(Adds dropped word 'million' in paragraph 18.)
Feb 9 Investors hammered Twitter Inc on
Thursday after the social network reported its slowest quarterly
revenue growth since going public in 2013, struggling to attract
advertisers amid intense competition from Snap Inc's Snapchat
and Facebook Inc.
The company's shares fell as much as 10 percent to $16.81 in
Revenue grew just 1 percent to $717.2 million, missing
analysts' average estimate of $740.1 million, according to
Thomson Reuters I/B/E/S.
Revenue from advertising declined year-over-year to $638
million, and the company warned that ad revenue growth would
continue to lag audience growth during 2017.
"Advertising revenue growth may be further impacted by
escalating competition for digital ad spending and Twitter's
re-evaluation of its revenue product feature portfolio, which
could result in the de-emphasis of certain product features,"
the company said.
The results show advertisers are shifting dollars to
Facebook, said Michael Pachter, a Wedbush Securities analyst.
Facebook said last week its revenue soared $3 billion from a
"There isn't a growth story here," Pachter said of Twitter.
"I don't think they can grow revenue without showing user
growth," he said. "They have to convince advertisers that they
will reach an expanding audience, or they will have trouble
competing for new revenue dollars."
Twitter's net loss widened to $167.1 million, or 23 cents
per share, in the fourth quarter ended Dec. 31, from $90.24
million, or 13 cents per share, a year earlier.
The company's adjusted profit, however, beat sharply lowered
"While revenue growth continues to lag audience growth, we
are applying the same focused approach that drove audience
growth to our revenue product portfolio," Chief Executive Jack
Dorsey said in a statement. "This will take time, but we're
moving fast to show results."
Excluding items, the company earned 16 cents per share in
the fourth quarter, beating the average estimate of 12 cents per
San Francisco-based Twitter was abuzz with takeover chatter
last year involving big names such as Salesforce.com Inc
and Walt Disney Co. That speculation dissipated amid a
lack of concrete offers.
Twitter was also hit by a string of executive departures in
2016, including in its products team, which had three heads in
less than a year.
Dorsey was upbeat about audience trends, saying in his
statement the company saw "strong growth continuing" in future
daily active usage.
The user base increased 4 percent in the fourth quarter to
319 million average monthly active users, Twitter said.
Analysts on average had expected 319.6 million monthly
active users, according to market research firm FactSet
Twitter's user growth benefited from social media frenzy
relating to the U.S. presidential election as well as the
growing follower base of President Donald Trump, who has 24.3
million listed followers on the network.
Trump has been using Twitter to air his views, bypassing
traditional media outlets.
"The shocking part is that the Trump effect was zero. Their
growth actually slowed during the quarter," Pachter said.
Twitter has upgraded its offerings with several new
features, including live video broadcasts from its app.
"While none of them will likely materially change Twitter's
user/usage growth, these product innovations are a positive
step," RBC Capital Markets analysts wrote in a pre-earnings
Restructuring charges in the latest quarter ballooned to
$101.2 million from $12.9 million a year earlier.
Twitter said in October it would cut 9 percent of its global
workforce as part of a broader restructuring.
(Reporting by Aishwarya Venugopal and Supantha Mukherjee in
Bengaluru and David Ingram in New York; Editing by Saumyadeb
Chakrabarty and Bernadette Baum)