In its debut earnings report as a public company, Twitter (TWTR) revealed fourth-quarter adjusted earnings and revenue that exceeded forecasts, but modest user growth appeared to spook Wall Street.
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Shares of the microblogging company tumbled 11% in after-hours action as monthly active users and timeline views trailed forecasts.
Twitter said it lost $511.47 million in the fourth quarter, or $1.41 a share, compared with a loss of $8.71 million, or 7 cents a share, a year earlier. The net loss was driven by $521 million of stock-based compensation expenses, including $406 million for restricted stock units previously granted to employees.
Excluding one-time items, the company earned 2 cents a share, compared with nil in the year-earlier period. That exceeded forecasts from analysts for a loss of 2 cents a share.
Revenue soared 116% year-over-year to $243 million, topping the Street’s view of $218.15 million. Ad sales climbed 121% to $220 million and mobile ad sales made up 75% of total ad revenue.
Twitter, which widely trails Facebook (FB) in number of users, reported a 30% year-over-year jump in average monthly active users to 241 million as of the end of 2013. That is below consensus calls from analysts for 249.1 million MAUs.
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Twitter said it averaged 54 million MAUs in the U.S. and 187 million internationally, compared with expectations for 57.6 million and 191.4 million, respectively.
Mobile MAUs climbed 37% to 184 million in the fourth quarter, representing 76% of total MAUs.
Timeline views increased 26% to 148 billion in the fourth quarter, but that also trailed the Street’s view of 173.65 billion. Twitter said advertising revenue per thousand timeline views surged 76% to $1.49.
"Twitter finished a great year with our strongest financial quarter to date," Twitter CEO Dick Costolo said in a statement. "We are the only platform that is public, real-time, conversational and widely distributed and I'm excited by the number of initiatives we have underway to further build upon the Twitter experience."
Costolo said in a tweet from Twitter's official investor relations account "combined changes over the course of the year" would rev user growth.
— TwitterIR (@TwitterIR) February 5, 2014
And said in a follow-up tweet that the social network has several initiatives planned to improve user experience.
Looking ahead, Twitter projected first-quarter revenue of $230 million to $240 million, which would top the Street’s view of $215.2 million. However, adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, would miss consensus calls for $18.9 million.
For the full year, Twitter sees revenue of $1.15 billion to $1.20 billion, which is above estimates for $1.13 billion. Adjusted Ebitda is seen ranging between $150 million and $180 million, compared with the Street’s view of $141.2 million.
After initially rallying, shares of San Francisco-based Twitter slumped 13.72% to $56.92 in extended trading Wednesday evening.
Since going public at $26 a share on November 7, Twitter shares have skyrocketed about 154%. Investors who bought the stock at its open price of $45.10 have generated a 46% return through Wednesday’s close.
However, the Twitter stock rally has sparked concerns the young company may have become overvalued.