Twitter Hit By Falling Monthly Usage Numbers

Twitter (Swiss: TWTR.SW - news) shares have been hit by volatile after-hours trading after its latest results showed a decline in monthly active usage in the last quarter.

Revenues for the whole of 2015 were up 58% to $2.2bn (£1.5bn) representing what the company called "another very strong year for Twitter".

But investors were instead focused on the number of active users of the site. The total number of these was flat compared to the previous quarter but according to Twitter's own preferred underlying measure it fell.

Shares (Berlin: DI6.BE - news) slumped by as much as 14% before recovering the losses to leave the price flat.

It follows a catastrophic three months in which the company has lost half its value. Twitter has been making changes to the way it works but is lagging behind market leader Facebook (NasdaqGS: FB - news) on a number of fronts including earnings and user numbers.

In its latest results the company said: "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."

:: Analysis: Should Twitter Worry About User Numbers?

Total (Other OTC: TTFNF - news) monthly active users (MAUs) were 320 million for the quarter, lower than expected and unchanged from the previous period. It was the first flat quarter-on-quarter performance since the company floated on the stock market in 2013.

But stripping out SMS fast followers - people who sign up and access Twitter entirely using text messages - the figure was 305 million, down from 307 million in the third quarter. These SMS users are seen as hard to make money from.

Twitter also disappointed traders with its revenue expectations for the current first quarter - at $595m-$610m (£410m-£420m) these were well below Wall Street forecasts.

The micro-blogging site saw revenues of $710m (£489m) in the three months to the end of December, up 48% from the same period last year thanks to a surge in advertising turnover.

Twitter habitually makes losses and it was in the red by $90m (£62m) in the fourth quarter, though this was 28% down year-on-year. For the full year, losses narrowed by 10% to $521m (£359m).

The results came hours after Twitter announced a major change on Wednesday, saying it would now show the best algorithimically-selected tweets at the top of users' timelines.

At the moment, most people see a constant stream of updates in reverse chronological order.

The weak results are likely to stoke investor concerns over stalled growth, which a series of initiatives since the return of founder Jack Dorsey last summer have failed to reverse.

Brian Blau, research director at Gartner, said: "With no increase in new users, but otherwise good financial performance, Twitter hasn't yet shown how it can rise from the troubling spot of not being able to grow the business (Other OTC: UBGXF - news) ."