Twitter Reports Lowest Revenue Growth Since IPO for Q2 of 2016

Published: July 26, 2016 9:40 PM /


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Reuters reports that Twitter stock fell 10% in after-hours trading following a disappointing shareholder report for Q2 of 2016. Twitter managed to increase its userbase by a modest amount to 313 million active users, up from 310 million users in Q1. Twitter has struggled recently to grow its userbase, but previous shareholder reports have stated a plan to increase the number of advertising partners, which would grow revenue even if the userbase continues to stagnate.

However this plan has not gone as well as expected, and the report notes that there was "less overall advertiser demand than expected." Twitter gives two main reasons why advertisers were reluctant to advertise on twitter. The first is that there is a growing competition for social media advertising dollars. The second reason is that Twitter's advertising space is priced higher than its competitors.

However, Twitter plans to focus more on live streaming content such as sporting events. The report states that some advertisers have shown interest in spending more advertising dollars on these events, and Twitter promises that it can precisely target ads to an influential and affluent audience. Some of the ideas mentioned in the report are reiterated from previous reports, such as the idea of letting advertisers reach Twitter's "total audience" by showing ads to those who visit the platform without logging into an account.

The report also touches on some other changes. As previously announced by Twitter, @replies and media attachments will no longer count toward the 140 character limit. However, the timeline for rolling out this change was kept vague when it was first announced. According to the Q2 report, those changes will be launched in the fall. The report also mentions some changes which have already been implemented in Q2. One of those is Stickers, which allow users to modify pictures they post to the platform, while also doubling as a tagging system to make the pictures searchable.

Twitter's total revenue for Q2 was $602 million, up 20% compared to the same quarter in 2015. This represents the slowest quarterly revenue growth Twitter has had since it went public in 2013. The future outlook doesn't look particularly good either. Analysts outside the company are predicting a total revenue of $678 million for Q3, but Twitter's own prediction for Q3 is much lower. The company is predicting a total revenue between $590 and $610 million, which looks like another lackluster quarter. Twitter has never been profitable in its entire existence, and its net loss for Q2 was $107 million, down from the $137 million net loss from Q2 of the previous year.

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I’m a technology reporter located near the Innovation District of Kitchener-Waterloo, Ontario.