Twitter releases Second Quarter 2016 earnings
On 26th July, 2016, Twitter released its earnings for SQ16, reporting a growth in user base. Second-quarter adjusted earnings stood at 13 cents a share, generating a revenue of $602 million. According to a Thomson Reuters estimate, Wall Street expected Twitter to earn 10 cents a share, with a revenue of $607 million. Company shares dropped more than 10% after in-hours trading yesterday.
On 4 October, Twitter COO Dick Costolo took over as the CEO of the company replacing current CEO and co-founder Evan Williams. Costolo's promotion came after his attempts to make money for Twitter through advertising platforms reaped huge results. As the COO, Costolo brought some impressive talent to Twitter like Ali Rowghani, Adam Bain, Mike Abbott and Katie Stanton.
Twitter CEO Dick Costolo confirmed that the service now has 100 million monthly active users worldwide. Twitter grew at an astounding rate with its monthly growth of active user count up by 82%. It also announced a new record of 8868 tweets per minute. Costolo said that other than the content creators, there are 400 million unique visitors who come to read the tweets.
Twitter officially became a publicly traded company on 7 November 2013. This was the most anticipated IPO since Facebook's entry in 2012. The company set its initial IPO pricing at $26 and saw the share price open at $45.10 due to strong investor demand. The initial surge in price gave the company a valuation of more than $24 billion when it began trading shares.
Twitter faced a severe backlash from analysts and investors frustrated by the company's slow growth in 2014. Twitter reported a sharp slowdown in its user growth adding a miniscule 4 million monthly users in the last 3 months of 2014. Despite the revenue of $1.4 billion in 2014, Twitter lost $578 million. Twitter's stock fell by almost 25% in April 2014.
Twitter's CEO Dick Costolo has decided to step down after 5 years. Twitter's co-founder and Chairman Jack Dorsey who is currently the CEO of the startup Square Inc., will step in as the interim CEO. Word on the street is that this resignation is directly as a result of the company's stalling growth and Wall Street's lack of faith in Costolo's leadership.
Twitter's three month search of finding a CEO ended with the appointment of Jack Dorsey. He was crowned as the CEO with a hope to get more traffic and terminate a decade long series of financial losses. Jack might invalidate the 140 character limit to draw more audience. However, Dorsey will continue his job as CEO in Square Inc, co-founded by him in 2009.
This is the second stint as CEO of Twitter for Jack Dorsey. He was the first CEO till October 2008, after which he became the chairman of the board.
Twitter CEO Jack Dorsey announced that Twitter's four top executives will be leaving the company, "taking some well-deserved time off". These include "Product Chief Kevin Weil, Head of Engineering Alex Roetter, Vice President of Global Media Katie Jacobs Stanton, and Vice President of Human Resources Skip Schipper". Dorsey also announced that Twitter COO Adam Bain will be "taking on additional responsibilities" in the interim.
Twitter reported that its monthly active users (MAUs) in the fourth quarter of 2015 stood at 305 million, dropping from 307 million in the previous quarter. Due to leadership turmoil and stagnating user growth, shares of the company fell 68% over the last year. News of the diminishing number of users saw the share prices spiraling down by 13%.
Even with its user base growing more than expected, Twitter's first quarter results for 2016 disappointed Wall Street. The company posted revenues of $595 million as opposed to the average estimate of $608 million. Post the announcement, company shares dropped down by 12% in after-hours trading. Amidst concerns about user and sales growth, Twitter's stock dropped more than 20% this year.
According to technology website Re/code, Twitter Inc invested $70 million in the audio streaming company SoundCloud. The company's investment was a part of a funding round expected to be in the range of $100 million. A statement issued by SoundCloud states, "this investment will enable SoundCloud to remain focused on building value for creators and listeners alike".
