Has the world reached PEAK TWIT? Supplies of new Twitter users are drying up

Revenues up - but still nul for profits

Twitter finished off fiscal 2014 with a ripper fourth quarter in many senses, during which it doubled sales from the previous year - but the microblurt-based ads site gained fewer users than some investors hoped for.

On Thursday, Twitter reported revenues of $479m for the three months ending on December 31, a 97.4 per cent gain over the same period a year ago. It was a haul that trounced even the most optimistic estimates of the Wall Street bean counters.

Revenues for the full year were $1.4bn, which was 111 per cent higher than in fiscal 2013.

Similarly, the firm reported earnings of $0.12 per diluted share for the quarter, which was twice the average of what financial analysts were expecting.

"We closed out the year with our business advancing at a great pace," CEO Disk Costolo said in a canned statement [PDF], somewhat understating the point.

Mind you, Twitter has yet to turn a profit. It posted a loss of $125.4m for the fourth quarter and a loss of $577.8m for the full fiscal year.

But both numbers were better than Twitter's results from a year ago, and more importantly, they're largely the result of accounting items like interest, taxes, depreciation and amortization, and – crucially – stock-based compensation expenses.

Adjusted to ignore those factors, Twitter made $79.3m in the fourth quarter, a 711.5 per cent year-on-year increase. It even earned $101m for all of fiscal 2014, while in 2013 it lost $34.3m on the same basis.

As in the year-ago quarter, 90 per cent of Twitter's revenue for the fourth quarter of 2014 came from advertising. But the actual fees the site earns from advertising have grown considerably over the past year. Worldwide, it earned an average of $2.37 per 1,000 timeline views in the quarter, a 59.1 per cent year-on-year gain. Average revenue per 1,000 timeline views was $1.81 on an annual basis, which was up 81 per cent.

If Twitter shareholders had any gripe, it was that the service doesn't seem to be adding new users as quickly as it could. Worldwide, Twitter claimed to have 288 million monthly active users (MAU) in the fourth quarter, which was a paltry 1.4 per cent gain over the previous sequential quarter.

Compared to the year-ago quarter, however, Twitter's active user base was up 19.5 per cent. So whether the last three months of 2014 represented a temporary dip in growth or the beginning of a worrying trend remains to be seen.

At any rate, the company's investors didn't seem worried. Twitter's share price soared up around 11 per cent in after-hours trading following Thursday's closing bell, adding some $2.8bn to its market capitalization.

In an earnings call with investors, Twitter also confirmed rumours it has inked a deal with Google to inject its microblurt content into the ad goliath's search results. ®

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