With Twitter Earnings, User Base Weakness, But Better Ad Engagement Drives Earnings Beat

Twitter again disappointed investors with quarterly results that failed to meet expectations on user growth as well as future guidance. The company’s average monthly active users (MAUs) grew 9% year-over-year (y-o-y) to 320 million in Q4 2015 but were flat compared to the prior quarter. In fact, if we exclude users who receive tweets via text messages (SMS Fast Followers), Twitter’s average MAUs actually declined from 307 million in Q3 2015 to 305 million in the fourth quarter. To ward off investor fears of a declining user base, management stated that MAUs had reached Q3 2015 levels by the end of January 2016, showing positive active user growth. Twitter’s struggle to grow its active user base was the primary investor concern through 2015, and that is unlikely to change this year. 

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