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Twitter Beats Fourth-Quarter Revenue Target, Falls Short On User Growth

CEO Dick Costolo, in the investor hot seat, makes a case for the social network’s growing momentum.

Twitter Beats Fourth-Quarter Revenue Target, Falls Short On User Growth
[Photo: Flickr user Anthony Quintano]

Twitter CEO Dick Costolo was full of renewed brio today as he reported the company’s fourth quarter and end-of-year 2014 earnings.

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“We closed out the year with our business advancing at a great pace,” Costolo told investors, highlighting speedy execution and revenues that more than doubled to $1.4 billion in 2014. “The recent cadence of product launches are making Twitter better for new users, current users, and developers.”

Plus, he signaled that the company’s recent product updates have begun to pay off in terms of user growth, which has been a sore spot with investors for nearly a year. “The trend thus far in Q1 leads us to believe that the absolute number of net users added in Q1 will be similar to what we saw during the first three quarters of 2014,” when the company net 13-16 million additional monthly active users per three-month period, Costolo said.

Last quarter, by comparison, Twitter logged just 4 million new users, closing the year at 288 million. Investors had expected 7 million more than that.

The results give Costolo a chance to breathe after three months of frenzied product announcements. Since November, when he promised investors major changes, Twitter has launched a recap feature called “While you were away,” private tweet-sharing via direct message, and Promoted Tweets on third-party platforms. Plus, real-time tweets are headed to Google search results, thanks to a new partnership with the search giant.

Looking ahead, Costolo indicated that Twitter will continue to innovate with product experiences, like the new video editor that appears within the “Compose tweet” window, in the hopes of hooking users. But he also set as a priority giving anyone in the world a great experience, “whether they have a Twitter account or not”–a tacit acknowledgment that Twitter may never be as broadly popular as rivals like Facebook, and that content partners like Google are likely to become central to the company’s strategy.

Next quarter, Twitter projects revenue between $440-450 million, a drop from this quarter’s strong showing of $479 million. The company attributes that estimate to seasonality, a return to organic growth, and continuing product initiatives.

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Twitter rose nearly 10% in extended trading, after closing at $41.26.

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About the author

Staff writer Ainsley (O'Connell) Harris covers the business of technology with a focus on financial services and education. Follow her on Twitter at @ainsleyoc.

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