Twitter Inc reported its slowest revenue growth since going public in 2013 and set a disappointing forecast, fanning concerns that faster growing social media services will make it a niche product. The microblogging service operator's shares fell 11 percent in extended trading to $16.40. While Twitter struggles to find a way to boost user growth and win over advertisers, social media services such as Instagram and Snapchat are expanding their footprints.
Co-founder Jack Dorsey returned to the company as chief executive a year ago, but his plan for reviving Twitter is at best seen as unfinished. The company's second quarter revenue missed Wall Street estimates and the revenue forecast for the current quarter of $590 million to $610 million was well below the average analyst estimate of $678.18 million.
Twitter's user base increased about 1 percent to 313 million average monthly active users in the second quarter from 310 million in the first quarter. "Clearly, the turnaround is still a work in progress and the question of whether being a platform for a mass audience versus a niche audience needs to be answered," said James Cakmak, analyst at Monness, Crespi, Hardt & Co.
Earlier this year, Twitter laid out a long-term strategy to turn around its business, focusing on five areas: its core service, live-streaming video, the site's "creators and influencers," safety and developers. Twitter is also working to better define its role in the social media landscape. This week it rolled out a video ad that showed it as the place to go for live news, updates and discussion about current events, which executives also emphasised on a call with analysts. It did not stream its earnings call on its live video app Periscope, which it has done in previous quarters.
Chief Financial Officer Anthony Noto said the company was focusing on live sports, news, politics and entertainment by bringing more live streaming to the site, which it hopes will spur additional advertising. Excluding items, the company earned 13 cents per share, topping the average analyst estimate of 10 cents. The company's net loss narrowed to $107.2 million, or 15 cents per share, in the second quarter ended June 30, from $136.7 million, or 21 cents per share, a year earlier. Revenue rose about 20 percent from a year ago to $602 million, but missed the analyst estimate of $606.8 million. It was also the slowest revenue growth quarter-to-quarter since its very-hyped initial public offering almost three years ago.
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