Despite High Hopes, Twitter’s User Growth Fell Flat in the Second Quarter of 2017

Overall revenue still beat estimates

Twitter's revenue beat expectations despite stagnant growth for monthly users.
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After a couple of promising quarters showing an increase in user growth, Twitter once again seems to have fallen flat, with monthly active users failing to gain momentum.

In the company’s second-quarter earnings released today, Twitter said its monthly active users total remained at 328 million even while its overall revenue beat Wall Street’s expectations. However, it did say daily active users in the top 10 markets grew 12 percent year over year, but it wouldn’t disclose how many DAUs it actually has.

In terms of finances, Twitter reported a net loss of $116.5 million, nearly twice the quarterly loss it experienced in the second quarter of 2016. Total revenue for the second three months of this year was $574 million—a 5 percent decrease year over year—which beat analysts’ estimates. Earnings per share were $.12, also besting estimates of $.05.

On an earnings call with investors this morning, Twitter COO Anthony Noto said there is still a “significant amount of headroom” to grow daily active users even while monthly active users remain stagnant.

On the advertising front, Twitter said ad engagements grew 95 percent year over year, while the cost per ad engagement declined 53 percent. Quarterly revenue from advertising made up $489 million—accounting for 85 percent of total revenue—and revenue from data licensing and other products accounted for the other $85 million. Ad revenue declined 8 percent year over year, while data and other products increased 26 percent. U.S. ad sales accounted for $269 million and international markets generated the other $220 million.

“We’re strengthening our execution, which gives us confidence that our product improvements will continue to contribute to meaningful increases in daily active usage,” Twitter CEO Jack Dorsey said in a statement. “We’re also encouraged by the progress we’re making executing against our top revenue generating priorities as we focus on making Twitter the best place to see and share what’s happening, where you can see every side and perspective.”

While Twitter has received heavy criticism for its lack of growth during the past year, the company’s pivot to live video has received some praise as it competes with Facebook and Google, who continue to build out their own video operations. In a letter to shareholders released this morning, the company said it streamed more than 1,200 hours of live video content from existing and new partners in the second quarter—up from 900 hours in the first quarter and 600 hours in the fourth quarter of 2016. (Twitter streamed 625 events, which reached 55 million unique viewers.)

At its first appearance at the IAB Digital Content NewFronts in May, Twitter announced 16 new livestreaming partnerships with brands such as Nike and Wendy’s coming on board. The company has also worked to make it easier for users to discover live content from within the Explore tab and also through a new external partnership with Roku.

“Our ability to attract audiences and advertising dollars reflects the breadth of our livestreaming content across sports, news and politics and entertainment,” according to the letter.