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Twitter shares are crashing in after-hours trading after the company reported another quarter of disappointing user growth and a weak revenue forecast for the last three months of the year.
Here are the key Q3 numbers:
- Monthly active users: 320 million, versus the 324 million expected by analysts, and compared to 316 million users in the second quarter.Monthly active users, excluding SMS followers: 307 million users, compared to 304 million users in the second quarter.Revenue: $569 million, up 58% year-on-year, compared to the $559.6 million expected by analysts. Twitter had already pre-announced that revenue will be at or above the top end of its forecast range of $545 million to $560 million.Adjusted EPS: $0.10 versus the $0.05 expected by analysts.Net loss of $132 million, compared to a net loss of $175 million in the year-ago period.Q4 Revenue Guidance: $695 million to $710 million, versus analyst expectations of $739.7 million.
Twitter shares plunged roughly 13%, or $4.04, to $27.30 in after-hours trading Tuesday.
It’s not a great debut for Jack Dorsey, who was appointed CEO earlier this month. He previously served as interim CEO, and will be hosting his first earnings conference call with investors as the company’s new chief later Tuesday. Wall Street will be looking for answers about how Dorsey intends to revitalize the company’s flagging user growth and reverse the growing impression that Twitter could become a social-networking also-ran.
To put Twitter’s stalled user growth in perspective, the company added a total of 4 million new users this quarter. Facebook, more than four times the size of Twitter, added 49 million new monthly users during its second quarter.
Twitter also appears to have suffered a steep and sudden drop in the prices that it charges marketers to run ads on its service. Twitter revealed that its “cost per ad engagement” fell 39% year-over-year.
Dorsey said in prepared remarks that the company has simplified its “road map” and organization around a few big bets across Twitter, Periscope. and Vine that it believes represent the largest opportunities for growth.
It’s been a busy few months for Twitter. In addition to appointing a new CEO, the company launched the new Moments feature, which tries to make it easier for new users of the service to follow live events, such as sports and presidential debates. And the money-losing company recently slashed 8% of its workforce.
While Twitter eliminated some of the uncertainty about its management by completing its CEO search, the appointment of Dorsey to the role creates more questions. The 38-year-old Twitter cofounder also serves as the full-time CEO of digital-payments company Square, which is in the process of preparing for an IPO.
Twitter’s stock has plunged 41% from its 52-week high of $53.49, though it has rebounded from recent lows when shares were trading below the company’s IPO price.
Twitter warned investors last quarter that they should not expect any meaningful user growth for a “considerable” amount of time. The question now is whether Dorsey has a plan to change that.