Twitter user growth slows again - but revenue and profits remain strong

Twitter has a slew of new features in the pipeline in 2015, but faces increased competition from other platforms

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The Independent Online

Twitter, the social media platform, continued its recent pattern of reporting stronger than expected revenue and profits but lower than expected user numbers. The San Francisco-based company has reported similar results in the last three quarters, leaving some analysts to ponder if its days of exponential growth are over.

The company reported Fourth Quarter and annual numbers after the US markets closed on Thursday, noting an increase in revenue to $479.1m, well ahead of consensus forecasts and its own somewhat conservative estimates – another Twitter trend. Earnings per share for the quarter of 12 cents also came in ahead of forecasts.

However, the good financials are not going to make life any easier for chief executive Dick Costolo. Monthly Active Users, the total amount of active accounts is a key driver of advertising and revenue growth. Analysts had been hoping to see 292 million MAUs over the quarter, but the company reported 288 million, an increase of just 1.4 per cent on the Third Quarter.

Twitter has a slew of new features in the pipeline in 2015, including video streaming and instant messaging, but faces increased competition from other platforms. Yesterday’s disappointing user growth numbers will add to the perception that Twitter's growth rate is now pedestrian.


Elsewhere in tech, professional networking platform LinkedIn also reported Fourth Quarter numbers after the market closed, and comfortably beat even the most bullish Wall Street forecasts.

LinkedIn, which has a broader mix of revenue streams than Twitter and is generating a greater amount of revenue from recruitment, reported a 44 per cent jump in 4 Quarter revenue to $643m, well ahead of the consensus forecast of $617m. LinkedIn’s recruitment business, which it calls Talent Solutions, accounted for more than half it its revenue.

Unlike Twitter, it looks like LinkedIn will have little trouble justifying its valuation.