Twitter earnings up, but long-term doubts remain

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Twitter may be having a hard time convincing Wall Street that the social networking platform is truly a high-growth company, after its second earning report as a public company on Tuesday.

Revenues in the first quarter ending March 31 were $250 million, according to a report by Nicole Perlroth in the New York Times, up 119 percent from $114 million in the first quarter of 2013.

Twitter also reports a net loss of $132 million, compared to last year’s loss of $27 million.

However, when taking account for adjusted earnings, which dismiss stock-based compensation, as well as other expenses, come to $183,000, about the break-even per share, compared with losses of $10.5 million last year.

Analysts on Wall Street expected Twitter’s first-quarter loss to be about three cents a share, with revenue of $241 million, Perlroth writes; meaning Twitter outperformed its own forecast.

For a fast-growing business, Twitter made the unusual move of forecasting first-quarter revenue of anywhere between $230 million to $240 million.

“We had a very strong first quarter,” Twitter’s chief executive Dick Costolo told the Times. “We also continue to rapidly increase our reach and scale.”

Twitter’s financials are only a backdrop for other concerns about its ability to attract and engage new users.

Since last quarter’s earnings announcement, Twitter’s share price dropped by almost a third. That drop did not occur because the company cannot generate revenue; it came from Wall Street concerns over Twitter’s slowing user base growth.

That slow growth pattern lingered in the first quarter, as users are not checking Twitter feeds as often. The company estimates 255 million global users a month March, up 5 percent from the end of December where it was 241 million. In the fourth quarter 2013, monthly active users jumped by a little under 4 percent.

Engagement, the top metric of user activity, was lackluster at best.

Average users in the first quarter of 2014 refreshed Twitter feeds 614 times during the month, slightly up from 613 times a month for the fourth quarter.

Twitter users, particularly those overseas, are refreshing feeds less frequently than last year.

More troubling for shareholders is Twitter’s $1.44 in advertising revenue for every 1,000 views, which was down from $1.49 in the previous quarter. That measure is the best indication of Twitter’s ability to monetize its platform, and in the first quarter 2014, it was trending down.

Phil Ammann is a St. Petersburg-based journalist and blogger. With more than three decades of writing, editing and management experience, Phil produced material for both print and online, in addition to founding HRNewsDaily.com. His broad range includes covering news, local government and culture reviews for Patch.com, technical articles and profiles for BetterRVing Magazine and advice columns for a metaphysical website, among others. Phil has served as a contributor and production manager for SaintPetersBlog since 2013. He lives in St. Pete with his wife, visual artist Margaret Juul and can be reached at phil@floridapolitics.com and on Twitter @PhilAmmann.