Twitter’s Payments Talk Absent As Growth Stalls

With all the growth issues Twitter is facing, perhaps it shouldn’t be so much of a shock that no more details about what’s going on with its payments plans were mentioned during the company’s fourth quarter earnings.

After all, from the results released yesterday (Feb. 10), Twitter is struggling to just keep its user base steady — let alone growing. That hasn’t left a lot of extra time for outside chatter about investing resources and effort toward growing one service that could perhaps monetize the social media service.

Its growth rate of monthly active users (MAUs) certainly spoke to that. MAUs for this Q4 were 320 million, which was 9 percent growth from the year prior. But the hitch? Twitter’s Q3 MAU figure was also 320 million, which means Twitter’s “growth” was really just about playing catch-up. On the mobile side, mobile MAUs represented approximately 80 percent of total MAUs.

That’s far less than Facebook’s 1.6 billion users and even less than Instagram’s 400 million users. And those are two social media companies that have also been vying to show their payments leg a little bit more through mobile messaging and integrated social commerce features.

As for Twitter’s payments strategy? What’s come of its CardSpring acquisition? That’s the payments infrastructure firm it acquired in 2014. We still don’t really know. And what’s still not clear is what, or how, Twitter is planning on doing anything with its “buy buttons” that haven’t seemed to take off or how it plans to really monetize the service with its pay-by-tweet options that it has explored in the past year. Essentially, its mobile payments and mobile commerce strategies — at least in terms of what investors and the public have been told — are nonexistent for the moment.

Of course, this is nothing new for Twitter. There’s a good chance it’s going to be the same story for a while — at least for its payments side — as the company irons out its handful of wrinkles. Those wrinkles come with a sinking stock (which dipped 12 percent post-trading yesterday) and questions lingering about if CEO Jack Dorsey has the bandwidth to run Twitter and his mobile payments company, Square.

Perhaps we’ll learn more next month when Square reports its first earnings since going public in November. But, for now, Dorsey might have his hands full with getting his original company up to speed with what investors have been asking for.

Which means faster growth and more ways to actually make money off of the service. As for the current mood? Dorsey emphasized that Twitter is intent on refocusing the company under five new priorities.

“We spent the last six months structuring the organization and our leadership team to move with greater agility and focus, reviewing the state of our service and strategy, learning from what we’ve shipped and developing a stronger point of view about what we are and what we want to be. In January, we gathered our global leadership team to align and commit to a strategy for 2016,” the company’s earnings release stated.

As for those five priorities?

The release explained: “To serve this focus: refinement of our core service, live streaming video, our creators and influencers, safety and developers. Each is critical to us strengthening our platform and audience around live.”

And one way to refine Twitter’s feed is through its new algorithm that will change how its tweets appear. What that means is having users’ feeds be filled first with their favorite users, instead of being overwhelmed with the real-time tweets that flood the timelines now. That feature is currently being tested.

Dorsey remarked that this could have “real promising growth” for user engagement, noting that Twitter is going to “refine our core service and make everything more intuitive.” He also spoke about Twitter’s efforts with Periscope (the video live streaming app) and other ways to engage current and potential users. For now, it’s clear Twitter is banking on posting events live as the key to its future growth.

But that’s going to have to coincide with the user boost Twitter also needs to produce.

“There’s an opportunity to fix broken windows and confusing aspects that are inhibiting growth. We think timeline is a big part of that,” he said during the company’s earnings call with analysts.

While Twitter’s earnings certainly sounded off the alarm for continued concern about its current and future metrics, there was one bright spot, and that was sales for advertising. Revenue hit $710 million for Q4, which was up 48 percent. Twitter went from a 100,000 active advertisers in Q3 to more than 130,000 active advertisers in Q4 (mobile advertising revenue was 86 percent of total advertising revenue). But, then again, sales for the current quarter are expected to slow to closer to $595 million to $610 million.

Overall, Twitter’s total revenue in 2015 reached $2.2 billion, which was up 58 percent YOY.

And back on the bad side, Twitter’s profit losses for the quarter were $90 million, which was actually an improvement from a year ago when it clocked in a loss of $125 million. While closing the gap has been a positive sign, not having a clear action plan for turning a profit may not settle so well with those investors Twitter is attempting to sway as it goes through its next stage of transition.

As for what’s ahead in 2016, Dorsey also pointed to its next focus, which will be on recruiting more talent to help grow its leadership team. He specifically pointed toward former Amex executive Leslie Berland, who recently took over as the new chief marketing officer. He also spoke toward growing its product and engineering side and overhauls under CTO Adam Messinger.

“2016 is definitively going to be a year of additions,” Dorsey said.

And, for Twitter’s sake, those additions will hopefully come with some earnings figures closer to a profit and a stronger, growing user base.