Twitter Says Sales and User Growth will Slowdown

Twitter reported solid sales during its first earnings report since its initial public offering in 2013, but its stock dropped in trading after hours on its disappointing outlook.

The company reported that sales were $243 million during the fourth quarter, which was up 116% from the same period a year ago. That easily exceeded the estimate of revenue of $218 million by Wall Street.

However, for the first quarter of 2014, Twitter said it expected sales of $230 million to $240 million, which would double the revenue from last year at the same time, but lower than the most recent quarter that ended 2013.

That would mark just the first time that quarter over quarter revenue at Twitter fell since revenue started being reported by the company in 2011.

Shares of Twitter were off by almost 18% in trading after hours following a conference call with analysts.

Twitter reported a $511 million loss during the quarter. Twitter has not yet earned a profit, but most of its loss was because employees cashed out of their compensation that was stock based.

Excluding those transactions and other expenses that were just one-time, Twitter said it had earned $10 million or 2 cents per share. Analysts expected 2 cents per share.

Twitter also is facing a user growth slowdown. Twitter said 243 million people had used its site monthly during the last quarter. While that was a jump of 30% compared to the same period one year ago, it was just an increase of 3.9% from the third quarter.

Over the four previous quarters, the average for quarter over quarter rate of growth was 7.4%, while in 2012 that growth was 10.3%.

Mobile however was a bright spot: Mobile users jumped by 37% year-to-year and over 75% of all Twitter users access the site through mobile devices, which is nearly the same percentage as during the previous three-month period.

Facebook has also seen success in mobile recently but struggled with that as well in the beginning.

The majority of the revenue on the site was from advertising with $220 million during the quarter, which was an increase from one year ago of 121%. Mobile sales were 75% of all ad sales. The other $23 million of revenue was from data licensing along with other sources.