Twitter advertising revenue declines despite user growth

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Source Twitter

Twitter announced disappointing advertising revenues results totalling $638 million, down from $641m last year. Following the announcement, shares slumped 11% to $16.54.

Annual revenues climbed 14% year-on-year to $2.5 billion. However, the company continues to make losses despite cutting its workforce by 9% in 2016.

Whilst the social media company has been trying to boost business and compete more efficiently with Facebook and now Snapchat, advertising hasn’t been going quite as expected for Twitter.

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Source Stock Screener

Twitter said that “revenue growth will continue to lag audience growth in 2017 and could now be further impacted by escalating competition for digital ad spending”.

CEO Jack Dorsey believes that the weak advertising revenue may still signal the impact of 2015 when Twitter user numbers declined. It may be reassuring then to see that in 2016 the company added two million new users and now has 319 million monthly active users.

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Source Twitter

Jack Dorsey added:

“2017 will be about simplifying and differentiating our revenue products. It’ll take time for all the results we want to see.”

Wall Street may not prove to be quite as patient, but Dorsey said that a focus on more successful product lines, such as live video should boost profitability this year. Twitter has seen some good results with live streams so far, broadcasting 400+ events and attracting audiences of 31 million viewers, predominantly for sporting events.

It remains to be seen if the social media company can catch up to please shareholders and avoid acquisition talks.