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Twitter beat expectations, but its stock is down 10% on lower than expected user growth
The stock is currently down over 9%, after gaining 4.64%, or $1.79 cents, in regular trading to finish at $42.62 a share.
The company posted quarterly revenue of $250 million, up 119% year to year, while analysts had been expecting quarterly revenue to be $241 million. Twitter reported non-GAAP EPS of $0.00, which beat expectations of a loss of 3 cents a share.
So why are investors so down on the company? Once again, it probably has to do with slowing user growth.
The company saw its average monthly active users (MAUs) grow 25% year to year, to reach 255 million. That is slower growth than it saw in the previous quarter, when MAUs went up by 30% year to year. Analysts had been expecting MAUs to hit 257 million.
Mobile MAUs increased 31% to 198 million, once again falling short of last quarter, which saw growth of 37%. Mobile MAUs represented 78% of the company's total MAUs, up from 76% last quarter.
Timeline views reached 157 billion for the first quarter of 2014, an increase of 15% year-over-year. They had been up 26% last quarter.
Almost all of Twitter's revenue came from advertising, which accounted for $226 million, a 125% year to year increase. Data licensing, and other revenue, came to $24 million, an increase of 76% year-over-year.
Of Twitter's total revenue, $70 million, or 28%, was International, an increase of 183% year-over-year.
Timeline views reached 157 billion in the first quarter of 2014, an increase of 15% year-over-year, while reached $1.44 in the first quarter of 2014, an increase of 96% year-over-year.
GAAP net loss was $132 million, compared to a net loss of $27 million in the same period last year.
Twitter is projecting revenue of between $270 and $280 million, with adjusted EBITDA in the range of $25 million to $30million, for the next quarter. For the full year 2014, it expects to see revenue between $1,200 million to $1,250 million, with an adjusted EBITDA in the range of $180million to $205 million.
(Image source: badlefthook.com)
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What is Twitter?
Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests.
Where did the idea for Twitter come from?
Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.
How is Twitter built?
Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes.
We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.
How do you make money from Twitter?
There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.
In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet.
At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.
Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.
What's next for Twitter?
We continue to focus on building a product that provides value for users.
We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.