That Time When Twitter Leaked its Own Disappointing Earnings, via Tweets
Earlier this week, on Tuesday 28 April, Twitter experienced firsthand just how quickly its microblogging service can disseminate news. One of its users stumbled upon Twitter's financial earnings after they were mistakenly posted on its own investor relations website. Selerity, a New York market intelligence firm, then tweeted the company's first-quarter sales and profit about a half hour before the results were scheduled to be announced. The tweet read: "Today's $TWTR earnings release was sourced from Twitter's Investor Relations website https://investor.twitterinc.com. No leak. No hack."
Maybe this is the wake-up call the San Francisco firm needed after it was revealed last week that its own hierarchy barely even use the service. In fact, 7 out of 11 top Twitter executives tweet less than once per day. Dick Costolo, CEO of Twitter, tweets on average three times per day while Chief Technology Officer, Adam Messinger, tweets close to zero times per day. Vice-President Brian Schipper has sent a total of four tweets ever. How can they understand their business if they never use their product? Eating your own dog food, as it's known in the software world, is seen as absolutely critical to long-term success.
Although Nasdaq subsequently took the blame for the premature earnings release - after asking the New York Stock Exchange to halt the trading of Twitter shares - it nevertheless capped a fairly miserable few weeks for the social media giant. The company reported sales of $436 million, below industry estimates of $457 million. For the current quarter, Twitter predicts revenue between $470 million to $485 million. Analysts had estimated sales of $537.3 million. Twitter's shares fell by more than 18 percent on Tuesday as the company was forced to concede it had lowered its full-year 2015 financial expectations.
It seems Twitter CEO Dick Costolo's job may once again be under threat. Investors had been calling for him to step down as the company struggles to deliver sustainable growth in sales and profits. "Revenue growth fell slightly short of our expectations due to lower-than-expected contribution from some of our newer direct response products," Costolo said in a statement on Tuesday. "It is still early days for these products, and we have a strong pipeline that we believe will drive increased value for direct response advertisers in the future."
"We remain confident in our strategy and in Twitter's long-term opportunity, and our focus remains on creating sustainable shareholder value by executing against our three priorities: strengthening the core, reducing barriers to consumption and delivering new apps and services," he said.
Recently Costolo has been focusing on expanding the site's appeal beyond the hipsters, geeks and news-hounds who make up the majority of its user base. It's becoming easier for new users to sign on and gain followers, while video-sharing is also now a possibility, and a reorganised home page should make the search functionality more inviting. New tools for advertisers, such as promoted tweets and targeted advertising, are the latest new developments to Twitter's evolving service offering.
The CEO has also pushed considerable resources towards countering abusive behaviour. This comes after an internal Twitter memo was leaked earlier this year in which Costolo said he was "frankly ashamed" about how little Twitter had done to combat trolling and abuse. He went on to concede that Twitter had undoubtedly lost users as a result of this negligence, which "was nobody else's fault but mine, and it's embarrassing."
The social network said it now has 302 million monthly active users, meeting analysts' estimates, up from 288 million users at the end of 2014. Twitter gets nearly all of its revenue from advertising sales, however, and CFO Anthony Noto said the company is struggling to get enough advertisers to sign up. The microblogging site's recent history of sluggish user growth has been well-documented, but this blip in revenue - time will tell if it is just that - comes as something of a surprise to industry experts. It seems Twitter is currently losing the social media advertising battle to rivals such as Facebook.
Still, there is a light at the end of the tunnel. Twitter just launched its new Periscope app, enabling users to stream and edit live video, with 1 million users in its first 10 days. Maybe, one day, even the company's execs will try it.