Twitter reported a further slowdown in revenue growth in the fourth quarter, as the company struggles to attract ad spending. Sales rose just 1 percent year-on-year in Q4 to USD 717 million, as growth in advertising revenue came to a halt. Ad revenue dipped to USD 638 million versus USD 641 million a year ago. Twitter said it expects revenue growth to continue to lag audience growth in 2017 and is working on refining its product to restore sales.
In terms of profit, Twitter grew adjusted EBITDA by nearly USD 200 million over the full year, reaching USD 751 million, better than its forecast of USD 700-715 million. The adjusted EBITDA margin improved to 30 percent from 25 percent the previous year. Adjusted free cash flow also jumped to USD 444 million from less than USD 5 million in 2015, and Twitter ended the year with USD 3.8 billion in cash. The bottom line was still in the red, with a net loss of USD 167 million in Q4 versus USD 90 million a year earlier.
Average monthly active users reached 319 million for the quarter, up 4 percent year-over-year and compared to 317 million in the previous quarter, due largely to growth outside the US. Average daily active usage grew 11 percent year-over-year, an acceleration from 7 percent growth in Q3, 5 percent in Q2 and 3 percent in Q1. Tweet impressions and time spent on Twitter also remained strong with each increasing by double digits in the fourth quarter on a year-over-year basis, the company said.
Driving usage remains the focus for the company, in order to stimulate revenue growth. CEO Jack Dorsey said the company will apply "the same focused approach that drove audience growth to our revenue product portfolio, focusing on our strengths and the real-time nature of our service". However, this will take time, he noted, and the company flagged several obstacles to restoring growth in ad revenue, including "escalating competition for digital ad spending and Twitter’s re-evaluation of its revenue product feature portfolio, which could result in the de-emphasis of certain product features".
For the first quarter, Twitter forecast adjusted EBITDA of USD 75-95 million and a drop in the margin to 17-17.5 percent. Over the full year, it plans capital expenditures of USD 300-400 million.
