Twitter Earnings Report Beats Expectations and Shows Growth, But Not Enough for Investors
Twitter released its earnings report for the second quarter that it has been a publically traded company late Tuesday. The results beat expectations in several fiscal categories, but the outlook for the social media company remains grim.
Twitter's second earnings report turned out much better than its first, raising its revenue outlook for the year to $1.2 billion to $1.25 billion, better than its previous outlook of $1.15 billion to $1.2 billion, and projecting revenue for the second quarter of up to $280 million - which beat analysts' expectations of $272.9 million.
The report also said Twitter's revenue rose in the first fiscal quarter of the year to $250.5 million, which is a big climb from $114.3 million in the same time a year earlier. However, the company remained unprofitable for now, widening its loss to $132.4 million from $27 million in losses last year. That negative figure for this quarter beat Wall Street expectations that were nearly double that, though.
Twitter's Active User Base, Engagement is Up
One of the biggest takeaways from Twitter's disappointing first earnings report after its IPO late last year was that the company needed to expand its active user base -- which meant engaging current Twitter users (as we previously reported, up to 44 percent of Twitter users have never actually tweeted, according to one study), along with gaining new subscribers.
This quarter, the all-important figure of the "monthly active user base," which denotes the number of users who logged in at least one time per month, was up.
For this quarter's earnings report, Twitter announced that its active user base grew to 255 million, according to The Wall Street Journal. Another metric, called timeline views, which represents the number of "refreshes" a user performs on a page or mobile app, was up 15 percent from the previous year, and 6.1 percent from the company's first earnings report. Timeline views, which Twitter uses for advertisers, are a good metric of user engagement and activity.
Twitter's Efforts Worked, But Not Enough
Twitter has gone through a lot of changes in the past three months to attract new users and get current Twitter users to use the service more often.
Among these efforts include a redesigned page layout, which some legacy Twitter users complained looks too much like Facebook. However, as we previously noted, Twitter likely takes those complaints as a sign of success: one of the problems acknowledged by Twitter was that its user interface was too confusing and too much of a learning curve to get new users hooked on the social media network.
Meanwhile, Twitter also began working with advertisers, and hired a multicultural strategist to increase the network's outreach and engagement with one of Twitter's biggest strengths -- its diversity. Latinos, in particular, have been noticed by Twitter as a demographic to track, engage, and play up to advertisers, as the social media company's internal figures demonstrated that Latinos are more active and invested in Twitter than the general user base, as we previously reported.
Despite the increase in Twitter's active user base and engagement figures, the rate at which the social media company grew has slowed, leading to a decidedly gloomy outlook and a slide in share price since the report was released.
The active user base only grew 25 percent this quarter, which is down from the 30 percent growth in the previous quarter. After-hours trading dropped the company's stock value by 10 percent, and remains down about 36 percent on the year.
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