Twitter’s market cap fell back to earth this morning, shedding more than 21 percent of its value on the heels of a $511 million net loss in the previous quarter. The company’s 116 percent year-over-year increase in revenue to the tune of $243 million was no match to Twitter’s massive expenditures in sales, marketing, and research and development. Losses surpassed half a billion dollars from $8.7 million in the year-ago quarter.
The bulk of Twitter’s revenue, or $220 million, was derived from a 121 percent year-over-year increase in advertising. While Facebook was applauded for earning more than half of its revenue from mobile in the previous quarter, Twitter is already pulling in more than 75 percent of its revenue from mobile.
Elsewhere for Twitter though, cracks are beginning to show on the surface. The platform’s total average monthly active user base jumped less than 4 percent to 241 million during the quarter, marking the lowest quarterly gain in users since the company began disclosing those numbers. Average monthly active users were up 30 percent from the year-ago period, however.
Timeline views fell for the first time from the previous quarter’s 159 billion to 148 billion, but Twitter still managed to net a 26 percent year-over-year increase. Mobile monthly active users jumped 37 percent from the year-ago quarter to 184 million.
Meanwhile, advertising revenue per thousand timeline views — a top benchmark by which Twitter gauges the growth of its business — grew 76 percent from the year-ago period to $1.49 in the final quarter of 2013. Favorites and retweets were up 35 percent from the previous quarter while direct messages jumped 25 percent in the same period, according to Twitter.
“Twitter is the only platform that is simultaneously public, real time, conversational and widely distributed,” Dick Costolo, chief executive of Twitter, says on the earnings call with investors and analysts. “We believe those four pillars are the right four pillars to help us reach every connected person on the planet.”
Indeed, Costolo spent much of the call answering questions about how Twitter plans to gain more users and increase engagement. Twitter’s roadmap calls for improvements across those four pillars he cited, including the user experience for new users especially on mobile, deeper integration of rich media, making Twitter a better tool for public and private conversations, and finally better organizing content along topical and relevance lines.
“We don’t think we need to change anything about the characteristics of our platform. We simply need to make Twitter a better Twitter,” Costolo says. “Those additive changes over the course of the year… will start to change the slope of that growth curve going forward.”
Costolo ended Twitter’s first earnings call by highlighting the key attributes that are unique to Twitter and discussing the overall strengths of native ads on mobile.
“We’re the place that information breaks first. We’re the place that real-time discovery of content happens. We’re the place that exists as the consummate second screen, both for the TV and any experience that’s happening in the world, and no other service can say that,” he tells analysts.
“In the mobile world, that display ad can no longer be an interruption through which a marketer tries to communicate more loudly than the content on the screen. That advertisement has to be content that’s relevant for the user,” Costolo says. “The ads perform better when they’re content first… That combination of the native ad unit and true one-to-one marketing that’s amplified has just made the ads better in this environment.”