Sure
to embolden Dick Costolo’s critics, Twitter once again reported slower-than-expected user growth on Thursday.
During the fourth quarter of 2014, monthly active users (MAUs) were up about
20% year-over-year to 288 million. Since the third quarter, however, MAUs were only up by about 4 million.
Despite the mediocre numbers, Twitter’s CEO insisted that the most recent data
showed stronger user growth.
The “MAU trend has already turned around,” Costolo told analysts on Twitter’s earnings call on Thursday.
In the first quarter of 2015,
Twitter said it expects to add between 13 million and 16 million users, which would represent a growth rate similar to that experienced in early 2014.
For the fourth quarter of the year,
timeline views reached 182 billion, which represented an increase of 23% year-over-year. Ad revenue per thousand timeline views reached $2.37 in the fourth
quarter -- an increase of 60% year-over-year.
Meanwhile, Twitter's ad business continues to outperform. During the fourth quarter, revenue was up 97% year-over-year to $479 million on
earnings per share of $0.12.
“Financially, we had another great quarter,” Costolo said.
During the quarter, mobile advertising revenue represented 88% of total ad
revenue.
Last quarter, Costolo said he was frustrated by Twitter’s rate of product development. Since then, however, Costolo has been “delighted” by the accelerated pace of
execution, he said on Thursday.
The social giant has been on a product launch and partnership tear. For starters, Costolo on Thursday confirmed reports that Twitter was working on putting real-time tweets back in Google
search engine results. A similar relationship between the two companies lasted from late 2009 through mid-July 2012.
Among other efforts, Twitter also just began testing a home page designed specifically for users who don't have their own
account, and announced plans to expand Promoted Tweets to third-party
sites.
Marketing executives said the latter effort was particularly significant. “The sheer scale of [the third-party expansion] changes the way Twitter is measured,” Craig
Elimeliah, SVP and director of creative technology at marketing agency RAPP, said on Thursday. “Growing outside of the stream and syndicating promoted tweets on other properties is a game
changer.”
Anthony Noto, Twitter's chief financial officer, said on Thursday that he did not expect these recent product launches and partnerships to significantly impact user growth
through the first quarter of 2015.
That could be bad news for Costolo who is reportedly under increasing pressure to step down.
Analysts remain
divided about Twitter’s prospects. “Just 18 months ago, Twitter was clearly the [No. 2] consumer social network, but now it appears to have tumbled into fourth place, [while] relative
newcomers like Instagram and Pinterest have spent the last year collecting more and more new users,” Forrester Research analyst Nate Elliott said earlier this week.
Earlier this week,
however, JPMorgan analyst Doug Anmuth was more optimistic about Twitter’ future. “We are increasingly confident in [Twitter’s] ability to grow users over time,” Anmuth said in
a note to investors.
Looking forward, Twitter said it expected revenue to fall in the range of $440 million to $450 million during the first quarter of 2015. For the full year of 2015, Twitter
said it expects to generate revenue in the range of $2.3 billion to $2.35 billion.