Twitter’s revenue grows despite decline in user numbers in Q4
Twitter’s advertising efforts have paid off in the fourth quarter, as its total revenues grew to USD 2.2 billion, up 58 per cent year over year. Q4 revenue reached USD 710 million in the quarter, an increase of 48 per cent year over year, and the advertising revenue totaled USD 641 million, an increase of 48 per cent year-over-year. Mobile advertising revenue was 86 per cent of total advertising revenue.
Twitter attributed the growth of Q5 revenue to its advertising business, particularly in video ads and across major verticals, channels, and geographies. “We made significant progress in scaling the total number of active advertisers to 130,000 in Q4, up almost 90 per cent year over year,” the company said in an official statement.
However, there was a decline in monthly active usage in Q4 that Twitter admitted to. Monthly active users, excluding SMS Fast Followers, grew six per cent year over year to 305 million, but were down on a sequential basis from 307 million in Q3. “It’s remarkable we built this business in just five years from zero revenue. We saw a decline in monthly active usage in Q4, but we’ve already seen January monthly actives bounce back to Q3 levels. We’re confident that, with disciplined execution, this growth trend will continue over time,” the statement added.
The average cost-per-engagement (CPE) fell 41 per cent year over year, due primarily to the shift to auto-play video, which delivers more engagement at a much lower average CPE than click-to-play video ads. Overall ad load for Twitter was higher in the quarter, on both a year-over-year and quarter-over-quarter basis, driven by the increase in advertiser demand.
Jack Dorsey, CEO, Twitter, said in an earnings call, “We spent the last six months structuring the organization and our leadership team to move with greater agility and focus, reviewing the state of our service and strategy, learning from what we’ve shipped, and developing a stronger point of view about what we are and what we want to be. In January, we gathered our entire global leadership team to align and commit to a plan for 2016.”
Mr Dorsey added, “We’re focussed now on what Twitter does best, live. Twitter is live. Live commentary, live conversations, and live connections. Whether it’s breaking news, entertainment, sports, or everyday topics, hearing about and watching the live event unfold is the fastest way to understand the power of Twitter.”
Twitter has also made changes to its algorithm for the timeline for users and brands. It will now put the most recommended tweets on top of the timeline, instead of the recent ones. “We want to make it even easier and faster for people to discover and catch up on what’s happening right now. Today, we’re launching an improved timeline to help people see Tweets that are important to them — from their favorite athletes, musicians, politicians, or brands. Upon opening Twitter, the Tweets they’re most likely to care about from the accounts they follow will appear at the top of the timeline. The rest of the Tweets will then be displayed directly underneath in reverse chronological order, like always. People can choose to turn this option on in their settings for iOS, Android, and web,” an official blog post explained.
Some of the other figures that the company highlighted in the Q4 results show that Twitter’s video views rose 220x from December 2014 to December 2015, since it added native video.
Since the expansion of the character limit for individual messages in DMs from 140 to 10,000, there was a 61 per cent year-over-year growth in messages sent in Q4.
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