Company reports 8% fall in revenue in first quarter to $548m, but shares rebound as number of users rises

Twitter’s revenue has fallen for the first time, as advertisers have pulled back from the social media service favoured by Donald Trump, celebrities and journalists. However, the Silicon Valley company, which has never turned a profit, cheered investors by announcing a significant rise in the number of monthly users, to 328 million.



Shares in the company, which hit a peak of $69 in 2014, rose by more than 10% to $16.14 on Wednesday as the revenue and user number figures exceeded analysts’ expectations.

Jack Dorsey, Twitter’s co-founder and chief executive, said he was “proud to report” that the number of active daily users had increased for the fourth consecutive quarter and was up 14% on this time last year. But he conceded that the company, which has never made a profit, was still battling “revenue headwinds”.

The San Francisco-based firm reported an 8% fall in first-quarter revenue to $548m (£427m). It is the company’s first fall in year-on-year quarterly revenue since it floated on the stock market in 2013.

Advertising revenue for the three-month period fell 11% to at $474m, but the drop was softer than the $443m that analysts had predicted. Some income from licensing deals increased.

The 11-year old company made a net quarterly loss of $62m, an improvement on the $80m it lost in the first quarter of 2016 and much less than the $167m it lost in the previous quarter. The loss amounts to almost $700,000 a day.

“While we continue to face revenue headwinds, we believe that executing on our plan and growing our audience should result in positive revenue growth over the long term,” Dorsey said.



The company pointed to its success in increasing engagement from users on a daily basis but did not provide figures for the number of daily users. It said monthly active users had increased by 6% over the past year to 328 million, and the total stood more than 9 million higher than at the end of the previous quarter.

Mark Mahaney, an analyst at RBC Capital Markerts, said the increase in users “could be your first indicator that revenue could recover some day”. But he said the issue for investors was: “When do things get less worse?”

Twitter, which was touted for sale last year but failed to find a buyer, has been pushed into the spotlight as President Trump has used the service to get his message across directly to the electorate bypassing what he regards as the “dishonest” media, both before and after the presidential election.

The company did not directly credit Trump for helping to drive user growth, but said that new users tended to follow more political accounts. “Having the political leaders of the world as well as news agencies participating on Twitter is an important part of reinforcing [engagement],” Anthony Noto, Twitter’s chief operating officer, said.

Twitter loses ad revenue despite gaining 2 million users and Trump 'boost' Read more

Michael Pachter, an analyst at Wedbush Securities, said: “Trump drives a lot of awareness about Twitter among people who otherwise wouldn’t be paying attention. But again, one quarter isn’t a trend, so let’s see if it’s sustainable.”

Twitter reported that its recent foray into livestreaming had proved successful, with more than 800 hours of live video broadcast across more than 450 events. The company said the content had reached 45 million users, a 31% increase on the previous quarter, which was the first full quarter with livestreaming.

Despite advertisers appearing to cool their enthusiasm for the service, Noto said the company still believed that “Twitter is the best place to drive brand perception and we’re continuing to showcase our unique value proposition for advertisers”.

“We’ve received positive early feedback from our ad partners as we highlight the improved return on investment from our audience growth and better pricing. We remain focused on our initiatives to grow revenue by simplifying our revenue product portfolio, communicating our progress to advertisers, and reallocating resources to our highest revenue generating priorities.”

Last year Twitter shed about 350 jobs – nearly a tenth of its workforce – in an attempt to cut its costs and stem losses.