Twitter Now Has 288 Million Users, But Its Growth Rate Is Under Scrutiny

Investors and brands want the social player to scale faster

OK, don't freak out. Twitter's growth appears to be slowing, according to a quarterly earnings call today, but the social network says it's actually gained nearly twice as many users as its own reported numbers show. Whether advertisers will buy that logic, however, remains to be seen.

The company said monthly active users were officially up 20 percent year over year to 288 million people. User growth is a a key figure that brands and investors watch to measure the health of the platform and effectiveness of leadership, and the new number would appear to show Twitter's growth is slowing, since the previous quarter's year-over-year increase was 23 percent.

However, Twitter says its actual user base is closer to 292 million, which would mean it grew 21 percent year over year. Twitter says the 288 million number it's officially reporting doesn't account for changes involving "third-party integrations"—including Apple's latest iPhone software update—that are clouding actual user stats. Twitter executives predicted the network's next quarterly report would show a return to year-over-year net growth in users.

User numbers are a main concern for advertisers who have other options like Instagram, which now has 300 million users, to consider. Twitter has been reconfiguring its product to make it easier to sign up for the service and present immediate value for the newcomers.

And the San Francisco-based tech giant has been making the case that its success is not about monthly active users, but more based on the impact it has on outside media, where its messages are seen across TV and digital screens. Not everyone thinks that's the case.

"You spend marketing dollars based on organic user growth, interest in a platform, and the frequency of usage," said Nathaniel Perez, SapientNitro's global head of social media. "Then the value add offered should be the reach beyond the platform."

Twitter announced this week that it would start making money from 1.85 billion tweets seen monthly on properties outside its own. It also announced a stronger partnership with Google to have tweet show up in search results, another place where Twitter could show its ads.

In today's quarterly results, Twitter did beat expectations on revenue and had a smaller loss than expected. Revenue hit $479 million, an increase of 97 percent from the same time last year. Revenue for the 2014 was $1.4 billion, up 111 percent from 2013. 

Twitter projected it would generate up to $450 million in revenue this quarter.