Twitter Misses Guidance, Stock Gets Scorched

If the stock price is any indication, Twitter whiffed the quarter, and badly — at least when it came to the all-important guidance.

[bctt tweet=”Twitter whiffed the quarter, and badly — at least when it came to the all-important guidance.”]

Indeed, the shares, down 12 percent after hours, slid not on the headline numbers, which were, and always have been, backward-looking. In fact, Tuesday’s (Oct. 27) top and bottom line numbers topped consensus. With $0.10 in earnings per share posted on $569 million in sales, the beat was more than just a shrug compared to the respective analyst projections of $0.05 and $560 million. And within that headline top line, $513 million was advertising-related revenue, up 60 percent from last year and a bit better than the $503 million via consensus.

But a few glaring metrics had investors headed toward the exits. Chiefly, this one: Average monthly active users (MAU), which is shorthand for near-term growth prospects, was 307 million for the quarter, and that represented a gain of 3 million from the previous quarter and up 8 percent year over year. The numbers may be skewed a bit given the fact that the latest user count does not, in fact, tie in users who use the platform through text messages (known as Fast Followers).But an anemic sequential performance was enough to spur selling, especially as CEO Jack Dorsey said the company continues to cluster its strategy across what was termed a “few big bets across Twitter, Persicope and Vine … our largest opportunities for growth.”

Along with the slowing MAU numbers, guidance for the fourth quarter miffed investors. Twitter said its revenue is expected to be in the range of $695 million to $710 million, which falls quite short of the roughly $741 million that had been in place via sell-side consensus before the latest results. That guidance may be especially sour given the update on services during the conference call that handed out a litany of new features, such as the nearly two dozen for mobile alone, as well as other initiatives, such as Moments and Promoted Moments, that are scheduled to debut this quarter. And though growth in the SMB was touted, with 9 million called out on the call as being on the platform, clearly it is not enough to save the quarter.

So, now the media and investor gaze on Jack Dorsey — and remember this past quarter has been his first as CEO — becomes a white-hot glare. And in what might have been a real shot across the bow, perhaps as a nod that some right-sizing is top of management mindset, the company has said it is cutting roughly 335 jobs, or about 8 percent of its global employees.

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