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Newstalk

13.25 27 Jul 2016


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Twitter shares fell 11% in afterhours trading on Tuesday, as the market reacted to sluggish growth and a fairly pessimist forecast from the social networking service.

The company had reported its slowest revenue growth since going public in 2013.

Its second quarter revenue missed Wall Street estimates, while its forecast for the current quarter of between $590 million to $610 million fell far short of the average analyst estimate of $678.18m.

Its number of users increased roughly 1% to 313 million average monthly active users.

When you compare that to the news last month that Snapchat's user base is set to leap 27.2% in the US alone this year (surpassing Twitter's figure of 56.8 million US users in the process), Twitter's expansion problems in the face of strengthening rivals become apparent.

Enticing advertisers has been a major issue. Now, Twitter itself is admitting it.

In a statement, it said:

"We’re seeing a continuation of the trends discussed last quarter with less overall advertiser demand than expected. This is reflected in both our Q2 performance and Q3 outlook...

"There is increased competition for social marketing budgets, which requires us to continuously raise the quality bar on the advertising solutions we bring to market."

Not helping the situation is the recent public criticism surrounding the service's ability to deal with the vast amount of abuse that is being tweeted on a daily basis. The most recent high-profile case saw rebooted Ghostbusters star Leslie Jones temporarily quit Twitter after receiving abusive messages.

Twitter's co-founder and CEO Jack Dorsey told investors yesterday:

"No one deserves to be the target of abuse on Twitter. We haven’t been good enough at ensuring that’s the case, and we need to do better.”

Dorsey identified 'safety' as Twitter's number one priority at the start of the year and he said that "recent events have only confirmed" that call.

He returned to the company as chief executive a year ago with the aim of reviving the struggling service an prevent it from becoming a niche concern.

Live-streaming video is central to his plan to do just that:

“We’re working every day to make Twitter faster and more intuitive to use," he said.

"Introducing changes to the timeline, character count and reply rules. We have exciting momentum on live video on Periscope and on Twitter.”

Adam Bain, Twitter’s chief operating officer, noted that video now accounts for the majority of Twitter’s advertising revenue:

“One year ago those products did not exist. There’s a whole new set of video budgets out there – a $10bn marketplace in the US alone.”


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