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Dick Costolo: Twitter 'doubling down' on user growth

Twitter's user growth is slowing, but CEO says upcoming changes will help bring on more new users

Financial trends and news by Steven Loeb
February 5, 2014 | Comments
Short URL: http://vator.tv/n/34d9

In a conference call following the release of Twitter's first ever earnings report, CEO Dick Costolo took the time to extole the virtures of the platform, as well as talk about where he will be taking it over the next year.

"Twitter is the only platform that is simultaneously public, real-time conversational and widely distributed," he said. "No other platform combines all these elements at scale."

Because anyone can create a tweet, and tweets can be read by anyone, Twitter has created a "level playing field, essentially democratizing content creation and distribution."

To illustrate this point Costolo pointed to some big moments on Twitter over the last year, including over 5.4 million tweets about the death of Nelson Mandela and 1.7 million tweets sent out about the World Cup draw.

"When events happen, the event itself, and the conversation surrounding the event, unfold on Twitter.

Costolo also addressed user growth, numbers that investors found disappointing. Twitter saw its average monthly active users (MAUs) grow 30% year to year to 241 million, while mobile MAUs increased 37% to 184 million. They represented 76% of the company's total MAUs.

"We are confident in our ability to continue to scale revenue by expanding our global reach, and introducing and scaling new ad products, even as we continue to maintain some of the industry's strictist limits on ad load, in order to optimize for the user experience," he said.

"With confidence in our ability to scale revenue, we are doubling down in 2014 to accelerate the growth of our core user base."

In the past quarter, Costolo said, the company brought content forward while pushing "the scaffolding" back, in order to help new, or casual users, to get a better handle on how to use it.

Steps to do this included introducing media forward timelines and in-line social actions. And its working: favoriting and retweeting is up 35% since those features debuted. The company also put direct messaging front and center on mobile apps, increasing messaging by 25%.

So what should we expected over the next 12 months?

"One of our core values as a company is to reach every person on the planet, and in 2014 we're focused on building a Twitter that is truly accessible and valuable to everyone" said Costolo.

That means making improvements to the new user experience, particularly on mobile. It also means ingrating richer media experiences on Twitter, making it more visually engaging, and making it a better tool for both public and private conversations. Finally, it will help better organize content for its users, basing it on topics, not just chronological order.

"We believe the changes we're making will make a much more satisfying experience for users in their first few days, then weeks, and then months and years on Twitter and, ultimately, lead to higher engagement and user growth over time."

Earnings results

The company posted revenue of $243 million, up 116% from $112 million year to year, while analysts had been expecting quarterly revenue to be $218 million. Twitter reported non-GAAP EPS of $0.02, which beat expectations of a loss of 2 cents.

It also posted a net loss of $511 million the company, which is more than double its quarterly revenue. The company saw a net loss of $9 million in the same period last year.

Almost all of Twitter's revenue came from advertising, which accounted for $220 million, a 121% year to year increase. Of that revenue, more than 75% came from mobile. Data licensing, and other revenue, came to $23 million, an increase of 80% year-over-year.

Of Twitter's total revenue, 27% was International, an increase of 200% year-over-year.

Timeline views reached 148 billion in the fourth quarter of 2013, an increase of 26% year-over-year, while advertising revenue per thousand timeline views reached $1.49 in the fourth quarter of 2013, an increase of 76% year-over-year.

For the full year 2013, Twitter reported revenue of $665 million, up 110% year to year, and a net loss of $645 million.

Twitter is projecting revenue of between $230 and $240 million, with adjusted EBITDA in the range of $10 million to $16 million, for the next quarter. For the full year 2014, it expects to see revenue between $1,150 million to $1,200 million, with an djusted EBITDA in the range of $150 million to $180 million.

(Image source: http://www.votetomas.com)


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