New York: Twitter Inc reported quarterly revenue that fell short of Wall Street estimates and cut its full-year forecast because of weak demand for its new direct response advertising, sending shares down as much as 24 percent on on Tuesday.
User growth was off to a slow start in April, the company said, even though it hit its own target for the just-ended first quarter.
Twitter forecast 2015 revenue of $2.17 billion to $2.27 billion, down from its earlier forecast of $2.3 billion to $2.35 billion. Analysts on average had been expecting $2.37 billion.
Twitter said its new direct response ads, intended to encourage actions such as clicking on a link to an advertiser`s website, did not produce the revenue expected. Advertisers limited their spending and the click rate on Twitter`s ads fell, but the company expects improvement in the second half of 2015, Chief Financial Officer Anthony Noto said on a call with analysts.
The company, which allows users to broadcast 140-character messages, said revenue rose to $436 million in the first quarter, from $250.5 million a year earlier. This was below the average analyst estimate of $456.8 million, according to Thomson Reuters I/B/E/S. (http://bit.ly/1GCvh0y)
Concerns about Twitter were exacerbated when the results were leaked before the market closed. Market data firm Selerity tweeted the figures, saying it had found the release on Twitter`s investor relations website. Twitter blamed the Nasdaq, which it said managed its investor relations website.
"Everything looked weaker than expected," said Arvind Bhatia, a SterneAgee CRT analyst. "This sort of loss of momentum is probably going to cause a bigger outside reaction than in normal circumstances."
The company`s monthly active users rose 18 percent from the previous year to 302 million, in line with some analysts` expectations.
Twitter`s net loss widened to $162.4 million, or 25 cents per share, for the quarter, from $132.4 million, or 23 cents per share, a year earlier.
Excluding items, the company earned 7 cents per share, above the 4 cents per share expected by analysts.
Selerity`s tweet about Twitter`s earnings raised questions about the social media company`s internal controls, said Brian Jacobsen, chief portfolio strategist at Wells Fargo Fund Management. (https://twitter.com/Selerity)
Ahead of earnings on Tuesday, Twitter said it had acquired marketing technology company TellApart to ramp up its direct response advertising.
Twitter shares closed down 18.2 percent at $42.27 on the New York Stock Exchange, and fell further to $41.89 after hours.