Twitter's User Growth Continues To Slow, But International Markets Show Promise

Twitter amended its S-1 filing to include third quarter performance revealing a similar story to what we reported in early October: User growth continues to slow, but revenues keep climbing higher.

  • Total monthly active users in the third quarter are up 6% from the previous quarter and 39% compared to the third quarter of 2012.
  • But that’s a deceleration from the second quarter, when MAUs had grown 7% over the previous quarter, and 44% year-over-year.
  • The company generated $US153.5 million in advertising revenue for the quarter.
  • An average 232 million people visited Twitter on a monthly basis.
  • 20-three per cent of those visitors were U.S.-based. 70-six per cent accessed Twitter via a mobile device.

In addressing the slowdown, company management admitted that there is a “perceived decline in the quality of content” on Twitter, which many analysts attribute to the prevalence of spambots on the service. However, in a previous filing with the SEC, Twitter claimed that less than 5% of user accounts on Twitter are spambots.

Twitter is adding new international users at a faster rate than U.S. users. International MAUs grew 41% year-over-year in the third quarter, compared to 33% in the U.S. Some of Twitter’s top executives were recently re-assigned abroad to support the company’s expansion into emerging markets.

Future user growth is expected to come largely from Argentina, France, Japan, Russia, Saudi Arabia, and South Africa.

Despite facing headwinds in growing its user base, Twitter is generating 106% more revenue than it was just one year ago. We expect revenue to continue to climb as the company will soon be selling ads outside of its own network (through its acquisition of MoPub). Moreover, the Financial Times reported recently that Twitter will inject its user data into MoPub’s inventory, which will increase the value of those ad units.

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