Twitter surprises market with Q2 surge in revenues, but shows slow user growth | M&M Global

Twitter surprises market with Q2 surge in revenues, but shows slow user growth

Twitter has surpassed its own expectations and those of analysts, posting better-than-expected revenue growth of 61% year-on-year to $502m for the second quarter ending 30 June.

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The results beat Twitter’s own forecast of $470m to $485m by some margin and the social network said that without the detrimental impact of global currency fluctuations against the dollar, revenue growth would have reached 68%.

However, Twitter made a net loss of $137m in the period, and while Q2 may have been a pleasant surprise for Wall Street, the social network’s user growth and outlook was less welcome news.

While average monthly users were up 15% to 316m in Q2 compared to Q2 of 2014, they only increased 2.6% compared to Q1.

Jack Dorsey, Twitter’s interim chief executive, said: “Our Q2 results show good progress in monetisation, but we are not satisfied with our growth in audience.

“In order to realise Twitter’s full potential, we must improve in three key areas: ensure more disciplined execution, simplify our service to deliver Twitter’s value faster, and better communicate that value.”

Meanwhile, Dorsey’s role as interim CEO also highlighted another concern about Twitter – the absence of a replacement for former CEO Dick Costolo, who left earlier this year amid lacklustre performance.

Twitter’s slowing growth is reflected in data from market analysts. Twitter accounted for 0.87% of the $145bn digital global ad market in 2014, according to eMarketer, with share expected to rise to 1.23% in 2015. Social rival Facebook’s share is expected to grow from 7.93% to 9.07% in the same period.

While Twitter’s growth may be slowing in some areas, it is nevertheless bucking a trend demonstrated by some major players. For instance, according to eMarketer, Google will continue to dominate the digital advertising market, and is expected to command 31.07% of global digital advertising this year, its share was down slightly from last year’s 31.42%.

Meanwhile, eMarketer predicts that 90% of Twitter’s ad revenues will come from mobile in 2015, up from 84.6% in 2014. Its share of the $42.63bn global mobile ad market reached 2.5% in 2014 and is forecast to grow marginally to 2.7% in 2015. Of the big digital platforms, Twitter is one of the few to anticipate a growing slice of the mobile advertising market.

Even so, Twitter trails behind Facebook, with its 17.4% share in 2014, which is expected to decline to 16.9% this year; and both are outshone by Google’s 38.2% share last year, but again which eMarketer expects to see declining in 2015, falling to 35.4%.

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