Twit­ter shares dive as earn­ings miss mark

The China Post - - WORLD BUSINESS - BY GLENN CHAP­MAN

Twit­ter shares plunged Tues­day af­ter an earn­ings re­port fell short of mar­ket ex­pec­ta­tions, de­spite a jump in the num­ber of ac­tive monthly users above 300 mil­lion.

Rev­enue dur­ing the first three months of this year was US$436 mil­lion, Twit­ter said, but the San Fran­cisco com­pany had been ex­pected to bring in about US$456 mil­lion.

The one- to- many mes­sag­ing plat­form re­ported a net loss in the quar­ter of US$162.4 mil­lion, as com­pared with a loss of US$132.4 mil­lion on rev­enue of US$250.5 mil­lion in the same pe­riod last year.

Twit­ter shares dived more than 18 per­cent af­ter re­lease of the earn­ings fig­ures and sank fur­ther to US$41.50 in af­ter-mar­ket trades.

“That kind of drop is re­ally tough,” said in­de­pen­dent an­a­lyst Rob En­derle of En­derle Group in Sil­i­con Val­ley.

Twit­ter has yet to show a quar­terly profit in its pub­licly re­leased earn­ings state­ments, but an­a­lysts say it may be more im­por­tant for the so­cial net­work to boost its user base as it moves to­ward prof­itabil­ity.

Separately it an­nounced a deal to buy mar­ket­ing tech­nol­ogy com­pany Tel­lA­part and a part­ner­ship with Google’s Dou­bleClick plat­form to im­prove ad­ver­tis­ing per­for­mance.

Earn­ings Leak

The re­sults came out ahead of sched­ule, through feeds on Twit­ter it­self, about half an hour be­fore the closing of the stock mar­ket and caused a tem­po­rary halt of trad­ing in the com­pany’s shares.

Twit­ter chief ex­ec­u­tive Dick Cos­tolo said rev­enue growth “fell slightly short of our ex­pec­ta­tions due to lower-than-ex­pected con­tri­bu­tion from some of our newer di­rect re­sponse prod­ucts.”

But he noted, “it is still early days for th­ese prod­ucts and we have a strong pipe­line that we be­lieve will drive in­creased value for di­rect re­sponse ad­ver­tis­ers in the fu­ture.”

Ad­ver­tis­ers balked at pay­ing higher amounts in auc­tions for ads de­signed to de­liver bet­ter re­sults, and Twit­ter ex­pected that fac­tor to weigh on rev­enue through the year, chief fi­nan­cial of­fi­cer An­thony Noto said dur­ing an earn­ings call.

“Some ad­ver­tis­ers with limited spend­ing dropped out due to bid­ding get­ting too high,” Noto said, adding that the model was be­ing re­fined and that he ex­pected that it would even­tu­ally pay off.

Cos­tolo re­mained con­fi­dent in Twit­ter’s strat­egy for long-term suc­cess.

Ad­ver­tis­ing rev­enue at Twit­ter tal­lied US$388 mil­lion, a 72 per­cent rise from the same quar­ter a year ear­lier. Ads served up on mo­bile de­vices ac­counted for 89 per­cent of the rev­enue.

The amount of money Twit­ter took in out­side the United States more than dou­bled to US$147 mil­lion and ac­counted for 34 per­cent of over­all rev­enue at the com­pany.

Woo­ing Users

The num­ber of monthly ac­tive users rose to 302 mil­lion from 288 mil­lion three months ear­lier, ex­tend­ing a growth trend which has nev­er­the­less dis­ap­pointed those who com­pare it to faster-grow­ing so­cial net­works.

Twit­ter has been striv­ing to ramp up the num­ber of peo­ple us­ing the ser­vice and the amount of time they spend at the on­line venue.

Last week, Twit­ter in­tro­duced a “High­lights” fea­ture that of­fers a twice-daily sum­mary “of the best tweets for you, de­liv­ered via rich push no­ti­fi­ca­tion,” the firm said in a blog post.

De­tails of the Tel­lA­part and Dou­bleClick deals were not re­leased but ex­ec­u­tives touted them as win­ning moves.

Cos­tolo said that Twit­ter, which boasted hav­ing cash and se­cu­ri­ties worth US$3.6 bil­lion at the end of the quar­ter, has an eye out for ac­qui­si­tions that will play to its strengths.

More than a mil­lion peo­ple logged into Periscope in the 10 days af­ter the ap­pli­ca­tion for real-time shar­ing of video launched in April, the Twit­ter chief said.

An al­liance with Google to have tweets de­liv­ered in search re­sults should begin tak­ing ef­fect in May, ac­cord­ing to Cos­tolo, who said that Twit­ter was also work­ing with Ap­ple to spot­light tweets.

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