Twitter reported quarterly revenue under estimates after the struggling social-media company restructured its advertising sales force and pared staff. The shares tumbled.
Fourth-quarter revenue was $717 million, missing the $740m average analyst estimate, according to data compiled by Bloomberg. Sales growth of 1 per cent slowed dramatically in the period from the 48 per cent gain a year earlier. Twitter added 2 million new users, bringing the total number of people who log in monthly to 319 million, the San Francisco-based company said Thursday. That was in line with analysts’ projections.
Twitter’s profit excluding certain items was $119m, or 16 cents a share, compared with the 12 cents per share analysts estimated on average. The company’s net loss widened to $167m, or 23 cents a share.
The social media network has become the megaphone at the White House, with Donald Trump sending broadsides and accolades, sometimes in rapid succession.
The response on Twitter has exploded, but that has not done anything to pump up profit numbers for the company and growth, as it has been for years, is elusive.
Revenue growth has been stalled for more than two years.
And in a charged political and social environment, the company is balancing its position as a platform for free speech while curtailing hate speech and bullying.
Twitter has had trouble persuading advertisers to spend more money on its platform as fewer people join. Pressure on the company mounted in the fourth quarter when its search for a potential buyer failed, forcing the chief executive Jack Dorsey to focus on reaching profitability as an independent business. Twitter cut 9 per cent of its staff, sold its Fabric developer business to Google and shut down its Vine short-video app. It also lost both its chief operating officer and chief technology officer, increasing the load on Mr Dorsey, whose time is divided because of his other job – as chief executive of Square.
“The fact that they’ve tolerated having a shared CEO is remarkable given the situation they’re in,” said Brian Wieser, an analyst at Pivotal Research Group. “Unfortunately, it’s a situation of investor indifference – everyone is used to Twitter’s troubles by now.”
Twitter fell as much as 10.2 per cent to US$16.81 before the start of trading in New York. The stock closed at $18.72 on Wednesday. That stock price approached $25 last autumn.
The company has been relying on live video partnerships, as well as video advertising, to jump-start user additions and revenue growth. With video, Twitter aims to appeal to a wider audience, including those people who may have decided its basic service – which lets anyone post 140-character updates to a feed that others can follow – was not appealing. Meanwhile, to retain the users it does have, the company has made a push to address abuse and harassment on its service, which caused several high-profile departures from its social network last year.
Video and curbs on abuse may not be enough to boost excitement about Twitter’s product, said James Cakmak, an analyst at Monness Crespi Hardt & Co.
“It’s still in an identity crisis,” he said. “People that use Twitter get it, the world conceptually gets it, but your average potential user doesn’t.”
While Twitter is struggling to convert its headline omnipresence via Mr Trump’s trumpetings into cash, advertising revenue fell slightly to $638m in the fourth quarter, and the company said tough competition and its push to re-evaluate its product portfolio could affect future revenue growth.
The company did not offer a revenue forecast for the first quarter, but it said it expected advertising sales growth to continue to lag audience growth in 2017.
* Agencies
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