by Glenn Peoples
Twitter’s third-quarter earnings results showed continued growth in revenue and monthly active users, but there was little useful information for onlookers in the music industry. The San Francisco-based company posted net loss of $175.5 million on revenue of $361.3 million, up 114 percent from the prior-year period.
In the first nine months of the year, Twitter had a net loss of $452.5 million on revenues of $923.9 million. The company will be able to burn through cash as it grows: Twitter ended the third quarter with cash of $2.3 billion thanks to the issuance of $1.8 billion of convertible notes in September.
Twitter met analyst expectations of $0.01 non-GAAP diluted earnings per share and exceeded analysts’ average revenue expectation by $10 million. However, shares of Twitter were down 10.6 percent in after-hours trading.
There was little in Monday’s earnings release directly related to the music industry. Although the platform is widely used by artists for sharing music and communicating with fans, music is likely a relatively small part of overall traffic and is far less important to investors than Twitter’s progress in advertising and sponsorships.
During Monday’s earnings call, neither Twitter’s executives or analysts mentioned Music Cards, a product that enables streaming with Twitter’s mobile app, or efforts to facilitate “in-tweet” purchasing through partnerships with e-commerce companies Gumroad, Fancy, Musictoday and Stripe.
But there were a few takeaways for the entertainment industry. First is Twitter’s ability to monetize mobile usage. In the third quarter, advertising revenue grew 109 percent to $320 million, with 85 percent coming from mobile platforms. Mobile users accounted for 80 percent of monthly active users. This points to a strong mobile advertising business and should allay fears that advertising-based music service like Pandora will not be able to turn mobile listening into dollars.
Second, the numbers show Twitter is still growing but is not getting more engagement. Monthly active users grew 23 percent year-over-year to 284 million, slightly worse than the 24-percent growth — fueled by the World Cup — in the second quarter. But users appear to be less engaged. Timeline views per user fell 7 percent to 636 globally and slipped 6 percent in the United States — where monetization rates are high — to 774.
As for Vine, the video-sharing platform Twitter acquired in 2012, don’t expect advertisements to intrude on the user experience any time soon. When asked about its intentions to monetize Vine, the company said its “near-term and immediate-term in vine are continuing to build beautiful content creation tools for all of the users of that service.”