Twitter’s management outlined a long list of problems with the product and the business during its Q2 earnings call.
The company believes all of these problems can be overcome (eventually) and that Twitter will once again recapture its glory days. You could even speculate that the company purposely unloaded all the bad news now to re-set the bar and clear the deck for whoever is tapped to be the next CEO.
But for investors worried about the social network’s growth potential and its appeal to a mainstream audience, the company’s catalogue of woes was certainly not reassuring.
Twitter’s stock is down 12% in after-hours trading.
Here are some of the key quotes that Twitter interim CEO Jack Dorsey and CFO Anthony Noto made during the Q2 call that have Wall Street spooked:
No impact from new products :
“Product initiatives we’ve mentioned in previous earnings calls like Instant Timelines and Logged-out experiences have not yet had meaningful impact on growing our audience or participation.”
Stalling user growth:
“We do not expect to see sustained meaningful growth in MAU [monthly active users] until we start to reach the mass market. We expect that will take a considerable period of time.”
“In the near term our organic growth is going to be very low as it was this quarter.”
Declining daily users:
“The ratio of DAU [daily active users] to MAU for our top twenty markets in Q2 2015 was approximately 44 per cent versus the 48 per cent we shared with you at our analyst day which is for the first 3 quarters of 2014.”
Difficult to use:
“Simply said, the product remains too difficult to use.”
“We have not communicated why people should use Twitter nor made it easy for them to understand how to use twitter.”
Market penetration problems:
“We are incredibly fortunate to have over 95 per cent aided brand awareness across the most important global markets…Despite this enormous awareness we’ve achieved less than 30 per cent penetration of users in these markets.”
“We have only reached early adopters and technology enthusiasts and we have not yet reached the next cohort of users known as the mass market.”
Limited advertising space:
“Because our growth rate in users is slowing quite dramatically, we’re giving you a sense on our load factor that there are scenarios where we could have a significant increase in daily revenue demand and specific mix shift towards one particular type of ad category. and if that happens we could be more constrained than we have been in the past from a supply standpoint.”
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