305 million in the previous quarter.
Twitter has struggled with stagnant user growth, with the complex interface making it less attractive. The user base grew modestly to 310 million monthly active users, from 305 million in the previous quarter.PHOTO: REUTERS

SAN FRANCISCO • Twitter disappointed investors again with first-quarter results that showed stagnant revenue growth, as the microblogging service struggles to grab new users amid efforts to improve its complicated interface with several new features.

Twitter shares plunged 13.6 per cent to US$15.34 (S$20.70) in late trading on Tuesday after reporting lower-than-expected revenue that was hurt by big advertisers' weaker spending, and providing a current-quarter revenue forecast well below analysts' expectations.

Twitter's user base grew modestly to 310 million monthly active users in the quarter ended March 31 from 305 million in the fourth quarter, above analysts' expectations. But investors were let down by the revenue miss since outlining a turnaround plan.

"It's obvious Twitter is having trouble," said CRT Capital analyst Arvind Bhatia. "It's not growing anywhere close to where people expected a while back."

During a call with analysts, executives said advertisers, especially in Europe, held back spending ahead of major events like the Olympics. They also said users were spending more time watching and sharing videos, and advertisers' budgets had not shifted from legacy advertising products such as promoted tweets.

Chief financial officer Anthony Noto said Twitter's long-term goal was to have "millions of advertisers like our competitors".

Facebook has more than 3 million advertisers.

Twitter has struggled with stagnant user growth as its complex interface makes it less attractive to new users. As part of its turnaround plan, the company has emphasized its live offerings, including live commentary and video streaming through its Periscope app, to attract new users.

But it faces fierce competition from Facebook, which recently ramped up its live video product, Facebook Live.

Twitter's forecast revenue for the second quarter was US$590 million to US$610 million. Analysts on average were expecting US$677.57 million.

First-quarter revenue rose 36 per cent from a year earlier to US$594.5 million, but missed the average analyst estimate of US$607.8 million.

Its net loss narrowed to US$79.7million, or 12 cents per share, from US$162.4 million, or 25 cents per share, a year earlier.

Excluding items, Twitter earned 15 cents per share, beating the average estimate of 10 cents.

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 28, 2016, with the headline 'Twitter's shares down as revenue misses estimates'. Print Edition | Subscribe