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Twitter's User Problem Clouds An Otherwise Solid Quarter

Twitter posted fantastic revenues and even lost less money than analysts expected, but user growth continues to plague the company's performance.

By Evan Thomas | February 6, 2015

Twitter had a great quarter, except for the whole user thing.

The company posted $479 million in quarterly revenue, up a meteoric 97 percent from this time last year.

And while this isn't the quarter Twitter goes profitable — it posted a net loss of $125 million — it still beat investor expectations.

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No, as far as Wall Street is concerned, Twitter's problem is one of users. And it's getting worse.

While Twitter saw a 20 percent increase in monthly active users over this time last year, the rate at which Twitter is growing that userbase is tanking.

Growth year-over-year is down to a little more than one percent. Last quarter, Twitter added a grand total of four million users.

Twitter says it would have been 8 million, were it not for changes to Apple’s iOS 8 and its integration with Twitter.

Whatever the reason, the trend is causing investor backlash. Analysts who talked to CNBC late last year were already losing patience with Twitter and its CEO.

“Do you think Dick Costolo will leave that job?” asked CNBC’s Scott Wapner.

“We think there’s a good chance he’s not there within a year,” said analyst Bob Peck.

Costolo, for his part, is facing the criticism head-on.

“If you’re going to be the CEO of a public company, you’d better develop a thick skin. That’s the world we live in.” (Video via CNBC)

The Verge notes he’s taken personal responsibility for Twitter’s troll problem, which is “costing the site users.”

And a newly announced partnership with Google is expected to help Twitter’s global visibility. What’s more, the company has specific plans to entice new users.

“Many, many users see tweets all over the media ecosystem all the time, and those viewers are not counted in their active userbase,” Bloomberg’s Paul Sweeney told ABC.

Twitter sees that as an opportunity. PCWorld reports it plans to debut a “logged-out timeline” so these users can get something out of Twitter and have more reason to set up a permanent account.

In the meantime, and despite the investor rhetoric, Twitter’s doing alright for itself. Its stock jumped about 10 percent in after-hours trading following its earnings announcement.

This video includes images from Getty Images and music by Little Glass Men / CC BY 4.0.

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