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Twitter

Twitter's US user growth stalls as revenue jumps

By Trevor Mogg Digital Trends
Published | Updated
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File photo. (REUTERS/Eric Thayer)

Twitter published its latest earnings report Tuesday, raising a few eyebrows in the process. The company has been struggling with slow user growth for some time, and data for its most recent quarter, ending June 30, served up similarly disturbing news.

The sluggish growth even prompted Anthony Nolo, Twitter's chief financial officer, to warn investors that the company didn't expect to see a sustained, meaningful expansion in its user base for "a considerable amount of time."

Twitter reported that the number of active monthly users on the microblogging site hit 316 million globally, marking an increase of 8 million users on the preceding quarter. However, take away those who don't have the app, but instead receive tweets via SMS, and the user base stands at 304 million, up just 2 million on the previous quarter.

That's a dismal 1 percent quarterly rise and marks Twitter's slowest growth rate since its IPO in 2013 -- hardly the kind of data to calm the fraying nerves of concerned investors.

Even more worrying were the figures for the U.S., the market which provides the company with the majority of its revenue. Twitter's home territory currently has 65 million active users (excluding SMS) -- the same as the quarter before.

There's little doubt that the company has, in recent months, been working diligently to try to attract more users, but the poor sign-up rate will continue to frustrate executives still searching for an effective solution.

Recent efforts to increase the site's exposure and make it more appealing have included the inclusion of Twitter data in Google search results, a more concerted effort to reduce harassment and abuse on the service, increased functionality for multimedia, and, importantly, design changes aimed specifically at attracting new users.

Despite the concerns over user growth, the company could at least point to some promising income figures in its latest earnings report. For the period ending June 30, Twitter generated $502.4 million in revenue, up from $312.2 million a year earlier. However, pricey investments in infrastructure and talent left the company with losses totaling $136.7 million, $8 million more than for the same period a year earlier.

The company's ongoing difficulties were brought into sharp focus at the start of this month when Dick Costolo stepped down as CEO following mounting pressure to boost the company's performance.

Twitter co-founder Jack Dorsey, who has taken over as interim CEO, commented on the company's latest earnings report, saying that despite some "good progress" in monetization, "we are not satisfied with our growth in audience."

He added that to realize the service's full potential, the company has to improve in three main areas: "Ensure more disciplined execution, simplify our service to deliver Twitter's value faster, and better communicate that value."