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Twitter loss widens, revenue surges

Twitter on Tuesday (July 29) reported that its quarterly loss widened to US$145 million despite revenue more than doubling, but its shares soared on word of healthy user growth.

SAN FRANCISCO: Twitter shares shot higher by some 30 per cent on Tuesday (July 29) after its quarterly report showed surprisingly strong revenue and user growth, despite a widening loss.

The popular one-to-many messaging service said its quarterly loss widened to US$145 million from a US$42 million loss a year ago.

But revenue more than doubled from a year ago US$312 million in the three months that ended June 30, with the number of monthly active users hitting 271 million, up 24 per cent year-over-year.

The "adjusted" results which exclude certain expenses and stock compensation showed a modest profit of US$15 million, better than expected. That along with the rise in use evidently bolstered confidence of investors who pushed the stock up more than 30 per cent to US$50.30 in after-market trading.

"They seem to be doing the right thing," said Gartner vice president of mobile computing Ken Dulaney.

"It is well-advertised on TV. Companies put Twitter IDs on pitches. It is kind of ingrained in what we do."

And, the analyst noted, there is plenty of room for Twitter to evolve, perhaps into a more extensive real-time news service tightly linked to television programming.

Twitter's loss included US$158 million in stock-based compensation.

Twitter took in US$277 million from advertising, a 129 per cent increase from the same period a year earlier.

Ads served up on Internet-linked mobile devices accounted for 81 per cent of that revenue in a sign that the San Francisco-based firm was tending to the business side of following users onto smartphones and tablet computers.

About a third of Twitter's revenue came from outside the United States, with International revenue climbing 168 per cent to US$102 million, earnings figures showed.

"Our strong financial and operating results for the second quarter show the continued momentum of our business," Twitter chief executive Dick Costolo said in the earnings release.

"We remain focused on driving increased user growth and engagement, and by developing new product experiences, like the one we built around the World Cup, we believe we can extend Twitter's appeal to an even broader audience."


Forrester analyst Nate Elliott saw the earnings numbers and user growth figures as encouraging, but only a little bit.

Twitter use in the second quarter of this year was up just six per cent from the first three months, and that was with the help of storms of tweets fired off during the World Cup football tournament in Brazil.

"The wind was in their sails," Elliott said of Twitter. "You would have liked to see them do a lot better than that on users."

Twitter does appear to be making progress on user numbers and is showing they can bring in money from the people already on the service, according to the analyst.

"And in making progress, they are reminding us that they aren't there yet," Elliott said.

"Things are moving in the right direction, but you have to wish they would move a little faster."

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