Twitter confirmed it will cut approximately 9 percent of its workforce, or about 350 people, primarily as a reorganization of the company’s sales, partnership and marketing efforts.
The possibility of layoffs surfaced earlier this week as the company’s stock has fallen approximately 40 percent in the last year, and it hasn’t been able to grow its user base as fast as competitors like Facebook, Snapchat and Instagram. The layoffs were announced as part of Twitter’s quarterly earnings report Thursday morning.
“The restructuring allows us to continue to fully fund our highest priorities, while eliminating investment in non-core areas and driving greater efficiency,” the company said in a letter to shareholders. “Over time, we will look to invest in additional areas, as justified by expected returns and business results.”
Twitter laid off a similar number of employees, 336, about a year ago, soon after Dorsey was named the company’s permanent CEO. The product and engineering teams felt the brunt of the 2015 layoffs.
Twitter posted non-GAAP earnings of $.13 per share on $616 million in revenue in the third quarter. Both figures were on the high end of expectations from analysts surveyed in advance by Yahoo Finance. Twitter stock is up approximately 4 percent in premarket trading this morning.
The company reported a GAAP loss of $103 million, and the layoffs and restructuring are part of a company goal to get to GAAP profitability next year.
Twitter said it will pay out approximately $10 million to $20 million in cash and another $5 million to $10 million in stock options as a result of the layoffs. Those costs will show up in the company’s fourth quarter earnings.
At the end of the third quarter, Twitter boasted 317 million monthly active users, a 3 percent increase over this time last year, and up from 313 million at the end of the last quarter. Twitter is doing better internationally than in the U.S., both in terms of number of new users and annual revenue growth. The company is also seeing more engagement from its existing users.
“Our strategy is directly driving growth in audience and engagement, with an acceleration in year over-year growth for daily active usage, tweet impressions, and time spent for the second consecutive quarter,” Jack Dorsey, Twitter’s CEO said in a statement. “We see a significant opportunity to increase growth as we continue to improve the core service. We have a clear plan, and we’re making the necessary changes to ensure Twitter is positioned for long-term growth. The key drivers of future revenue growth are trending positive, and we remain confident in Twitter’s future.”
Twitter raised a few eyebrows when it moved its earnings release and call to 4 a.m. Pacific, before the stock markets open, rather than the traditional after-close timing for tech companies. In another unusual move, the company did not provide specific revenue guidance for its current quarter.
The company has reportedly explored a sale, but many of its potential suitors, like Salesforce, Disney, Google and Apple, among others, have publicly stated they aren’t interested.
In recent months Twitter has sought to add a new revenue generator through live streaming. Following its deal with the NFL to stream 10 Thursday Night Football games this season, the company inked deals with the NBA; the NHL and MLB; and the Pac-12 conference. It also live-streamed content from Wimbledon earlier this month. Twitter also is partnering with non-sports media companies, like Bloomberg, and streaming events like the Republican National Convention.
That effort appears to be paying off. Approximately 3 million people have streamed each of the past three Thursday Night Football games on Twitter, an increase of approximately 28 percent over the 2.35 million viewers for the first game.
The last two presidential debates on Twitter averaged 3.3 million viewers, up more than 30 percent over the first debate. Twitter reported that the second presidential debate, with approximately 16 million tweets, was the most tweeted debate of all time.
“Our live-streaming video experience is unique in that it pairs a live-streaming video together with the vibrant live conversation happening on Twitter. People come for the high quality video content, but then also get to see the best of Twitter in our curated Tweet stream with the best commentary about the event,” according to the shareholder letter.
With a potential audience of more than 1 billion people for streaming events, advertisers are getting on board. Twitter reported that video has been the company’s top revenue generating ad format for each of the last two quarters.