Twitter Innovation too Slow Even for Dick Costolo

Some 13 million people signed up to Twitter for the first time in the last three months, but the influx was not enough to make the social network’s boss Dick Costolo and investors happy.

It’s been nearly a year since the microblogging site, better known as a newsbreaking platform, went public. The challenge then, as it is now, was to grow user numbers and generate profits despite its somewhat niche positioning.

The San Francisco-based firm posted a net loss of $US175.5 million ($189.9 million), or nearly half of its $US361.3 million revenue for the quarter ended on September 30. Even though the number of monthly users grew 23 per cent from a year earlier to 284 million as expected by analysts, its shares suffered.

“I’m confident in our ability to build the largest daily audience in the world, over time, by strengthening the core, reducing barriers to consumption and building new apps and services,” Twitter chief executive Dick Costolo.

Investors had evidently hoped to hear the ranks of users were growing faster at Twitter.

The company has certainly been trying lots of new things to drive growth, including a “buy” button and a simplified sign-in process. But still, quarter user growth stopped at 4.8 per cent, slower than the 6.4 per cent of the previous quarter. In fact, Twitter has not achieved double digit growth since the first quarter of 2013, according to this chart by Business Insider.

“Their user growth is mildly encouraging, but I want to see better,” said Forrester Research analyst Nate Elliott.

“Users is their key metric. They need to get people using the site every day.”

The analyst lamented that the Twitter service has changed little since it launched in 2006, while social network Facebook has thrived by perpetually innovating.

“Facebook is constantly giving people new reasons to come back to the site, Twitter needs to do more of that,” Elliott said.

Mr Costolo, too, said he wanted the company to innovate more quickly.

“We have to continue to grow our monthly active users and make it increasingly a daily use case for them,” he said during a webcast with investors to discuss the financial results. “It’s more critical than ever to increase our overall pace of execution.”

Twitter earlier this month said it would start reconfiguring users’ timelines with “relevant” messages from people they haven’t bothered to follow at the service.

Based on a positive response from its tests, the service is inching toward the Facebook model of using software to “curate” what users see based on their interests or activities, Twitter said in a blog post.

Twitter said the plan, which has drawn resistance from some users, remained a “timeline experiment” and might not make it to all users.

The company said testing showed that many people enjoy seeing tweets from accounts they don’t follow, provided the messages are deemed worthwhile based on “signals” such as popularity, level of interaction, and how much interest is shown by accounts one does follow.

The notion of curating Twitter timelines that have long been loved for real-time blasts of information is seen as anathema by some fans of the service.

Twitter shares fell more than 9 per cent in after-market trades that followed release of the earnings figures, along with a lacklustre fourth-quarter outlook.