Twitter’s Q4: Decent Revenue, Stalled MAUs

twitterQ4The one thing that investors really want from Twitter – for it to grow its monthly active users – is seemingly something that the platform can’t deliver.

Twitter reported on Wednesday that revenue for Q4 2015 was up 48% year over year, hitting $710 million – with ad revenue comprising $641 million of that number – while revenue for the full year was $2.2 billion. Mobile represented 86% of total ad revenue.

But user growth remained flat at 320 million MAUs quarter over quarter, although Twitter did see a 9% year-over-year increase in the number of new users. While not included in numbers provided for Q4, growth through January reportedly normalized to a healthier level.

In a letter to shareholders, Twitter looked to veer the conversation away from MAUs to its so-called “total audience,” which includes its roughly 500 million logged-out monthly visitors.

The letter laid out Twitter’s three main initiatives for its ad business: building a “rich canvas” for marketers; driving better ROI with improved measurement, bidding and relevance; and “increasing scale by leveraging Twitter’s unique total audience.”

But “at the center of everything is live,” said CEO Jack Dorsey, referring to the real-time nature of Twitter’s platform.

Dorsey demurred when asked if the algorithmic timeline feature launched Wednesday in advance of the earnings call clashed with Twitter’s core value prop around capitalizing on live events.

“We want to focus on live because we think it’s the fastest and easiest way to understand the power of Twitter and get into it,” he said. “It’s a meaningful guidepath into the experience.”

From there, users will make connection and start to regularly engage in conversations – or at least that’s the hope.

Twitter knows it has a lot of work to do to make its platform easier to use.

“We are focusing a lot of our energy on refining our core product and looking at what is confusing about the service and what’s inhibiting growth,” Dorsey said.

The timeline is a big part of that focus, as is the recently launched Moments product, which packages trending tweets into more accessible bundles.

Although MAU growth slowed to a near crawl between Q3 and Q4, Twitter did see a significant increase in the number of advertisers it works with – scaling the total number to 130,000 in Q4, up nearly 90% year over year.

Dorsey attributed the uptick to the number of SMBs running ads with Twitter.

Which raises a question about ad load. With more advertisers comes the need for more ad inventory.

“Ad load has increased meaningfully since the beginning of the year driven by international ad load increasing more than domestic, although domestic has also increased,” said Twitter CFO Anthony Noto. “We increased [ad load] because of demand … but we still have headroom in what we think we can do.”

Twitter’s also been busy on the ad product front.

On Tuesday, Twitter launched a unit called First View that allows marketers to buy Promoted Video at the top of the timeline on an exclusive basis for 24 hours. In January, Twitter rolled out the ability to play Periscope videos directly within its flagship app. Doritos was the first brand to take advantage during this year’s Super Bowl.

And in Q4, Twitter ran several limited pilots, one around the Dynamic Ads product it built using the technology acquired from TellApart, which allows direct-response marketers to retarget users based on their browsing behavior, and a second around exposing its logged-out audience to advertising.

Its MAUs added to its logged-out users creates a total audience of more than 800 million.

In another deflection from the MAU question, Twitter Chief Operating Officer Adam Bain told investors, “Our total addressable reach got bigger in the quarter.”

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