Twitter decline: International growth fails to offset US revenue loss

According to Twitter’s earnings report for the final three months of 2016, the social media platform generated $638 million in ad revenue in the period, down from $641 million in the fourth quarter last year.

The company’s total fourth-quarter revenue grew 1 percent year on year to $717 million. This missed analysts’ expectations of $740 million, which would have represented 4 percent year-on-year growth.

Most of Twitter’s ad revenue comes from the US—it reported $440 million in US ad revenue during the quarter, down 7 percent. But international ad revenue grew 11 percent to $256 million in the period.

Mobile advertising made up 89 percent of total ad revenue.

Across the year as a whole, Twitter’s revenue was $2.53 billion, up 14.1 percent year on year, while its ad revenue rose 12.7 percent year on year to £2.25 billion in 2016.

Twitter’s adjusted earnings before interest, tax, depreciation and amortisation were $751 million during the year, up 34.6 percent compared with 2015. It made a net loss of $457 million in 2016, although this was down 12.3 percent from a year earlier.

The company, which is led by co-founder and chief executive Jack Dorsey, said it expected advertising revenue growth to continue to lag audience growth in 2017, adding, "Advertising revenue growth may be further impacted by escalating competition for digital ad spending and the re-evaluation of our revenue product feature portfolio, which could result in the de-emphasis of certain product features."

Twitter’s monthly active users reached 319 million, up 4 percent compared to the same quarter last year. It said its daily active users grew 11 percent year on year but did not disclose a figure.

In addition to missing analyst’s forecasts, Twitter’s revenue growth compares unfavourably with other social networks.

Facebook’s fourth-quarter ad revenue jumped 53 percent year on year in 2016 to $8.6 billion.

In documents filed last week ahead of a March IPO Snapchat parent Snap’s reported revenue growth of nearly 700 percent in the fourth quarter of 2016 to $404.5 million. However, Snap made a net loss of $515 million in 2016, up 64.5 percent year on year.