Twitter has an unfortunate track record of disappointing investors on earnings day, and this quarter was no different.
Twitter shares slid more than 10% in after-hours trading. So what happened?
By several measures, Twitter actually had a decent first quarter. (Of course it helped that analysts kept lowering the bar.) The company narrowed its net loss by 50% and reported 310 million monthly active users, up 5 million from the previous quarter.
But it showed weakness in revenue, both in its reported figures and its outlook for the current quarter.
Its $594.5 million in first-quarter sales fell short of analysts’ average estimate of $608 million and was below the low end of the range of Twitter’s own guidance ($595 million to $610 million). At a 36% rise year over year, it’s the slowest quarter of revenue growth since Twitter went public.
This quarter’s growth is likely to be even slower. Twitter said it expects revenue of $590 million to $610 million for the second quarter, which would represent only a 17% to 21% increase from the year-ago period.
The company blamed the first-quarter revenue miss on a slower-than-expected pickup in advertising spending by clients. It also said the strong dollar hurt revenue, noting sales would’ve increased 39% if foreign exchange rates were not a factor.