A year since Twitter went public, the first quarterly report has been somewhat of a mixed bag. The once booming social network had been able to boast a 30% increase in users year-on-year, but this quarter’s report has seen new sign-ups significantly slowing to 4% in the fourth quarter.
Despite this deceleration of users, an unexpected surge in fourth-quarter revenue gave the platform a profit of ¢2 per share, with total revenue of $264m, up 116% on the year. On a whole, these reports show that Twitter has become much more efficient at monetising its current user base, but is having trouble attracting a new audience.
Making Twitter fresh again
Twitter currently has a total database of 241 million active monthly users, but only nine million come from the latest quarter. There was a huge expectation that the figure would much higher, especially considering the international attention given to the platform in November 2013.
The problem isn’t just with new users – the current users are not being thoroughly utilised either. There has been a continual 7% quitter-to-quarter decrease in timeline views, whilst users outside of the North American audience only attribute to 24% of the overall ad revenue made.
Many have suggested that this is simply a familiar story to that of Facebook, who may have been able to attract a keen audience but had problems persuading marketers of its value, which eventually proved to be only growing pains. But what can be done to attract a new audience?
Despite the figures, Twitter seems to be feeling pretty confident based upon the statement given by Dick Costolo, chief executive of Twitter: “Twitter finished a great year with our strongest financial quarter to date.
“We are the only platform that is public, real-time, conversational and widely distributed and I’m excited by the number of initiatives we have underway to further build upon the Twitter experience.”
Mobile could be the key to increasing the audience size, as the platform represents 76% of the overall customer growth, with a standard growth of 37% year on year. Costolo commented: “Twitter made its platform more accessible to a broader range of advertisers by launching its self-serve advertising platform to small and medium-sized businesses in the UK, Ireland and Canada.”
According to Joshua Raymond, Chief Market Strategist at City Index, Twitter is going to have to get used to how fickle the markets are very quickly.
“Their first earnings report to the markets showed that users were refreshing their timelines less often and user growth slowed to 3.8%. Investors rapidly sold their shares forcing the stock price down 24%, wiping more than $6bn off the company’s value. Was this a market overreaction? Yes but when you have a stock that has rallied from $40 to a high of $74 at the end of last year, volatility becomes a feature in both the good times and the bad. I still think Twitter has huge potential and despite this disappointment, many will see Twitter with optimism and value.”
It’s clear that the social network is dedicated to improving itself thanks to a number of updates and changes to the platform on a regular basis. One of the most significant updates came in 2013 where a focus upon personalised timelines helped to enhance the platform as a personal account rather than simply a rapid, quick-fire communication device.
Meanwhile, 2014 has already seen significant developments made to both the desktop and mobile versions of the site. The official Twitter mobile app has become much more intuitive and user-friendly on small devices, whilst the desktop has become much more aesthetically pleasing and corresponds to the mobile version.
Twitter is clearly dedicated to improving its service on a regular basis, but only time will tell if this is enough to attract a new audience and to expand the advertising revenue beyond the North American market.