Twitter has posted a net loss of $645m (£396m) for 2013, three months after its flotation on the New York Stock Exchange, as the micro-blogging network struggles to attract new and existing users.
The loss was expected by analysts, who highlighted Twitter’s revenues, which rose 110% last year to reach $665m.
But a reported slow growth in user numbers was a bigger concern for investors.
There were 241 million monthly active users in the fourth quarter, up 30% from 185 million a year earlier and slower than 39% seen in the prior period.
Usage also declined, with 148 billion views of Twitter timelines compared with 159 billion views in the third quarter.
That represents a slowdown compared with a growth rate of 10% seen at the beginning of 2013.
Net loss was $511.5 million compared with $8.7 million a year earlier, and was more than double analysts’ projections of $253.5 million.
Timeline views were down nearly 7%, suggesting users were refreshing their feeds less often.
Shares fell as much as 12% in after-hours trading on Wednesday.
Twitter’s share price had more than doubled in value since the company was floated on the stock market in November, when it was valued at around $18bn.
For the last three months of 2013, Twitter said it made a net loss of $511m but on revenues that more than doubled to $243m.
Chief Executive Officer Dick Costolo said on the earnings call that the company is addressing the slowing growth with a plan to increase the number of users and engagement, primarily by making the site easier to use.
“It will be a combination of changes introduced over the course of the year that will start to change the slope of the growth curve,” he said.
Twitter said it was improving its “overall user experience” by launching enhancements like custom timelines, and the ability to send and receive photos via direct message.
But it also pledged to continue to improve its services to advertisers in the hope of growing revenues further.
Twitter brings in money largely by selling advertising space and data on tweeting habits.
More than 90% of its revenues in the last quarter came from advertising, where advertisers pay to have their tweets promoted and appear in users’ feeds.
Three-quarters of advertising income comes from mobile platforms like smartphones, the company said.
Analysis
Dr Sotirios Paroutis, Warwick Business School Associate Professor of Strategic Management Sotirios Paroutis said: “Twitter’s results were a mix of positive news, with revenues and adjusted fourth-quarter earnings per share exceeding analysts’ expectations, and some negatives, with a slow down in the rate of growth of monthly users and record quarterly net losses.
“In many areas, these results were above analysts’ expectations – yet, investors have not been impressed sending the share price down from around $66 to as low as $54 in after-hours trading after the results were published. Inevitably, the market is evaluating Twitter not in isolation but in relation to Facebook, which posted record quarterly results a few days ago. In other words, while Twitter is doing well, it needs to do better – and faster – to keep its advertisers, users and investors interested – or as its CEO, Dick Costolo, admitted during the call to investors ‘we simply need to make Twitter a better Twitter’.”
Watch this Bloomberg discussing Twitter’s challenges below: