News Column

Twitter user growth slows even as revenues rise

April 30, 2014

NEW YORK - Social networking site Twitter Tuesday reported a net loss of $132m in the first three months of 2014 though it posted quarterly profit of $250 million largely generated through advertising.

The shares of the San Francisco based business plummeted 10pc on Tuesday night, as the social networking site revealed that it had around 255m users in the three months to April - a 25pc increase on the previous quarter, compared with a 30pc increase in the quarter before that.

Despite higher user growth than the previous quarter, when Twitter saw just a 3.8 percent rise, the rate was below expectations of many analysts..

Twitter, which allows people to post messages 140 characters at a time, said it revenues more than doubled to $250million in the three months to April, and the company came close to breaking even.

The increase in revenue was "fuelled by increased engagement and user growth", said Dick Costolo, chief executive of Twitter.

The integration of advertising management software MoPub had helped Twitter "reach more than 1 billion iOS and Android users each month", he stated.

The social network may have made a dazzling stock market debut last November with its stock soaring from $14billion to nearly $40billion in December, but its shares have been volatile since.

A series of changes to its service, with greater emphasis on pictures and video and changing profiles to more closely resemble those of Facebook, Twitter has been trying to drive user growth.

Costolo said the number of tweets people had added to their favourites or re-tweeted were up 26 percent.

He has expressed confidence that the changes would drive up growth and usage of the service.

Timeline views, Twitter's measure of how many times a user refreshes a page on the desktop or a mobile device, increased 15 percent year-over-year to 157billion, up from 149billion last quarter but still below the 159billion it reported last year.

Responding to the criticism of NBC Universal's head of research, Alan Wurtzel, who told The Financial Times over the weekend that there was no evidence to support Twitter claims that it was driving TV audiences, Costolo said Twitter's interest in TV was "very much based on data we saw informing the two-way relationship".

He cited numerous studies to illustrate a close relationship between Twitter and TV usage.

Twitter is not alone in facing slowing growth problems. The pace at which Facebook adds accounts too appears to have run out of steam.

The largest social network now counts over 1billion people as monthly active users. At 255million, Twitter is in danger of being caught by the fast growing, and Facebook-owned Instagram, and is just over half as big as WhatsApp, the private social messaging service also owned by Facebook, states the Guardian..

Nate Elliott, analyst at Forrester Research, said users growth and "engagement" the amount of time they spend on Twitter and tweets they send, retweet and favourite, were far more important to investors and advertisers than revenues at present.

"If you don't have an audience, you don't have a business," he said.

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Source: Big News Network (United Arab Emirates)