Twitter is trying to carve itself a path to profitability.
After failing to find a bidder to take the struggling social networking service under its wing, Twitter etched out a turnaround plan for itself. When it reported third-quarter results before markets opened this morning (Oct. 27), the company also announced that it was letting go of 9% of its 3,860-strong workforce as part of a wider restructuring effort. While no additional details were disclosed, earlier reports suggested that the sales team would be most impacted by the downsizing.
Later in the afternoon, the company announced that it would also be discontinuing Vine, the mobile short-form video sharing app it acquired in 2012. Many of the app’s top creators have been ditching the platform for Facebook and other platforms, shining another light on Twitter’s woes.
In October 2015, to combat lagging stock prices and stalled growth, chief executive officer Jack Dorsey fired nearly 300 workers, about 8% of the company’s workforce at the time. Despite the slimming efforts, the company continued to disappoint quarter after quarter. But this time, the company has concrete housekeeping plans: It’s focusing on growing its livestreaming business, an area where Twitter already seen some success, and on combating hate, an area that’s holding the company back.
Twitter may have beat analyst estimates when it reported $616 million in revenue in the third quarter of 2016 but the 8% uptick from the year earlier is still the slowest growth rate in company history.
Initiatives like Moments, Twitter Engage, and the overhyped Twitter stickers have failed to alleviate its user growth problem, and the company did not address them outright in its third quarter earnings report.
However, not all of Twitter’s strategies have failed. Forays into livestreaming with NBA and NFL games and the Republican and Democratic national conventions this year have already started paying off. About 3 million users logged in to watch the third NFL game livestream—a 28% uptick from the first game Twitter broadcast live, the company said. The site has also forged partnerships with Pac-12, to stream college sports, with Bloomberg Media.
Twitter has yet to turn a profit, but it managed to cut losses to $103 million from $132 million this time last year.
“Product improvements are having a direct positive impact on audience growth, engagement, and monetization,” the company said in a letter addressed to shareholders. “We believe that, with continued disciplined execution, growth in audience and engagement will drive acceleration in revenue growth over time.” The company reported 317 million monthly active users in the third quarter of 2016, up 4 million from the prior quarter.
In its earnings letter, Twitter also highlighted improving safety as a priority moving forward.
The microblogging platform has struggled to curb all sorts of hate speech including terror, political, bullying, and harassment, and has been criticized for using band-aid solutions like quality filters to combat its huge troll problem instead of tackling it head on. Ghostbusters star Leslie Jones quit Twitter after being bombarded with racist hate, and a New York Times editor left the platform after being subject to anti-semitic tweets. Abuse on Twitter was reportedly a deal breaker for potential bidder Disney too.
The company has said it will announce updates to its safety policy, as well as improvements to its enforcement strategy, by next month.
Ever since Yahoo found a buyer, tech investors have been hopeful about a Twitter acquisition, but Dorsey has been opposed to one. Although the board is supportive of him, investors were running low on patience. However, providing clarity on the company’s next steps won over some skeptics and the stock jumped up 4% when markets opened.