Twitter Inc.’s advertising revenue rose 71.7% in the first quarter—to $388 million this year from $226 million in 2014. Mobile ads accounted for 89% of that revenue, which amounts to roughly $345.3 million during the first quarter. That’s a 91% increase from roughly $180.8 million in mobile ad revenue a year earlier.
While Twitter’s ad revenue continues to rise, the social network struggles to attract new users. Its user base grew 18.4% in the first quarter compared to a year earlier, but increased only 4.9% compared with the fourth quarter. That slow growth is far behind burgeoning social networks like Instagram.
Twitter’s ad revenue growth was in the high double digits, but it fell below the expectations the social network set when it released its fourth-quarter results. That, combined with slow growth, spooked investors who learned about the social network’s results when financial analytics firm Selerity posted them on Twitter before the stock market closed.
“After five consecutive quarters of more than 97% year-over-year revenue growth, we underperformed against our expectations,” Twitter CEO Dick Costolo said during a conference call with analysts.
Anthony Noto, Twitter’s chief financial officer, attributed the slowdown to an increased focus on direct-response ads, which aim to drive a direct action, such as a click to a retailer’s site.
“It’s important to emphasize that we are still in the very early stages of development for direct-response products, as most of them have been available for less than one year,” Noto said. “We are very encouraged by the growth we have experienced thus far, but as often is the case with new products, we have a great deal of iterating and fine-tuning to do as we scale in order to maximize the effectiveness of these products in our complex marketplaces.”
One way Twitter aims to bolster direct-response offerings is via acquisition. The social network also on Tuesday announced plans to buy TellApart Inc., a marketing vendor that retailers and other businesses use to retarget consumers on the web and via email marketing.
“TellApart joining Twitter gives us additional tools for cross device identity, targeting and attribution, along with a very talented and deep direct response expertise and team,” Costolo said.
The social network also struck a deal with Google Inc. that will enable brands buying ads on Google’s DoubleClick ad platform to also buy promoted tweets. The deal comes only a few months after Twitter and Google reached an agreement to make its 140-character updates more searchable online.
For the first quarter ended March 31, Twitter reported:
- $435.9 million in total revenue, up 74.0% from $250.5 million a year earlier.
- 302 million monthly active users, up 18.4% from 255 million in the same period a year earlier, but up only 4.9% compared to 288 million the fourth quarter.
- 241.6 million consumers, 80% of Twitter’s monthly active users, accessed Twitter from a mobile device.
- $162.4 million net loss compared to a $132.4 million loss in Q1 of 2014.