Twitter’s earnings report on Tuesday showed the company is learning how to make money, but it continues to miss the mark in a category almost equally important for a social media giant: user growth.
Twitter reported 320 monthly active users in Q3, which is up about 11 percent year-over-year.
Last quarter the company showed 15 percent user growth, 18 percent the quarter before that, 20 percent before that and 23 percent at this time last year.
That means Twitter’s growth rate has been more than cut in half over the past year. Facebook, meanwhile, is already much larger and continues to grow at a faster pace.
It’s a trend Twitter has put right at the top of its priorities, but has so far been unable to turn around. This is going to be a major challenge facing new CEO Jack Dorsey as he settles in at the top of the company he co-founded in 2006.
Dorsey has already made operational changes, laying off about 8 percent of the company’s staff. Next, he’ll have to convince investors that new features like Moments and Periscope can win over new users.
Dorsey highlighted the challenge in front of him during a call with investors, noting how Twitter “makes people do a bunch of work to find the right accounts to follow.” He added that Moments, which offers curated feeds to make it easier to follow major events, is just one of the company’s efforts to fundamentally rethink the service to attract new users.
“That’s just one initiative around making Twitter easier to understand,” he said. “There will be many, many more to come.”
Things weren’t looking too promising on Tuesday as Twitter’s stock took a 10 percent dive in after hours trading immediately following the release.
The earnings report did have a sliver of a silver lining for anyone more concerned about financials. The company reported earnings per share of 10 cents on revenue of $569 million, beating analyst expectations of 5 cents and $560 million, respectively.
That represents healthy year-over-year revenue growth of 58 percent as Twitter continues to see its advertising business blossom, especially on mobile.
“We continued to see strong financial performance this quarter, as well as meaningful progress across our three areas of focus: ensuring more disciplined execution, simplifying our services, and better communicating the value of our platform,” Dorsey said.