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Twitter has confirmed it will cut around 350 jobs and shut down its Vine video service, as it reported a slowdown in revenue growth.
The microblogging service highlighted the fact that the number of average monthly active users rose for a second consecutive quarter to 317 million, an increase of 3% compared with the third quarter of 2015.
But revenue for the quarter rose only 8% year-on-year to $616m, and although this was better than expected, it was well below the 20% rise in the previous quarter.
In the face of slowing revenue growth and a failed bid to find a buyer, Twitter said it was cutting its global workforce by 9% and not 8% as previously reported.
Twitter said the “restructuring” will focus mainly on reorganising the company’s sales, partnerships and marketing efforts to create “greater focus and efficiency” to enable Twitter’s goal of driving towards profitability in 2017.
The company also announced that it is to close its Vine video sharing service, just four years after its launch.
Twitter gave no reason for the move, but analysts said it is not surprising in the light of the latest round of planned job cuts and Vine’s failure to compete with Snapchat and Instagram.
“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,” said Jack Dorsey, Twitter’s co-founder and CEO.
“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.”
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Twitter reported a net loss of $103m and a net income of $92m for the quarter, but said advertising revenue was $545m, up 6% compared to the same period a year ago. Mobile advertising accounted for 90% of total advertising revenue, signalling a successful transition to mobile.
Data licensing and other revenue was $71m, an increase of 26% year-over-year, while US revenue was up 1% year-over-year and international revenue was up 21%.
“We’re getting more disciplined about how we invest in the business, and we set a company goal of driving toward GAAP [generally accepted accounting principles] profitability in 2017,” said Anthony Noto, Twitter’s chief financial officer.
“We intend to fully invest in our highest priorities,” he said. “We are de-prioritising certain initiatives and simplifying how we operate in other areas.”
Noto said Twitter’s live video strategy is showing great progress. “We’ve received very positive feedback from partners, advertisers and people using the service, and we’re pleased with the strong audience and engagement results.”
Workforce restructuring expenditures
Twitter estimates that it will incur approximately $10m to $20m of cash expenditures as a result of the workforce restructuring, substantially all of which are severance costs, and $5m to $10m of non-cash expenditures, consisting primarily of stock-based compensation expense.
In September 2016, the company began a concerted effort to attract a buyer, but despite interest by Google parent Alphabet, Disney and Salesforce, no deal was reached.
With a market cap of about $12.76bn and losses of around $400m a year, financial commentators said prospective buyers considered Twitter to be too expensive.
Market commentators said that if Twitter is to succeed in growing revenue it will have to do a much better job of attracting and retaining users. Twitter currently still only has less than a fifth of Facebook’s 1.71 billion monthly active users.