Twitter has released its earnings call for the fourth quarter of 2015 and has posted a revenue of $710 million with non-adjusted earnings of $114.6 million(16 cents a share). Although Twitter managed to meet the analysts’ expectations of $710 million and 12 cents a share, the age-old problem of its user base has got worse.
The user base in the fourth quarter remained stalled at 320 million Monthly Active Users (MAUs) which is the same as the third quarter, although increased from 292 million during the same period last year. Analysts had expected the user base to reach 325 million this quarter. This is not the worst part, though.
The worst part is that if one excludes the number of SMS Fast followers ( people who use Twitter via SMS and don’t see ads) from the above number, the number of users actually declined from 307 million in the previous quarter to 305 million.
And this is the first time it has happened in the history of Twitter, despite its desperate measures to increase the number of users over the past couple of years.
However, CFO Anthony Noto said that the users they lost were not of high quality, meaning that they visited Twitter occasionally during the month.
He also said that despite the decline in core monthly active users, there is no decline in the daily active user count. He partially attributed the reason of decline to the decision of Twitter to reduce the number of emails to dormant users.
Commenting on the same, the company said in its earning statement,
We saw a decline in monthly active usage in Q4, but we’ve already seen January monthly actives bounce back to Q3 levels. We’re confident that, with disciplined execution, this growth trend will continue over time.
However, even the future seems bleak at the moment for Twitter as far as its revenue expectations are concerned. It has projected a revenue between $595 million to $610 million which is far below the Wall Street expectations of $629.25 million.
There are some positives too in the earnings report. In addition to the 48% year-over-year increase in revenue despite stalled user growth, the most encouraging aspect was the 35% increase in average revenue per user from $1.48 to $2 indicating the success of its advertising efforts.
CEO Jack Dorsey has laid down a five-point focus plan in front of investors during the earnings call.
Refining our core service and making it more intuitive, investing in live-streaming video, giving creators and influencers the best tools, investing in making Twitter safer and better supporting developers.
In a letter to shareholders discussing the earnings report, Twitter also discussed the efforts of increasing the number of users and said that it was dedicated towards making the service less confusing.
These efforts include fixing the broken windows and confusing parts like @name syntax and @reply rules; improving the timeline; making tweets faster and more expressive with text and visual media; and helping people come together around a partiuclar topic such as @NBA timelines experiences.
It has already begun to implement few of the above changes revolving around timeline as it recently introduced an algorithm based timeline for showing the most important tweets at the top.