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Twitter adds 5 million new users, but forecast is still gloomy

By Koh Wanzi - on 27 Apr 2016, 4:11pm

Twitter adds 5 million new users, but forecast is still gloomy

There doesn't seem to be a light at the end of the tunnel for Twitter. (Image Source: Twitter)

The big news out of all the quarterly earnings reports today was Apple’s first ever revenue drop in 13 years, but in the midst of all that noise was more bleak news from everyone’s favorite – maybe not, depending on who you are – microblogging service. In its first-quarter earnings call, Twitter reported revenue of US$595 million, less than the US$607.8 million that analysts had predicted.

This is up 36 percent from the same period last year, but is quite a big drop from the previous quarter where total revenue stood at US$710 million. The company also revised its second quarter revenue guidance downwards – it is now targeting US$590 million to US$610 million in revenue, much lower than the analyst consensus of US$678 million. Its stock is also down over 12 percent on the news.

Revenue is up 36 percent year-on-year, but still down from last quarter's US$710 million. (Image Source: Twitter)

In its letter to shareholders, Twitter attributed the revenue shortfall to brand marketers, saying that they “did not increase spending as quickly as expected in the first quarter”.
There is still a silver lining in the midst of all these missed expectations though. Twitter also said that it had added five million users, putting its total users now at 310 million.

This is welcome news, especially after the company reported its first ever user decline in the last quarter of 2015. However, there’s still little reason for celebration. User growth numbers in the US market appear to have stagnated – the figure now sits at 65 million users, the same as in 2015, which means Twitter is failing to generate interest in one of its key markets.

But the more worrying fact is that despite all Twitter has done to revitalize itself, it still doesn’t seem to be enough. In addition to a new CEO and other leadership changes, Twitter has launched new features like Moments and polls, and also integrated Periscope directly into its timeline. It has even enabled longer direct messages, and more recently did away with its reverse chronological timeline – a signature feature – in favor of sorting tweets by quality and relevance.

Live video, courtesy of Periscope, was one of its more interesting offerings, but Facebook has since made an aggressive push into live video streaming as well.

People have been debating Twitter’s problems for a while now. But it’s starting to look like maybe Twitter’s issues run too deep.

Source: US Securities and Exchange Commission via Recode

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