Twitter beats earning expectations amid exodus of top executives

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Twitter beat expectations – including its own – by a healthy margin on Tuesday, announcing better-than-anticipated earnings even as two more high-profile executives left amid a continuing shakeup. The company’s share price rallied 5.36% in after-hours trading.

“Product initiatives we’ve mentioned in previous calls haven’t yet had meaningful impact on growing audience and participation,” interim CEO and co-founder Jack Dorsey said on a conference call with investors. “This is unacceptable, and we’re not happy about it.”

Twitter is flirting with new features that will change its simple interface to curate tweets more effectively for new users. Its timeline layout, which places the freshest tweets first and is more or less synonymous with the product, may change. “We need to balance recency with relevance,” Dorsey said.

The company posted revenues of $502.4m for the period ending 30 June, compared with $312.2m one year earlier and a net loss of $137m. Stagnating growth, however, remains a problem, as does the vacancy in the chief executive’s office. Average monthly users were up 15% year-over-year, to 316 million, but up only 8 million from 308m the quarter before – a rise of just 2.6%.

User growth is a metric to which Twitter has paid particular attention, and it is not increasing at a rate that pleases company brass. Advertising accounted for fully $452m of that number and was up $175m from the same quarter in 2014.

“Our Q2 results show good progress in monetization, but we are not satisfied with our growth in audience,” said Dorsey. The company is doubling down on its audience goals, casting stagnating subscriber growth as in part a PR problem (the company’s head of communications left abruptly on 16 July).

“In order to realize Twitter’s full potential,” Dorsey said, “we must improve in three key areas: ensure more disciplined execution, simplify our service to deliver Twitter’s value faster, and better communicate that value.”

Ahead of Twitter’s earnings announcement came the latest in a series of high-profile departures: product director Todd Jackson has left Twitter for Dropbox, and head of growth Christian Oestlien has left for YouTube.

Dick Costolo announced he was leaving the company last month amid stalled growth, with Dorsey taking the helm on a temporary basis.

Rich Greenfield, media and technology analyst at BTIG, said Twitter’s focus on user numbers was the opposite of what it ought to do in order to stay healthy.

“We believe Twitter has focused too hard on trying to be perceived by investors and brands as equivalent in scale/reach to Facebook,” he wrote in a note to investors earlier Tuesday, about what he would do as hypothetical CEO of the company.

“We believe spending less time trying to monetize syndication and more time building the active, logged-in user experience is a far bigger long-term opportunity. Too many people try Twitter and stop using it because it is too hard/complicated.”

Powered by Guardian.co.ukThis article was written by Sam Thielman in New York, for theguardian.com on Tuesday 28th July 2015 21.53 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010