Twitter: Core Users Dip In Q4, Revs Reach $2.2B

If Jack Dorsey is righting Twitter’s ship, it’s not reflected in the company’s fourth-quarter earnings report. For the first time in Twitter’s history, the social giant failed to add new users during the period.

In a rather defensive letter to investors on Wednesday, Twitter said: “We've already seen January monthly actives bounce back to Q3 levels.” Worse yet, the network’s core users -- which excludes those who receive tweets via text message -- fell from 307 million to 305 million, during the fourth quarter.

For the quarter, total average monthly active users reached 320 million -- the same as during the third quarter -- but up 9% year-over-year.

Excluding SMS Fast Followers, monthly active users were up 6% year-over-year.

On the bright side, Twitter’s quarterly earnings were in line with analyst expectations.

Total revenue reached $2.2 billion -- up 58% year-over-year. Year-over-year, Twitter’s total number of active advertisers also increased by about 90% to about 130,000 during the fourth quarter.



Ad revenue totaled $641 million -- an increase of 48% year-over-year -- with mobile ad revenue representing 86% of that total. Domestic revenue totaled $463 million -- an increase of 47% year-over-year -- while international revenue increased 51% to $247 million.

Some analysts remained optimistic about Twitter’s prospects on Wednesday.

“Twitter's ad revenue is still rising, and the introduction of new ad formats, such as First View, will help it capture more digital video ad dollars,” Debra Aho Williamson, principal analyst at eMarketer, said this week.

“As user growth slows, it becomes more and more important to ask whether Twitter can continue to grow revenue if it can't substantially increase its user base,” Williamson added. “I believe that it can.”

Why the optimism?

“Twitter has many ways to make money outside of the core service,” according to Williamson. “It has its ad network, and it is starting to show ads to people who visit Twitter pages without being logged in. Fixing the usage problems isn't unimportant, but figuring out how to keep the revenue engine going even if usage doesn't grow should be a major focus.”

Looking ahead, Twitter said it expects to take in between $595 million and $610 million in revenue during the first quarter -- again failing to meet analysts’ expectations.

CEO Jack Dorsey does seem committed to real change.

Despite a growing user backlash, Dorsey just decided to move Twitter away from arranging tweets in chronological order. Marking a fundamental strategic shift, the social giant will now give users the option of seeing more relevant tweets placed more prominently in their timelines. 

Dorsey is also reconsidering Twitter’s defining 140-character limit, and recently decided to embed live streaming Periscope broadcasts directly into tweets.

In another major shift, the company is also increasingly opening its doors to unregistered visitors. As of earlier this month, people without Twitter accounts can follow a variety of content streams in real-time.

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