Twitter Has Impact and Influence _ but Not Cash or Growth

  • Twitter Has Impact and Influence _ but Not Cash or Growth

Twitter Has Impact and Influence _ but Not Cash or Growth

The fourth quarter included the US presidential election in November, when Trump used Twitter to bypass traditional media and air his views to 24.3 million Twitter followers.

Twitter's CEO, Jack Dorsey, called 2016 a "transformative year". This was coupled with earnings of 16 cents per share as compared to 13 cents per share in the last quarter. Notably, the fact that the company's adjusted EPS of 16 cents topped forecast by 4 cents suggests that the cost cutting measures Twitter has taken has begun to work.

On an adjusted basis, earnings for the quarter were $118.60 million or $0.16 per share, compared to $114.62 million or $0.16 per share past year.

"Facebook and Google are going to continue to grow at very fast rates and continue to innovate and I think that would leave Twitter far behind at this point", he said.

The company has been relying on live video partnerships, as well as video advertising, to jump-start user additions and revenue growth.

"We overcame the toughest challenge for any consumer service at scale by reversing declining audience trends and re-accelerating usage", he said in a statement. And there's still more the company can do to make using Twitter as easy as looking out a window and seeing what's happening.

One figure that will give cause for concern among investors is a fall in advertising revenue in the fourth quarter, down to $638m from $641m in the same period of a year ago.

On Thursday, Twitter reported fourth-quarter earnings, i.e. earnings for the quarter that included November's U.S. presidential election.

Ad revenue fell in the fourth quarter, and the company's total revenue missed analysts' expectations, sending shares down 11% on Thursday afternoon. For the full year of 2016, Twitter lost $456 million on revenues of $2.5 billion.

Meanwhile, overall advertising revenue fell slightly compared to the same period past year, with ad revenue generated in the US down 5%. "These changes improved retention for both monthly active and daily active usage, as well as increased Tweet impressions and time spent on the service", the company stated. Daily average users, the other big metric, is not disclosed by the company in actual numbers.

Pacific Crest Securities analyst Andy Hargreaves, who has a Sector Weight rating on shares of Twitter, said the forward-looking comments indicate the company will keep being outpaced by competitors in 2017.

Dorsey said that the company is taking the same approach it took to the user side, namely to "reset and focus on our strengths [by] clearly differentiating and complementing Twitter's real-time nature", in order to show advertisers that Twitter works.