News Column

Twitter's sales, user growth tops estimates

July 30, 2014

Bloomberg News

New York: Twitter's second-quarter revenue and user growth topped analysts' estimates, sending its shares soaring more than 35 per cent.

The microblogging company's active membership in the quarter reached 271 million, with year-over-year growth at 24 per cent, compared with 25 per cent in the prior period, Twitter said in a statement.

That exceeded analysts' projections of 267 million monthly active users for the quarter, according to data compiled by Bloomberg. Sales more than doubled to $312.2 million, exceeding the $282.8 million average estimate.

New members

The San Francisco-based company is maintaining its rate of attracting new members after reporting two straight quarters of decelerating user growth.

The slowdown, coming so soon after Twitter's November initial public offering, had stoked investor concerns that the company's fastest sales growth was behind it. Chief Executive Officer Dick Costolo responded by gutting Twitter's executive ranks, including replacing his chief financial officer and parting ways with his operating chief.

"People who were negative on the company and on the stock now have reason to reconsider and re-evaluate," said Scott Kessler, an analyst at S&P Capital IQ. "Twitter has momentum in its business."

Shares jumped as high as $52.48 in extended trading, after rising 1.8 per cent to $38.60 at the close.

The stock, which closed at a record of $73.31 on December 26, had plunged 47 per cent since then on concerns that Twitter wasn't growing fast enough to justify its valuation.

The company is among the most expensive in technology based on projected 2014 sales.

Net loss

Twitter's net loss widened to $144.6 million, or 24 cents a share, from $42 million a year earlier. Excluding some items, the company reported a two cent profit, compared with the one cent loss estimated by analysts polled by Bloomberg.

People viewed their Twitter timelines more often, with 173 billion views, up from 157 billion in the prior quarter.

For the current quarter, Twitter said revenue will be $330 million to $340 million, exceeding analysts' average estimate of $323.1 million. The company raised its full-year sales forecast to $1.31 billion to $1.33 billion, up from an April projection of $1.2 billion to $1.25 billion.

"The company appears to have allayed investor fears that they can drive user growth and accelerate top revenue growth," Paul Sweeney, an analyst at Bloomberg Intelligence, wrote in an e-mail.

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Source: Times of Oman

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