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Twitter Inc. Earnings: User Growth Stalls, Significant Changes Coming

Twitter 's fourth-quarter results this morning included both some better-than-expected and worse-than-expected figures. Of all the metrics shared in the update, the social network's pullback in core users seems to have stolen the show -- and not in a good way. Twitter shares are down about 5% following the report.

Data retrieved from SEC filings and company press releases for quarters shown. Chart source: Author.

Guidance

Another area where Twitter underwhelmed was in its guidance. For the first quarter, Twitter said it expects revenue of $595 million to $610 million. This would represent about 38% year-over-year growth. Notably, this would mark a rapid deceleration from the company's 48% year-over-year revenue growth in Q4 and its 58% year-over-year growth reported in Q3.

Other key takeaways

Here are some other key points from Twitter's quarterly update.

  • Video views on Twitter were up 220 times from December 2014 to December 2015, supported by the introduction of new native video capabilities introduced throughout the year.
  • Direct messages on Twitter were up 61% year-over-year, driven by new messaging features and an increased character limit, from 140 to 10,000 characters.
  • Twitter's active advertiser count hit 130,000 during Q4, up 90%, year over year.
  • Advertising growth for the year was driven by a 153% increase in ad engagements.
  • Average-cost-per-engagement, or the revenue Twitter collects from advertisers per engagement, declined 41% year-over-year, offsetting some of the gains from higher engagement.

Going forward, management said in its shareholder letter that "that 2016 will be a year of many changes for Twitter," and noted the company has "a new product roadmap which includes significant changes."

The article Twitter Inc. Earnings: User Growth Stalls, Significant Changes Coming originally appeared on Fool.com.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Twitter. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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