July 27, 2016
Twitter announced lackluster Q2 earnings, with $602 million in revenue for a net loss of $107 million. While the company improved over Q2 2015, when it lost $136.6 million, and monthly active users increased from 310 million to 313 million, its numbers fell short of Wall Street expectations and the company’s stock dropped more than 10 percent in after-hours trading. Despite new deals for live-streaming sports in the near future, the platform is not keeping up with the growth of social rivals such as Facebook, WhatsApp, Messenger, Snapchat and LinkedIn.
“For months, the San Francisco-based company has been grappling with worsening advertising growth and anemic audience growth,” reports The New York Times. “It risks losing out on top talent and deals to other bigger, stronger companies.”
In addition, Twitter’s short-term projection of $590 million to $610 million for the current quarter falls far below Wall Street estimates of $681 million.
While CEO Jack Dorsey remains upbeat, the platform is struggling to keep up with competitors such as Facebook, which draws more than 1.65 billion monthly visitors. Twitter has sidestepped the comparative user numbers in the past based on the strength of its advertising business, but in recent months the platform has experienced slower than expected growth in advertiser demand and a subsequent drop in stock value.
“As Twitter is less able to increase the size of its user base, advertisers are more likely to buy ads on Facebook, which has a huge global reach, or perhaps Snapchat, which caters largely to younger audiences,” notes NYT.
According to Recode, “this kind of production (or lack thereof) doesn’t help Dorsey’s case for running two companies (remember, he also runs Square). It also puts pressure on the board to consider broader options for the company, namely selling.”
Twitter has deals with MLB, NFL, NHL, Pac-12 Networks and Campus Insiders to live-stream sports and related programming soon. With its new push into video, the company is looking to sell more of its premium video ads to current clients.
“We’ve become a video-centric platform,” said Adam Bain, Twitter’s chief operating officer. “It is now the No. 1 ad format in terms of revenue on Twitter.”