All speculations related to the Q4 results for Twitter came to a halt when it posted its numbers on Thursday. It stumbled in a big way missing the analysts’ estimates completely. There was just 1% y-o-y (year-on-year) rise in growth of the company probably because there was virtually no growth in the advertising revenue.
Jack Dorsey, the Chief Executive Officer of Twitter said, “While we may not be meeting everyone’s growth expectations, there’s one thing that continues to grow and outpace our peers: Twitter’s influence and impact. It’s the reason we’re all here fighting so hard for the service and company we love. It’s been hard, it will continue to be hard, and it’s all worth it.”
Sales rose just 1 percent year-on-year in Q4 to USD 717 million, as growth in advertising revenue came to a halt. In spite of some analysts predicting that Twitter will gain a lot with Trump’s frequent blasts, the company is finding it difficult to woo the advertisers. While Facebook is going rock solid and Instagram gangbusters, Twitter’s ROI is dwindling. The marketers are questioning themselves on whether they should continue to spend money on the platform where fewer people are joining or shift their resources elsewhere.
In Q4, the company managed to add 2 million new users, which were less than what it managed in last three-quarters. The company expects the EBITDA (Adjusted Earnings before Interest, Taxes, Depreciation and Amortisation) for Q4 to be $75 million to $95 million. The analysts had quoted the figure of $188 million for the same and hence the company performed well below the expectations.
Jitendra Waral, an analyst with Bloomberg Intelligence said, “Sales growth recovery for Twitter will be very challenging in 2017. Google and Facebook results show robust ad environment in the fourth quarter. The lacklustre sales growth at Twitter is showing their strategies are not working.“
Twitter was searching for a potential buyer and when that effort failed they started focusing on attaining the profitability as an independent business entity under the shared CEO Jack Dorsey. Having lost both its Chief Technology Officer and Chief Operating Officer, the company worked under the guidance of Dorsey who is also the CEO of Square Inc. The company tried everything from cutting the headcounts by 9% to selling Fabric developer business and shutting down its Vine app, but failed to deliver.