Twitter growth is falling again
The small nice-ish story Twitter had going for itself for
the past few quarters was that, at the very least, its monthly active users
were growing quarter-over-quarter.
While MAUs might not be the right number to look at these
days, for better or worse it’s one of the core metrics that Twitter is judged
on for now — and that didn’t pan out when it reported its earnings today as its
users were flat quarter-over-quarter (and up around 5% compared to the same
quarter last year).
Perhaps more importantly, the company’s MAUs in the United
States fell slightly though the loss was made up by international users.
So, in very Twitter fashion, the stock fell on its face as
it dropped more than 8% after the report came out. Here’s the money chart:
The rest of Twitter’s business looked more or less fine, but
it seems that Wall Street was still relying on Twitter to continue that even
small user growth. Its revenue is still falling, coming down to $574 million as
its advertising business continues to decline. Its data licensing is still
growing, but not yet fast enough (or large enough) to offset that decline.
Twitter said it brought in earnings of 12 cents per share, while analysts were
looking for earnings of 5 cents per share on revenue of $536.6 million.
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Here’s one reason why that number in the U.S. falling would
be bad for Twitter: it’s probably its most efficient market (as it is for many
other companies) in terms of monetization.
Its U.S. users are a fraction of its
total users, but they make up a majority of its advertising revenue. It’s the
same kind of problem that Netflix has had to grapple with as it tries to grow
even as it may be reaching a saturation point — where everyone who could
potentially want to use Twitter is already on Twitter. (The below is
advertising revenue.)
In a grander scope, Twitter has sought to bill itself as an
indispensable live service that can evolve into a long-term independent
company. Snap’s shoddy performance since going public may have altered the
calculus of how the market views advertising products outside of Facebook and
Google, but Twitter may see an opportunity to capitalize on its (well, large)
niche and sell high-priced video advertising products.
To that extent, the company touted that it had 55 million
unique video viewers. It’s also tried to show that its daily user count is
growing, though it was with this bizarre mystery chart with no actual daily
active user number (but hey, this is tech — we don’t need a Y axis):
So far this year, that pitch may be working.
Even with even
more changes at the top — though the most recent one was an addition with a new
head of live video business — the company’s stock is still up around 20%.
Twitter announced earlier this month it brought on a new CFO after Anthony Noto
took over as the chief operating officer. But if it’s going to continue to sell
itself, it apparently still needs to do more to get that user growth going up.
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