Shares of Twitter are getting slammed in after-hours trading, as lower-than-expected user growth outweighed revenue that topped estimates in the third quarter, released late Monday.
The stock tanked over 9%, after already losing 2.78%, or $1.39, in regular trading to finish at $48.56 a share. The stock is down over $16, or 25%, starting the year at $65 a share.
The company posted quarterly revenue of $361 million, up 114% year-to-year, handily beating analyst expectations of $351 million. Twitter reported non-GAAP EPS of $0.1, matching expectations.
So what exactly is going on with its stock price? Once again, lower-than-expected user growth was the main culprit.
Twitter saw its average monthly active users (MAUs) grow 23% year-to-year to 284 million, adding only 13 million since Q2. Mobile MAUs represented 80% of the company’s total MAUs. Analysts had been expected MAUs to reach at least 287 million. Its 5% quarter-to-quarter growth was down from the 6% Twitter saw in Q2. In a recent report, MMK Partners had said that anything below 14 million net adds would be a miss.
User growth has been a problem for the company in its previous earnings reports. In the second quarter it was able to beat expectations, but the company couldn’t make it happen again, and it is being punished for it.
The rest of the report all seems to read pretty well. Timeline views reached 181 billion for the third quarter of 2014, an increase of 14% year-over-year. The 5% quarter to quarter increase may have also hurt Twitter, as it had seen a 10% increase in the second quarter, though those numbers may have been inflated due to the World Cup.
Once again, almost all of Twitter’s revenue came from advertising, which accounted for $320 million, a 109% year to year increase. Mobile advertising revenue was 85% of total advertising revenue. Advertising revenue per thousand timeline views reached $1.77 in the third quarter of 2014, an increase of 83% year-over-year.
Data licensing, and other revenue, came to $41 million, an increase of 171% year-over-year. Of Twitter’s total revenue, $121 million, or 34%, was international, an increase of 176% year-over-year.
GAAP net loss was $175 million for the quarter, compared to a net loss of $65 million in the same period last year.
Twitter is projecting revenue of between $440 and $450 million, with adjusted EBITDA in the range of $100 million to $105 million, for the next quarter. For the full year 2014, it expects to see revenue between $1.365 billion to $ 1.375 billion, with an adjusted EBITDA in the range of $260 million to $265 million.
Last quarter the company had projected revenue of between $330 and $340 million for Q3, and revenue between $1.310 billion to $1.330 billion for the full year.
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