It was 2pm Pacific Time as Twitter’s interim chief executive Jack Dorsey walked into a room at Twitter’s offices in San Francisco, preparing to give details on its second quarter earnings. The main issue Dorsey faced was one similarly faced by his predecessor, Dick Costolo—the issue of user growth, as it continued to stall, and it was a big concern for investors, hoping to hear some good news.
What would follow would be a mixed bag, but signalled that more needed to be done on user growth, as the issue continued to gnaw at the future of the social network, which will celebrate its tenth birthday early next year.
The good news – its revenue went up 61 per cent, to a total of $502 million (£321.5 million), which beat analysts’ expectations of an average of $481.9 million (£308.7 million), according to a report from the Bloomberg financial news service.
The bad news – the number of users it had was 304 million, the active users that use the web and mobile services of the social network, an increase only of two million compared to the last quarter. Including messaging services like SMS, the number of users was 316 million, an increase of eight million last quarter.
Q2’15 rev: $502M; adj. EBITDA: $120M; non-GAAP net income: $49M. Key info: http://t.co/vD89osWNNi #TWTRearnings $TWTR pic.twitter.com/L1t8IYge0g
— TwitterIR (@TwitterIR) July 28, 2015
The stock dive
Dorsey noted features including instant timelines, a feed for new users, but said that had not made a significant difference as far as user numbers.
“This is unacceptable and we’re not happy about it,” Dorsey said, according to a report from The Wall Street Journal.
The mixed bag of news reflected in the trading of Twitter’s stock, which went up to $36.54 (£23.41) on the New York Stock Exchange as the bell sounded at 4pm Eastern, signalling the end of the trading day. Yet, after hours, as the call was conducted, the stock declined to $32.23 (£20.64), the Journal report added.
A search for stability
As Dorsey prepares to conclude his first month as interim chief executive, two questions are at stake, not only the issue of user growth, but the issue of overall leadership at the company. Dorsey is the chief executive also of a mobile financial services app called Square, also based in San Francisco, and reports emerged last week that it filed an initial public offering, or IPO.
Twitter has indicated that it wants a full time leader, and the question of whether Dorsey wants to remain as chief executive full time, is still, for the moment, unanswered. Dorsey also declined to discuss the IPO, or confirm that if one was indeed filed with the Securities and Exchanges Commission, the main US financial regulator in Washington.
As Twitter prepares to enter its next quarter, this has become more than just about issues regarding the confidence of its users around the world. It has become an issue for the social network’s investors, and whether they can have confidence in what Dorsey can do to prove that it is going in the right direction.
Investors are looking for answers to what Twitter will look like in the future. The question is whether Dorsey can answer them, and if he will be there to answer them, as the search for stability for users and Wall Street continues to be conducted.
What do you think? What is key to Twitter’s financial future and overall confidence in investors? Have your say in the comments section below.
