SAN FRANCISCO — Twitter’s predicament can be summed up in far fewer than 140 characters: Too little growth.
Twitter shares plunged after the social media company released financial results on Tuesday. Revenue came in lighter than Wall Street forecast and the second-quarter revenue forecast fell short of expectations. Making matters worse for the beleaguered company, user growth remained anemic.
The triple whammy raised fresh concerns that Twitter will continue to fall behind market leaders Facebook and Google in attracting digital advertising dollars and made one thing very clear: Twitter’s long anticipated turnaround is still nowhere in sight.
Twitter said it generated revenue of $ 595 million, up 36% year over year, but well below Wall Street’s target of $ 607.5 million. In a tweet, Twitter’s investor relations department said “brand marketers did not increase spend as quickly as expected” in the first quarter.
Also disappointing to investors: the sales outlook. Twitter said it expected second-quarter revenue in the range of $ 590 to $ 610 million, far short of Wall Street’s forecasts of $ 677.1 million.
“Total active advertisers are up Y/Y and we'll continue to build tools to make it easier for marketers to run effective campaigns on #TWTR,” the company said in a tweet.
Twitter reported financial results after the market closed. Its already battered shares fell 11% to $ 15.84 in extended trading.
For all its other travails, Twitter is still unprofitable. It recorded a loss of $ 79.7 million, or 12 cents a share, compared with a loss of $ 162.4 million, or 25 cents a share, in the year-ago quarter. Excluding certain expenses, Twitter said it would have earned 15 cents a share, up from 7 cents a year earlier. Analysts had expected earnings of 10 cents a share.
Twitter did record a slight uptick in user growth in the first quarter. Twitter reported it had 310 million monthly active users in the first quarter, up 3% year over year and up 1.6% from the previous quarter. Analysts had expected 308 million.
In the fourth quarter, Twitter reported monthly active users fell to 305 million from 307 million in the previous quarter. Twitter noted during the fourth-quarter earnings call with analysts that monthly active users activity in the first quarter had returned to third-quarter levels.
Starting in the first quarter, Twitter said it would no longer count so-called “SMS fast followers,” people who access the service through text messages, in the monthly active users figure. Including fast followers, Twitter had 320 million users in the fourth quarter.
According to research firm eMarketer, Twitter will generate $ 2.61 billion in digital ad revenue worldwide, up 30.8% from last year. In 2016, its share of the total digital ad market will grow slightly to 1.4% from 1.3%.
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