Twitter first quarter earnings results got leaked, pushing the company disclose them officially prior to scheduled date. Afterwards shares of TWTR fell sharply about 20% on Tuesday as the results failed to impress investors. Twitter also lowered its sales estimate.
Twitter on Tuesday said it cut its estimate to $2.17 billion to $2.27 billion for a whole year, expecting below than its previously forecasted range of $2.3 billion to $2.35 billion. Twitter also lowered its expectations for the ongoing quarter to $470 million to $485 million, estimating below the average forecasts of analysts’.
According to Twitter, revenue grew 74% to $436 million, beating the $250 million value in a year earlier period but below the analysts’ estimates of $456.2 million. Adjusted earnings stood at 7 cents a share, above from zero cents a year ago and bested analysts’ prediction of 4 cents.
Twitter average monthly active users were 302 million for the quarter compared to 288 million in a year earlier period but averaging below 20% which Twitter attracted in the previous quarter. About 80% of the average users were using Twitter through the mobile platform.
Twitter reported a boost of 72% year-on-year to $388 million in ads revenue for the first quarter and revenue would reached to 78%, excluding impact of foreign currency value on revenue. Revenue collected from mobile advertising contributed 89% of total ad revenue and revenue of international segment accounted 34% of the total revenue.
Twitter said in conference call with analysts’ that it has additional 6 million monthly followers when including the “fast followers”, people who only use Twitter via text messaging. On the other hand, Anthony Noto, CFO at Twitter, rang the alarming bell for Twitter by illustrating that users growth at the start of the month slowed down a bit.
On Tuesday’s call, Twitter CEO Dick Costolo said the company will continue to iterate how tweets are packaged and delivered to users, logged in or not. He also said the network plans to launch more changes to direct messaging to allow people to “move fluidly between public and private conversation.”
The addition of instant timeline, which is similar sort of feature like Instagram, and improvements in private messaging and video sharing and recording could also attract more people to Twitter. Twitter’s procurement of Periscope app, a live video streaming app, possibly assists the social giant to make a mark in live video industry. Twitter is also experimenting with Auto-play videos and ads on profile pages which could possibly be a big mean of sales boost.
The company also declared that it plans to procure TellApart, a marketing company that serves retailers and e-commerce advertisers. Twitter has also partnering with Google’s DoubleClick platform, so as to better measure its ads growth performance. According to Twitter the deal will make the Twitter’s inventory available via the DoubleClick Bid Manager, which should assist client to carryout Twitter operations more comprehensively.
Twitter has improved its ads business a lot in recent years, but faces a severe competition from Facebook and Google and struggle to sustain its position in market. The popular mobile messaging services like Facebook Messenger, Snapchat and WhatsApp continue to pose a challenging condition for Twitter. So for Twitter to remain in the market, it has to bring a ground-breaking innovation in its social platform.
