Twitter Stock Drops After Less Than Stellar Third Quarter Earnings Report


Yesterday Twitter released its third quarter earnings report and though revenue was up by 114% and its user base jumped by 13 million, it wasn’t enough to swoon investors. The company’s stock fell by 11% in after-hours trading following the earnings release.

“We had another very strong financial quarter” said Dick Costolo, CEO of Twitter. “I’m confident in our ability to build the largest daily audience in the world, over time, by strengthening the core, reducing barriers to consumption and building new apps and services.”

The guidance isn’t very strong, and a deeper look at the report shows that the company’s losses are widening. The big concern from this report is lower-than-expected user growth that appears to put a ceiling on ad revenues. In particular, Twitter provided a forecast of about 80% year-over-year revenue growth in the fourth quarter, down from 109% in the third quarter.

Twitter reported 284 million active users in the third quarter, up from 271 million in the second quarter this year. Without a major event like the World Cup, Buzzfeed noted that Twitter wasn’t able to continue dramatically boosting its user base, suggesting that it needs flagship events like that to boost its numbers. Even though the company has been touting user activity around events like NFL games, it hasn’t hit the highs that it achieved during the World Cup over this past summer.

Other highlights Twitter noted in their release are below:

Third Quarter 2014 Operational Highlights

  • Average Monthly Active Users (MAUs) were 284 million for the third quarter, an increase of 23% year-over-year.

  • Average Mobile MAUs represented around 80% of total MAUs.

  • Timeline views reached 181 billion for the third quarter of 2014, an increase of 14% year-over-year.

  • Advertising revenue per thousand timeline views reached $1.77 in the third quarter of 2014, an increase of 83% year-over-year.

Third Quarter 2014 Product Highlights

  • Users: Twitter launched its biggest update to the profile experience on the iPhone with an increased focus on bios, tweets and photos, making it easy for users to get a glimpse into the people they care most about on Twitter, resulting in an 83% increase in profile impressions on iOS. Twitter also launched new consumer experiences around the NFL, making it easy to stay up to date and keep up with the latest action. In the #NFL Timeline, users can see NFL-related Tweets from people in their network, along with relevant Tweets from teams, players, coaches, press, fans and celebrities. Finally, Twitter released a new camera for the Vine app with powerful new ways to edit videos as well as the ability to import existing videos and turn them into Vines.

  • Advertisers: Twitter launched a number of new advertiser tools, including: a Promoted Video beta, which streamlines video playback and brings a one-tap viewing experience to users’ timelines; a test of the “Buy” button, allowing users to complete an entire purchase directly from a tweet; objective-based campaigns, reports and pricing, which make it easier for advertisers to create and optimize successful marketing campaigns and pay only for the actions that are aligned with their marketing objectives; and new tools to make it even easier to create, manage and activate tailored audiences on Twitter. The new tailored audience features include audience list upload capability, better audience management tools, new supported ID types for creating audiences – specifically, mobile advertising IDs and mobile phone numbers – and improved targeting options to help advertisers reach additional users similar to their existing audiences.

  • International Expansion: Twitter continued the international expansion of Twitter Ads to 12 additional markets in Central, Continental and Eastern Europe. In addition, Twitter entered 12 new countries with its self-service ad products for small- and medium-sized businesses (SMBs): Argentina, Chile, Colombia, Ecuador, Guatemala, Mexico and Peru in Latin America, and Belgium, France, Italy, Luxembourg and the Netherlands in Europe. Twitter’s self serve ad products now serve marketers in 20 countries that, in aggregate, account for more than 45% of its global monthly active user base.

  • Developers: Twitter announced its first mobile developer conference, Flight, where it subsequently unveiled Fabric, a modular, integrated SDK that combines the functionality of Crashlytics, the MoPub ad serving platform, and a new Twitter SDK to help developers build and deliver scalable, stable apps with state of the art app monitoring, mobile identity and monetization services.

  • Acquired Companies: Finally, Twitter closed the acquisitions of CardSpring, a payments infrastructure company, TapCommerce, a leader in mobile retargeting and re-engagement advertising, and SnappyTV, a platform for video editing and distribution.

Third Quarter 2014 Financial Highlights

Revenue – Revenue for the third quarter of 2014 totaled $361 million, an increase of 114% compared to $169 million in the same period last year.

  • Advertising revenue totaled $320 million, an increase of 109% year-over-year.

  • Mobile advertising revenue was 85% of total advertising revenue.

  • Data licensing and other revenue totaled $41 million, an increase of 171% year-over-year.

  • International revenue totaled $121 million, an increase of 176% year-over-year.

  • International revenue was 34% of total revenue.


Please enter your comment!
Please enter your name here