Twitter has recently released its latest quarterly results. The third quarter of 2015, unfortunately, was a disappointing one. The results clearly show that the social media company, which has gone through a lot of turmoil lately, continues to find it difficult to expand its audience and this is translated into significant financial losses.
The revenue forecast was also depressing. To make it worse, user growth was slower than expected as well. The result was that the shares of the social media platform dropped by about 13%. However, overall, there was a year on year increase of 11% in terms of monthly active users. So perhaps not everything is bleak.
There were some other positive signs as well. For instance, there was a 60.3% increase in advertisement revenue compared to the same quarter last year. Last year, it stood at $320 million, and this quarter it was able to reach $513 million. However, although these figures may look good, they are well below expected. Wall Street had previously stated that they expected the revenue to be $741 million and Twitter executives had hoped for revenue between $695 million and $710 million. The new CEO of Twitter, Jack Dorsey has commented on this in the quarterly report.
We continued to see strong financial performance this quarter, as well as meaningful progress across our three areas of focus: ensuring more disciplined execution, simplifying our services, and better communicating the value of our platform. We’ve simplified our roadmap and organization around a few big bets across Twitter, Periscope, and Vine that we believe represent our largest opportunities for growth.
Twitter is making big changes to help turn the tide. For instance, a huge new incentive plan has been started within the company, with many of Dorsey’s own shares earmarked to be issued to employees as stock next year. When markets closed, there had been some recovery in the overall stock price, with a final closing value of $30.85. However, the overall growth of monthly active users, not counting SMS fast followers (users who Tweet via texting), was just 8%, equating to 307 million users.
Dorsey became the CEO of Twitter in July 2015. He has, since then, added quite a few new features to the platform to make it more interesting and accessible. However, most of these features have only been minor changes. One of the bigger ones is ‘Moments’, which has been touted by most Twitter executives since its inception. Overall, they feel that it has made the platform far more user friendly, thus, improving overall experience.
Dorsey remains optimistic about the future of his company. In fact, he has told analysts about his optimism and his plans for further growth.
When amazing things happen in the world we see them right on Twitter, Periscope and on Vine. Last several months were no exception. With a single tweet in August, Germany’s immigration office sent a message about their acceptance of refugees that reverberated throughout Syria and the Middle East. It created a wave of migration that was documented for all the world to see, live.
On the other hand, Dorsey is also realistic. He knows that it will take patience, time and perseverance for the platform to climb back out of the slump that the company is in. This particular report is the first that has been issued since Dorsey became permanent chief executive, and many feel that this does show improvement overall, particularly when compared with last year. This is something investment and brokerage firm Stifel also commented on.
Twitter faces declining expectations and easing comps as it approaches 2016, which should be a ideal backdrop for a product-focused founder to look like a savior.