Twitter Shares Slide on Earnings Report Leak

Revenue rose 74% from a year ago, but missed analysts' estimates by $20 million. Twitter also lowered second-quarter sales projections.
Matthew HellerApril 28, 2015
Twitter Shares Slide on Earnings Report Leak

Twitter stock endured its second-worst day ever Tuesday, sliding 18% after a research firm leaked the social media’s disappointing first-quarter earnings report.

The figures leaked by Selerity — appropriately enough, in a tweet — prompted a nearly 6% drop in Twitter shares before trading was temporarily halted and forced the company to issue the confirmed results before the market close. Once Twitter started trading again, shares dropped further.

According to Twitter, first-quarter revenue hit $436 million, increasing 74% from the year-ago period but missing analysts’ expectations of $456 million. Adjusted earnings came in at $0.07 a share, better than the $0.04 that was expected, and average monthly active users rose nearly 5% to 302 million, including 242 million mobile users.

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Twitter said revenues were affected by a lower-than-expected contribution from its newer direct response products. It expects this revenue impact to continue for the remainder of the fiscal year and lowered its second-quarter revenue outlook to a range of $470 million to $485 million. That is well below initial expectations of $538.1 million.

Twitter Inc. – Earnings Surprise | FindTheCompany

“While we exceeded our EBITDA target for the first quarter, revenue growth fell slightly short of our expectations due to lower-than-expected contribution from some of our newer direct response products,” Twitter CEO Dick Costolo said in a news release.

SunTrust Robinson Humphrey analyst Rob Peck said in a recent research report that Wall Street sentiment toward Twitter was “equally divided,” with bulls excited about product improvements and user growth and bears worried that user growth will slow in the second quarter and that user engagement on the service is declining.

As USA Today reports, user growth slowed to a crawl in the fourth quarter as Twitter added only 4 million average monthly active users for a total of 288 million at year’s end. Twitter executives assured investors that user growth would make a comeback in the first quarter, but the average mobile user number came in below estimates.

For the full year, Twitter sees revenue totaling $2.17 billion to $2.27 billion, down from a prior outlook of $2.32 billion to $2.35 billion. Adjusted EBITDA is expected to total $510 million to $535 million in 2015, down from a previous outlook of $550 million to $575 million.