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Business Management

Twitter doubles revenue but profit remains elusive

Twitter reported its first earnings as a public company on Wednesday, revealing that sales more than doubled from a year ago, though it still hasn't managed to turn a profit.

Revenue for the quarter ended Dec. 31 was US$243 million, up 116 percent from the same quarter a year earlier, Twitter said in its earnings release. That was far higher than the $218 million analysts had been expecting, according to a poll by Thomson Reuters.

Its loss was a hefty $511 million, much greater than its loss of $8.71 million in the fourth quarter of 2012. Excluding share-based compensation and other adjustments, it would have made a profit of $0.02 per share, again better than analysts had expected.

"Twitter finished a great year with our strongest financial quarter to date," CEO Dick Costolo said in a statement.

Still, investors reacted by pushing its shares down nearly 10 percent in trading after hours, to $59.60 at the time of this report.

The company ended the year with 241 million monthly active users, up 30 percent from the fourth quarter of 2012. Despite the increase, it lags far behind Facebook, which has passed 1.2 billion monthly active users.

Twitter's advertising revenue totaled $220 million for the quarter, up 121 percent from a year earlier. More than 75 percent of its ad sales were from ads placed on mobile devices, showing Twitter's ability to monetize its site on a critical platform.

It was Twitter's first earnings report since the company went public late last year at US$45 a share. Its IPO documents showed at the time that the company was growing fast but losing money.

Since the IPO, which was viewed as a success, the company has faced questions about its ability to maintain its growth rate and become a more "mainstream" service like Facebook.

One of Twitter's largest advertising products is its promoted tweets, which allow marketers to place sponsored tweets in users' streams. Twitter only charges marketers when people click on the tweet or follow the promoted account, however.

For the full year, Twitter's sales grew by 110 percent, to $665 million. Its net loss for the year was $645 million.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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