Twitter Posts 1Q Loss, Higher Revenue

Twitter booked a net loss in the first quarter because of stock-compensation costs, but its results surpassed Wall Street’s expectations thanks to a sharp increase in advertising revenue.

Investors were looking for stronger user growth from the short-messaging service, however, and the company’s stock declined sharply in after-hours trading.

Twitter Inc. said Tuesday that it had a loss of $132.4 million, or 23 cents per share, in the January-March quarter. That compares with a loss of $27 million, or 21 cents per share, a year ago, when Twitter was still privately held. Adjusted earnings were $183,000, or roughly breakeven on a per-share basis.

Revenue more than doubled, to $250 million from $114 million. Twitter’s advertising revenue was $226 million, about 80 percent of which came from mobile advertising.

Analysts polled by FactSet had expected an adjusted loss of 3 cents per share on revenue of $241.5 million. Twitter’s own forecast in February was for revenue between $230 million and $240 million.

Shares of San Francisco-based Twitter fell $4.74, or 11.1 percent, to $37.88 in after-hours trading after the results came out. The stock had closed up $1.89, or 4.6 percent, at $42.62.

Twitter went public last November. It had set a price of $26 per share for its stock, which then soared amid hungry investor demand. The high-flying stock peaked in December at $74.73, then declined steeply.

Twitter had 255 million monthly users at the end of March, up 25 percent from a year ago. That’s just about what Sterne Agee analyst Arvind Bhatia was expecting, though 2 million lower than Wall Street’s consensus. The analyst called the quarter’s results “mixed,” noting that user metrics were better than they were in the final quarter of 2013 — Twitter’s first as a public company — but not as strong as Wall Street had expected.

Twitter has said that it is focusing on expanding its audience and encouraging people who do use its short-messaging service to use it more often, but the company has not been growing its user base as quickly as its investors would like.

“We had a very strong first quarter. Revenue growth accelerated on a year over year basis fueled by increased engagement and user growth,” said CEO Dick Costolo in a statement.

Advertising revenue per thousand timeline views, another closely watched measurement, reached $1.44 in the first quarter, more than double the figure from a year ago.

Twitter gave a conservative revenue forecast for the current quarter and for all of 2014. The company expects revenue of $270 million to $280 million for the April-June period, compared with analysts’ expectations of $273.3 million.

For the full year, Twitter expects revenue of $1.2 billion to $1.25 billion, compared with analysts’ forecast of $1.24 billion.

This article appeared in print in the May 1st, 2014 edition of Hamodia.