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Twitter Q1 Results Disappoints and shares nosedive after company reports no user increase


On Wednesday, Twitter released its first quarterly earnings with no growth in users since it went public adding to concerns it is lagging in the fast-moving world of social networks.

An earlier version of this story said Twitter added 320 million monthly users in the fourth quarter. It did not add any more users. Instead it maintained its user base of 320 million.

Twitter had 320 million monthly active users the final three months of 2015, the same number as in the third quarter. What’s worse, if you exclude SMS Fast Followers, an audience that uses Twitter through text messaging in emerging foreign markets, user numbers declined on a quarterly basis to 305 million from 307 million.

Twitter, which has never earned a profit, said its loss in the past quarter narrowed to $90.2 million from $125 million a year earlier, but the market was focused more on its user growth.

Twitter shares dropped more than 3 percent in after-market trades that followed release of the report, extending a steep decline that has eroded some 75 percent of its value from peak levels.

In the last year alone, Twitter shares have fallen nearly 70%.

On a positive note, the number of active advertisers grew 90% year-over-year to 130,000.

The latest report showed revenue climbed 48 percent to $710 million in the quarter when compared to the same period a year earlier.

Twitter revenue for the full year was up 58 percent to $2.2 billion.

Twitter has been under pressure to prove it can expand beyond its fierce following to be a mainstream society hit.

Company executives tried to allay investor fears by saying that user growth is traditionally the worst in the fourth quarter and that it rebounded in January.

Twitter Chief Executive Jack Dorsey, who is also CEO of mobile payments company Square, said Twitter would refocus this year on leveraging its advantages in the real-time experience of its platform.

“We’re focusing on what Twitter does best: live,” Dorsey told analysts. “Watching a live event unfold is the best way to understand the power of Twitter.”

To that end, Dorsey said the company would bolster its live-streaming video through its app Periscope, give social media stars and trendsetters more tools to reach their audience and make Twitter a safer medium to communicate more freely. The company has faced criticism in the past for not taking a stronger stance on harassment, hate speech and the use of Twitter by terrorist organizations.

Ahead of earnings on Wednesday, the company revealed a new Timeline that shows tweets out of order — a controversial move that takes away from Twitter’s real-time feel and replaces it with an algorithm.

The latest tweak was aimed at injecting new life into the one-to-many messaging service by moving away from a pure chronological timeline to one determined by algorithm, as used by social network leader Facebook.

Twitter said the “Show me the best tweets first” feature is optional and that users can stick with tweets rushing by like leaves on a fast-moving river, if they prefer.

The algorithm was built on a “while you were away” feature that Twitter introduced about a year ago to show people notable posts they missed while not using the service.

“We have applied a lot of the same algorithms to it,” Dorsey said while discussing the new feature on an earnings call.

“This gives the tweeter a super power, because they don’t have to tweet multiple times to get their message across.”

The new feature is being introduced as Twitter strives to expand its ranks of users and ramp up the amount of time people spend at the service.

“The tweets you’re most likely to care about will appear at the top of your timeline,” said Mike Jahr, Twitter’s senior engineering manager in a blog post.

News of the change, first reported by BuzzFeed last week, sparked a maelstrom on the platform among Twitter’s most loyal fans. As a result, one of the top trending hashtags was #RIPTwitter.

The outrage elicited a response from Dorsey, who tweeted Saturday that the company was “always listening.”

The new algorithmic Timeline can be switched off in settings.

An earlier change, Moments, which curates and promotes popular tweets, was not nearly as controversial but did little to inspire confidence in the company’s direction.

Twitter’s enduring problem is that competitors simply do things better, said said David Giannetto, author of “Big Social Mobile: How Digital Initiatives can Reshape the Enterprise and Create Business Results.”

Facebook, for example, leads in social connection. Google is far better at delivering content. And Amazon is better at enabling consumption.

Beyond attracting more users and advertisers, Twitter still has a personnel problem.

Last month, it announced the departure of its top executives in engineering, human resources, media and product.

Dorsey, one of Twitter’s co-founders, was eventually named chief executive after his predecessor Dick Costolo stepped down last June.

Twitter isn’t the only technology company souring on Wall Street. The sector as a whole has taken a beating in recent months as tech stocks such as Apple, LinkedIn and GoPro begin to succumb to concerns about the broader economy.

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