The microblogging network Twitter has had a hard time. In its way to fix things the way it did, the company tried several strategies as well as introducing new and better targeted ads to users.
The company's 2015 second quarterly earnings and revenue has past expectations. Its advertising business is working its way up, but the growing pains are not yet over for Twitter.
When users are products, internet companies are selling user data to advertisers that are willing to buy targeted ads. Twitter succeeded in bringing more advertisers into its platform. The social media company said that its Q2 revenue rose 61 percent to $502.4 million compared with $312.2 million in 2014.
The result has outpaced Twitter's projection and analysts' expectations.
But as good as it can be, it's Twitter's weakest quarterly revenue growth since its 2013 initial public offering. And the company didn't succeed in bringing more users to use its service. Twitter's monthly average user number grew at its slowest pace since it went public back in 2013.
Furthermore, the company's shares fell to about 7 percent after hours.
During the company's Q2 earnings call on July 28th, 2015, Twitter's CFO Noto said that the company is not expecting its user's growth to rebound anytime soon.
"We do not expect to see sustained meaningful growth in MAU until we start to reach the mass market. We expect that will take a considerable amount of time," he said.
Climbing and Falling
Twitter's revenue is surprising, and one of the reason for that is because the demand for ads is increasing. Direct-response to ads urges users to take actions such as downloading an app or visiting external websites.
Noto said that these types of ads represent about 25 percent of advertising revenue. The ads, as well as video ads contents and Twitter's improved targeting capabilities, has helped the platform in dicing better results that expected.
But with its outstanding revenue growth, the company remains unprofitable as it invests in new data centers and new talents. Twitter reported a loss of $136.7 million, or 21 cents a share, compared with a year-earlier loss of $144.6 million, or 24 cents a share.
Excluding certain expenses, Twitter said it would have earned 7 cents a share. Or higher than what analysts had expected at 4 cents a share on that basis.
Twitter's fail to increase user engagement and active users is diminishing investors' hopes that the company is making progress in expanding its audience. Twitter's user growth has stalled, and in the U.S., it has been stagnant since 2014.
Despite its popularity among celebrities, activists and journalists around the world, Twitter only have several hundreds of millions of users. That number is tiny if compared to Facebook. As one of its competitors in the same industry, Facebook with its claiming to have 1.4 billion users is still far out of Twitter's reach.
The market is hoping that Twitter will soon innovate its service so it can soon revive those dormant users and to get more users on board.
Jack Dorsey, Twitter co-founder and interim CEO replacing Dick Costolo who stepped down on July 1st 2015, said that he was pleased by the revenue results but had harsh words for the slow user growth.
