twitter-facebook-cmn

Twitter will be laying off 9% of its workforce and the media company said that it needs to de-priortize certain initiatives. The job cuts will mainly affect people in sales, partnerships and marketing, Twitter CEO Jack Dorsey said in an analyst call. TechCrunch pointed out that this could affect more than 300 employees at Twitter.

Last month, Twitter also cut 20 jobs and shut down its Bangalore global engineering operations. The Bangalore engineering team was constituted following the company’s acquisition of ZipDial in February 2015. 

The layoffs come after Twitter failed to attract enough attention from companies when it tried to get itself acquired. Some of the companies which showed interest were Salesforce, Walt Disney and Alphabet’s Google. It looks like Twitter will have to figure out a way to profitable business model.

 

For the quarter ended September 2016, Twitter reported revenues of $616 million but a net loss of $103 million. The company managed to reduce the net loss from $107 million in the preceding quarter.

Twitter said that it won’t be reporting a revenue guidance and the job cuts in sales were a reason for this. “We’re restructuring and moving from three channels to two channels. There will be transitions of account that will take place over the course of the quarter… Sales force transitions can have unexpected impacts when you’re transitioning accounts which is what we’ve seen from other Internet companies,” CFO Anthony Noto added in the call.

Focus on daily active users (DAUs)

Twitter has more than 317 monthly active users but till now it has not disclosed the number of daily active users but going forward, it will be focusing more on daily active user growth to sell it as a proposition to advertisers. “Product changes are driving an acceleration in year-over-year growth for daily active usage, tweet impressions and time spent for the second consecutive quarter. We’re shipping rapidly and see a significant opportunity to increase growth as we continue to refine the core service,” Dorsey added.

Noto explained that the product changes will contribute to growth in audience and engagement and that marketers are looking for audience growth and audience engagements sustained over time.

For context, Facebook’s daily active users grew 17% to 1.13 billion in the June quarter while its monthly active users grew to 15% to 1.7 billion.

Video still drives growth

Video is now Twitter’s largest ad product by revenue for the second consecutive quarter, and it’s also its fastest growing.

We believe those product changes will continue to contribute to growth in audience and engagement. They’re not just one-time events. “Our current advertiser set is upgrading into these video ads, and then the second opportunity that we see clear ahead of us are these new incremental budgets for online videos (OLV),” Adam Bain, chief operating officer said.

“As you recall, this OLV marketplace is about a $9 billion or $10 billion ad market with most of the money coming from video-centric services like YouTube and the like, and so we’ve seen another good quarter of ad product execution to win OLV budgets. So we’re excited about the next quarter ad,” he added.

Financials

– Twitter reported revenues of $616 million for Q3 2016, up 8.26% year-on-year (YoY) from $569 million revenues reported in Q3 2015. In the previous quarter, Twitter posted overall revenues of $602 million.
– The company’s net losses were $103 million during this quarter, compared to the loss of $132 million in the same quarter last year (Q3 2015). In the previous quarter (Q2 2016), Twitter posted net losses of $107 million
– Advertising revenue accounted for 88.47% or $545 million of the revenues, while data licensing & other accounted for the remaining $71 million revenues.
– Advertising revenue grew 6.23% YoY from $513 million in the corresponding quarter last year.
– EBITDA stood at $181 million for the quarter, up 27.46% YoY from $142 million in Q3 2015. In the previous quarter, EBITDA stood at $175 million.

Download: Presentation | Transcript