Twitter shares fall as growth of monthly users slows

Thursday, 30 July 2015 00:00 - - {{hitsCtrl.values.hits}}

Twitter Inc’s shares fell more than 11% in extended trade on Tuesday after the microblogging company said its number of monthly average users grew at the slowest pace since it went public in 2013.

“This is unacceptable and we’re not happy about it,” Jack Dorsey, who stepped in as interim chief executive on July 1, said on a call with analysts.

Twitter said it had 304 million core users in the second quarter, up from 302 million in the prior quarter.

Twitter’s struggles to increase its audience worries investors, who are focused on the company’s growth potential, and the latest figures did little to reassure them.

The data on users overshadowed the company’s second-quarter earnings and revenue, which exceeded expectations, and its bullish projections for future revenue.

Executives also made clear it would be a long process, and were candid about problems with the service.

“We do not expect to see sustained meaningful growth (in monthly active users) until we start to reach the mass market,” Chief Financial Officer Anthony Noto said on the call.

“We have not clearly communicated Twitter’s unique value. And as a result non-users continue to ask, ‘Why should I use Twitter?’ “Simply said, the product remains too difficult to use.”

Twitter recognises “there is an issue that needs to be worked on,” Evercore ISI analyst Ken Sena said. “They were giving investors a sense of the challenge and I think the stock sell-off that you saw just reflected that.”

Total revenue rose 61% to $ 502.4 million. Excluding the impact of a strong dollar, revenue rose 68%. Advertising revenue rose 63% to $ 452 million. Excluding the impact of the dollar, advertising revenue was up 71%.

The company’s net loss narrowed to $ 136.7 million, or 21 cents per share, in the second quarter ended 30 June from $ 144.6 million, or 24 cents per share, a year earlier.