Twitter misses Q4 revenue targets amid advertising revenue slump
- Author: Annette Adams Feb 10, 2017,
Feb 10, 2017, 1:47
The company's revenue shortfall came even though its cost of revenue - the amount it must spend for hosting the service and sharing revenue with partners, among other things - rose by 40.4 percent to $306 million from a year earlier.
Wall Street analysts were disappointed with the results. At the time, Dorsey said that Twitter was cutting its workforce as part of the firm's goal to become profitable in 2017 and simplify how it operates.
Dorsey said that the company is taking the same approach it took to the user side, namely to "reset and focus on our strengths [by] clearly differentiating and complementing Twitter's real-time nature", in order to show advertisers that Twitter works. Total MAUs for Q4 grew by just 2 million between last quarter and this quarter to 319 million. Data licensing and other revenue totaled $79 million - an increase of 14%, year-over-year. Its revenue from the United States was down five percent at $440 million. Global revenue totaled $277 million, which represented an increase of 12% year-over-year.
Total ad engagements surged 151% from previous year, but cost per engagement (CPE) was down 60%. The social media company expects between $75 million and $95 million in adjusted earnings this quarter before interest, taxes, depreciation and amortization.
"Revenue growth will continue to lag audience growth due to the sales cycle". 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.
"We really need to improve our targeting capabilities, improve our measurement capabilities and improve our creative capabilities to get some of our DR products to continue to scale the way our successful ones have", Noto said.
Company watchers are not holding their breath.
Twitter's stock took another big hit on Thursday, but its CEO Jack Dorsey doesn't plan to stop juggling two jobs anytime soon.
"Trump is very polarizing and I think a lot of times people might see something he tweeted on the news networks", eMarketer analyst Debra Aho Williamson said in an interview. Its outlook did not call for revenue growth.
While it may be the mouthpiece of U.S. president Donald Trump, the Q4 earnings for Twitter have revealed it is still not very profitable.
Facebook's stats, published at the start of February, said it had 1.86 billion people using its website across December - a 17 per cent year-on-year growth - and 1.74 billion people using Facebook on mobile in the final month.