Twitter planning changes to reverse slowdown

Dick Costolo is confident Twitter's 'slope of user growth trajectory' will change. Picture: Reuters
Dick Costolo is confident Twitter's 'slope of user growth trajectory' will change. Picture: Reuters
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Twitter boss Dick Costolo hinted that more changes to the social media site are planned for this year as he sought to reassure investors after user number growth slowed to a trickle in the last quarter.

Costolo said the company would make it easier for people to sign up for the service and will also attempt to bring back inactive users, addressing concerns following fourth-quarter numbers that the site is not “mainstream” enough.

“We think there’s a lot we can do to significantly improve the user experience over the course of the year in 2014,” he said.

He was speaking after the Californian firm’s first results since it became a listed company caused a huge sell-off in its shares as growth failed to match the high expectations priced in by investors.

Although it posted better-than-expected revenue of $243 million (£149m) for the final three months of last year, analysts said the firm’s “honey-moon period” on the stock exchange was effectively over as almost a quarter was wiped off Twitter’s shares when Wall Street opened.

The site averaged 241 million monthly users in the December quarter, up just 3.8 per cent from the previous three months -– the lowest rate of growth since it began disclosing user figures.

Arvind Bhatia, an analyst at Sterne, Agee & Leach, said the figures brought into question how mainstream Twitter was as a platform.

“Both in the US and internationally, the monthly active user base did not grow as fast as people thought, and that has an impact on the number of timeline views,” he said.

Timeline views actually dropped from 159 billion to 148 billion in the quarter, signalling that users were refreshing their Twitter accounts less often. The firm has already made a number of changes to its layout to help new users make sense of Twitter and stick with it. Costolo said a recent move to show multimedia directly inside a tweet card and chain together conversation threads have boosted user engagement.

The chief executive also talked up other initiatives such as improving the “onboarding” process for newcomers to Twitter’s mobile app, saying he had “every confidence” that the “slope of its user growth trajectory” will change in 2014 once those changes take effect.

But, he added, “what that slope will look like or when it will occur is not something I can guess at.”

Twitter’s valuation has been predicated in part on the belief it could expand its mainstream appeal and eventually become as ubiquitous as Facebook, which has five times as many users.

Some analysts warned that its valuation, which had been close to about 30 times projected 2014 sales before, looked increasingly bloated.

But even as Twitter’s user numbers appeared to plateau, its advertising business model – which places ads inside users’ timelines every time they refresh – appeared to steadily improve. The company said it made $1.49 per 1,000 timeline views, a jump of 76 per cent from a year prior.

in a rare move for fast-growing internet companies, Twitter offered forward-looking guidance, saying it was targeting revenue of $230m to $240m in the first quarter of 2014.

Stock options for staff pushed Twitter to a net loss of $511.5m over the three months, but in cash terms the firm broke even.