in Spite of income and a number of users on the rise, Twitter still shows more than 100 million dollars in losses in the third quarter. To achieve balance, the company has announced the departure of 9 % of its workforce – particularly in sales – and the closing of the video service Vine.
Twitter is embarking on a plan of the surroundings of the winter. On the occasion of the announcement of its results for the third quarter, the social network has published its intention to separate of 9% of its 3 910 employees and close the video service Vine. The company intends to focus on its core business, by streamlining its sales channels and advertising. The goal : profitability in 2017, even when the losses are even larger in these three months.
An increase in sales but still incur losses
In fact, Twitter reported revenue of $ 616 million, an increase of 8 % year-over-year. For their part, the losses amounted to $ 103 million (compared to $ 131 million a year earlier). American users are still those who report the most : a total of 376 million dollars in sales to 67 million members. The 250 million members abroad have enabled the company to earn $ 242 million.
The number of users has increased by 7 % in one year, thanks above all abroad (+21 %), whereas the base members of the Atlantic remains stable (+1 percent). The company says it is just the same as the number of daily users has increased, as the number of impressions of tweets and the time spent, ” for the second quarter in a row “. The question of the use is sensitive for Twitter, as its growth is weak in the face of competing services.
To attract more users, Twitter claims to (still) want to improve the experience for newcomers, via the interface to the first arrival, the news feed main, notifications, and writing of tweets. It is for example, to control the new entrants to the thematic people to follow or view a summary of missed messages back to the service. It also displays his willingness to “secure ” its platform, highly criticized for its minimal management of the harassment that has in the course.
On the bottom, Twitter declares intention to strengthen its strategy on the content, such as coverage of sporting events or political (in the image of the French primary). Moments that contribute to increase the time spent on the service. “Our experience live video is unique, combining the video with the conversation on Twitter live, ” she says elsewhere, after having launched several applications for keypads and TV consoles. The company says it also get good results with Periscope, while remaining very vague on its actual performance.
Layoffs, the end of the Vine and profitability expected in 2017
To recover quickly, and thus achieve a balanced budget next year, the company has decided to remove 9 % of its workforce. The objective is to reduce its sales teams and partnerships, from three commercial channels to two. The expected cost is 10 to 20 million dollars in cash, plus 5 to 10 million of share-based compensation.
” The restructuring allows us to continue to fund fully our priorities, while eliminating investments in ancillary activities, and thus to be more efficient, ” says the company in its letter to investors. The long-term goal is to obtain an EBITDA margin of 40% to 45%, net of the costs of acquiring traffic. A margin which is currently at 29 %, or $ 181 million. It does risk not have forecasts for the next quarter, due to the ongoing restructuring.
on the side of The services, the main victim is Vine, which has announced in a blog post its closure in the coming months. The application of diffusion of short videos do not give details on the job cuts-related, or on the precise date of implementation of key under the door. Always is it that the videos are already online should be kept, promises the team, which adds that users will also be notified of any new major service-related. On the video, the horse on which to bet Twitter is so Periscope and its live broadcasts, with a significant investment in new features, especially on the business side.
video advertising, plank Twitter
On the $ 616 million of revenue in the quarter, 545 million come directly from the advertising… Which 90 % of the mobile. “As we expected, the turnover of the Tweets sponsored traditional continue to melt, so that the new function-oriented brands are better adopted, ” says the company, which thus becomes increasingly dependent on the operations of global brands. They would show their willingness to invest more on the social network, says Twitter.
The licenses of the data, for example the database access Twitter via third-party actors, have reported $ 71 million over these three months, that is 26 % better than a year earlier. The reason : the success of the system of bidding on ads (ad exchange) mobile of the company. In absolute terms, the engagement of internet users with advertisements grew by 91 % in one year, even if every interaction is charged in 44 % less.
For the result, Twitter says, is to focus on the return on investment for advertisers, and tools for the measure. In detail, it is to propose new indicators and a further integration with the management tools of the governed DoubleClick (Google). On the merits, he wants to offer live content and conversations with a wide targeted audience, which would be the most effective methods to generate advertising revenue.
Twitter also claims the strength of its video advertising. “For the second consecutive quarter, the video was the advertising format that generates the most revenue, ” explains the service, which is said to receive a lot of requests from advertisers on the video, live or not. It remains that, over the quarter, the advertising activity in and of itself has caused 78 million dollars in losses. If Twitter supports hold a series of indicators showing the best, the balance is therefore clearly not reached for this which is the heart of turnover of the company.
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