Twitter Turns In Lackluster Earnings, Will Cut Up to 350 Jobs

In the financial quarter ending Sept. 30, the San Francisco-based network reported net loss of $103 million on total revenue of $616 million.

Twitter is in the news almost hourly in connection with this year's U.S. presidential campaign, and it no doubt is seeing high-level usage as people argue politics back and forth, but all that additional activity isn't translating directly to the company's bottom line very well.

The micro-blogging social network confirmed during its quarterly earnings report Oct. 27 that it will be trimming between 300 and 350 staff in an effort to quell the company's financial losses.

Twitter currently employs about 3,600 people, down from 3,900 in 2015. In October 2015, the company let go roughly the same number of employees (336) as it is cutting this time.

In the financial quarter ending Sept. 30, the San Francisco-based network reported net loss of $103 million on total revenue of $616 million.

Advertising, its major line of business, amounted to $545 million; data licensing and other web services brought in revenue of $71 million.

Erosion of Ad Revenue Continues

A major issue the company has faced a long while is the slow-but-sure erosion of its ad revenues. Ad sales growth, which in the past was frequently in double digits, has slowed to 6 percent.

Even that positive number was overcome by corporate expenses that grew 3 per cent to $694 million compared to a year ago. User growth rose by a mere 3 percent, although Twitter also reported that tweet impressions and time spent on the network increased during the quarter.

"To capture this large opportunity, and drive daily active usage across the millions of people at the top of our funnel each day, we're refining our core service in four key areas: onboarding, the home timeline, notifications and Tweeting," CEO and co-founder Jack Dorsey said in an advisory to analysts and shareholders.

In an effort to spark ad revenue, Twitter has integrated its backend with Google's DoubleClick Campaign Manager, which now brings in an annual run rate of almost $75 million. The alpha deployment is already showing positive results, Dorsey said.

No News on the Acquisition Front

Attempts to sell the company fell through two weeks ago when the last remaining bidder, Salesforce.com, decided against acquiring the company.

Back on Sept. 23, reports surfaced that Salesforce and possibly Disney Company and Google were interested in taking over Twitter, but nothing substantive came of those behind-the-scenes initiatives. Salesforce is the only one of the three that has publicly decided to drop its interest.

Nonetheless, Twitter isn't going to be giving up the ghost anytime soon. Its balance sheet shows $3.7 billion in cash and equivalents and, despite reporting net-income losses, the company claims positive cash flow of around $80 million—thanks mostly to interest from investments.

Twitter, one of the three busiest social networks in the Western world (with Facebook and Instagram), had a market value of about $13 billion as of Sept. 22.

That estimated value, however, is down substantially from a high of $40.7 billion in December 2013, according to Thomson Reuters. Twitter has had major changes in its leadership during the last 18 months, including at the CEO level, where Dick Costolo was replaced by co-founder Dorsey in July 2015.

Chris Preimesberger

Chris Preimesberger

Chris Preimesberger is Editor of Features & Analysis at eWEEK, responsible in part for the publication's coverage areas. In his 10 years and more than 3,500 stories at eWEEK, he has distinguished...