Dive Brief:
- Micro-blogging platform Twitter reported quarterly earnings on Tuesday, revealing mixed results and sluggish user growth that sent shares plunging as much as 12% in after hours trading.
- Twitter added five million users in Q1 for a total of 310 million monthly active users (MAUs), up from 302 million MAUs a year ago.
- Revenue from brand advertising, Twitter's primary revenue stream, was up 37% over last year at $530 million, but that's way down from Q4 last year when ad revenue reached $640 million.
Dive Insight:
To say that Twitter has had a rocky past couple of months would be an understatement.
In the face of shakeups in the boardroom and the C-suite, as well as pushback from investors and core users, the social platform has struggled to attract new users and find its footing in an evolving social media landscape. For comparison, Snapchat had about 100 million MAUs a year ago, Instagram counted over 400 million MAUs and, as of Q4 of 2015, Facebook boasted 1.59 billion MAUs. While Snapchat's overall numbers may be smaller than Twitter's, the rapid user growth of the video-sharing platform—and the relative stagnation of user growth at Twitter—tell the real story.
Twitter said "seasonality and marketing initiatives" helped bring in new users, but it blamed its revenue woes on brand marketers who "did not increase spend as quickly as expected in Q1." Despite the murky atmosphere surrounding the company, Twitter said it sees "a clear opportunity to increase our share of brand budgets over time given our strong product roadmap."
Revenue came in at the low end of our guidance range, as brand marketers did not increase spend as quickly as expected in Q1. #TWTR
— TwitterIR (@TwitterIR) April 26, 2016
Twitter has recently added a slew of new products and revamped old ones, all with an eye on broadening its appeal and attracting new users. Some of those move include its launching new Moments features, rolling out a reworked algorithm for Twitter feeds based on interest rather than timeliness, and swapping out the star and "favorites" for a heart and "likes".
Twitter outlined three main ad business plans going forward, including beefing up its live-streaming video capabilities through Periscope. For instance, Twitter has a contract with the NFL to live stream 10 football games next season on the app. The two other ad initiatives it has in mind include to help drive ROI and measurement through dynamic product ads and collaborations with Moat and Nielsen, and then to leverage Twitter's total audience through Promoted tweets.
But any changes haven't been enough to dent the negative perceptions swirling around the company, at least not yet. The Verge notes that Twitter has not introduced a self-serve ad platform, something that many of its competitors have done. "It's simply not clear that Twitter is as effective at direct marketing efforts as its rivals, and its revenues have suffered accordingly," Casey Newton wrote for The Verge.
Despite the criticism, the micro-blogging platform said it intends to "continue to build tools to make it easier for marketers to run effective campaigns on Twitter."
What brand marketers hope this will translate to is better engagement from users, new and existing, and more opportunities to reach those users through improved products. Although Twitter does offer a unique real-time marketing opportunity for brands, the key to bringing in more advertisers—and turning around its poor performance—is signing up more new users.
Q1'16 total revenue: $595M; adj. EBITDA: $180M; non-GAAP net income: $103M. Key info: https://t.co/njFKHX3eMO #TWTR pic.twitter.com/kp09FtnJ89
— TwitterIR (@TwitterIR) April 26, 2016
