Twitter Reports Ad Revenue Upswing, But Anemic User Growth

1:32 PM PST 02/05/2014 by Natalie Jarvey
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CEO Dick Costolo

UPDATE: The social media company’s stock tumbled in after-hours trading on news of slowing user growth.

In its first earnings report since becoming a public company, Twitter reported an uptick in ad revenue but a slowdown in user growth, causing its shares to drop during after-hours trading.

The company said that it earned 2 cents per share, excluding some items, for the fourth quarter on revenue of $243 million, up from what analysts were expecting. Wall Street predicted -2 cents earnings per share on revenue of $218 million. 

On a non-adjusted basis, the company reported a fourth-quarter loss of $1.41 per share. 

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Advertising revenue for the quarter totaled $220 million, up 121 percent from the same period last year. Ad revenue per thousand timeline views was $1.49 for the quarter, up 76 percent year from the same period last year. 

But buried behind the good news was some bad. Twitter saw 241 million average monthly active users for the quarter. While that's 30 percent growth year-over-year, it represents less than 4 percent growth from the previous quarter.

That news sent Twitter’s stock into an after-hours nose dive. Shares, which closed the day down 1 percent to $65.55, at one point plummeted nearly 12 percent to $58.22 during after-hours trading.

The company also reported full year adjusted earnings of -18 cents per share on revenue of $665 million.

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"Twitter finished a great year with our strongest financial quarter to date," said CEO Dick Costolo. "We are the only platform that is public, real-time, conversational and widely distributed and I'm excited by the number of initiatives we have underway to further build upon the Twitter experience."

The quarterly earnings highlighted the importance that mobile plays in Twitter’s business. Mobile advertising revenue, for example, made up 75 percent of total ad revenue. And mobile monthly active users represented 76 percent of total MAUs.  

Twitter debuted strong on the New York Stock Exchange in November. The social media company raised $1.8 billion from an IPO that saw shares, originally priced at $26 each, open at $45.10.

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