Twitter’s 1st Earnings Report Beats Expectations With Big Revenue Boost

(San Jose Mercury News/MCT) -

Twitter Inc. beat Wall Street’s expectations Wednesday by reporting a hefty boost in advertising sales for the final quarter of 2013, but it showed relatively slow gains in its user base.

In the company’s first earnings report since a successful stock market debut last fall, the popular microblogging service said it had a net loss of $511 million on sales of $243 million for the quarter ending Dec. 31. That compares with a loss of $8.7 million on revenue of $112 million in the same period a year earlier.

Twitter said its user base increased to 241 million monthly active users, an increase of 30 percent from a year ago, but only about 5 percent more than it reported in the third quarter of last year.

Still, CEO Dick Costolo indicated he was pleased with the results. “Twitter finished a great year with our strongest financial quarter to date,” he said in a statement.

Earnings for the fourth quarter amounted to a loss of $1.41 a share, or a gain of 2 cents a share after excluding one-time charges. Analysts surveyed by Thomson Reuters were expecting Twitter to report a loss of 40 cents a share for the quarter, or a loss of 2 cents a share after excluding one-time charges, on revenues of $218 million.

An earnings loss isn’t surprising, since young companies traditionally spend heavily on expanding their infrastructure and granting stock options to new employees. Wall Street is much more focused on Twitter’s revenue, which is fueled primarily from sales of mobile ads and was expected to nearly double from the $112 million Twitter reported for the same period a year earlier.

But analysts were also watching to see how much Twitter’s user base has grown from the 230 million monthly active users reported last fall. Twitter’s growth rate had slowed from 10 percent in the first quarter of 2013 to 7 percent in the second quarter and 6 percent in the third.

The San Francisco company has introduced several new features for users in recent months, as well as new programs designed to help advertisers reach targeted audiences and to demonstrate the effectiveness of Twitter ads. One new program, for example, lets online retailers track whether customers made a purchase after seeing an ad on Twitter.

Meanwhile, Twitter’s stock had soared more than 150 percent from its initial public offering price of $26 on Nov. 7, when the company raised $1.8 billion in the tech industry’s most closely watched IPO since Facebook’s rocky debut in 2012. Shares lost 35 cents to close Wednesday at $65.97, and then lost another $11.81, to drop to $54.16, in after-hours trading following the report’s release.