Twitter beats revenue expectations but fails to add any new users this quarter

Twitter has released its second quarter earnings report and despite beating analysts’ revenue expectations, the struggling social media network failed to increase its monthly active users, spooking investors looking for growth and causing the company’s shares to drop as much as 14 percent to $16.85, the biggest one-day drop since October.

The microblogging service reported 328 million monthly active users, which is the exact same figure it reported during the last quarter. Revenue fell 4.7 percent to $573.9 million, beating Wall Street’s estimate of $537.2 million, but the company reported a net loss of $116.5 million, or 16 cents a share. Even though it failed to show an increase in users, Twitter said that 12 percent more users are visiting the site daily than in the same quarter last year.

Anthony Noto, the company's chief operating officer, said on a call with investors:

“While we still have a lot of work to do for revenue growth to get it to track audience growth, the improvements in revenue growth reflect the progress executing against our top revenue-generating products in the second quarter as well as strengthening business fundamentals.”

Twitter has made several efforts to attract more users, including merging some features to streamline discoverability and making various UI refinements. The company has also been investing heavily in video, but it has a hard time competing against Facebook and Google for advertising dollars.

In the third quarter, Twitter expects adjusted earnings before interest, tax, depreciation, and amortization of $130 million to $150 million, but the company has a long way to go to convince investors that it has found a path to sustainable long-term growth.

Source: Twitter via Bloomberg

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