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Twitter Q3'14 results show $175 million loss as user base grows by 23 per cent

05-November-2014
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Twitter Q3'14 results show $175 million loss as user base grows by 23 per cent

Both Facebook and Twitter saw their stock price fall after releasing their latest quarter results, but for very different reasons. With Facebook it was because of the company’s warning that expenses might go up by as much as 75 per cent in 2015. For Twitter, which continued a streak of growing user base and revenues over the last couple of quarters, the issue that stuck with investors was the huge $175 million in losses that the company posted. Q3 revenue, though, was posted at $361 million, up 114 per cent YoY.

For Twitter CEO Dick Costolo, the key takeaway from the quarterly results would have been the 23 per cent YoY increase in Average Monthly Active Users (MAUs), which means that the micro blogging platform had 284 million in the third quarter of 2014. Since going public back in November 2013, Twitter investors have tended to fall when the user base has stagnated. Though user growth slowed a bit from Q2 to Q3, it is not particularly worrying since it is a trend seen with the likes of Facebook too.

What should be a cause of concern for Twitter is drop in user engagement. To measure engagement, Twitter looks at the timeline views per Monthly Active User (MAU). This figure dropped nearly 7 per cent YoY. “The year-over-year decline primarily reflects the changes we've been making to allow users to more efficiently access to our content. We will continue to focus on driving the better product experience, which may pressure timeline views per MAU over time. Based on our current trends, we expect timeline views per MAU in Q4 could be flat on a year-over-year basis,” said Twitter CFO, Anthony Noto.

In the earnings call, Costolo admitted that strengthening the “core”; the monthly active users, remained one of the top priorities for the company. “We have to continue to grow our monthly active users and make Twitter an increasingly daily used case for them,” he said. To do this, Twitter is working on improving the user experience, providing more rich media and consumption tools and releasing new applications and services, said Costolo.

As expected, the major chunk of revenues came from advertising—$320 million; an increase of 109 per cent YoY. Ad revenue per 1,000 timeline views reached $1.77 in Q3, up 83 per cent YoY and 11 per cent sequentially. Almost 85 per cent of the total ad revenue came from mobile, up from 70 per cent last quarter; the highest for any social media platform.
 

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