Do not get it twisted, Twitter Inc., the world’s number one microblog is still declaring losses. But things are looking more positive than ever.
In its first quarter result for the year, monthly active users grew by 14% year on year compared to 3% in the year before. Within the period, Twitter has added 9 million more to its average monthly users compared to the year before.
Twitter still posted a net loss of USD61,5 million compared to USD79,7 million posted within the same quarter last year.
On a year on year basis, Twitter is seeing a crash in its total revenue. Gross revenue fell to USD548 million versus USD594 million in the previous year.
As to how difficult Twitter is finding to carry on is also visible in its cost of revenue which soared to USD220 million compared to USD198 million reported in the previous year. This is a course of concern for a company that is desiring to report its first profit since it was founded.
But not to worry, Twitter said it has an explanation (solution), listen to them:
“We believe that executing on our plan and growing our audience should result in positive revenue growth over the long term”.
As to how it intends to reach profitability, the company said “We reduced our GAAP net loss significantly and achieved our highest adjusted EBITDA margin to date, despite the year-over-year decline in revenue, as we continued to streamline our cost structure and remain focused on greater Q1 Broadcast Partners operating efficiency”.
One of the major problem with Twitter in reaching profit is that it is too US dependent, a market that is also seeing a decline. Out of the USD548 million revenue it did in Q1, about USD341 million was from the US with a year on year decrease of 13%.
On the other hand, international revenue was less than that of the US at USD208 million with an increase of 2% year on year.
If Twitter will break even one day, it has to look totally outside of the US. Get more advertisers outside of the US to trust Twitter as a platform for brand engagement and customer acquisition.