Twitter has turned in another disappointing earnings report, and the future is starting to look dim for the microblogging platform.
Though it managed to gain 3 million monthly active users (MAUs) in Q2 - bringing total users to 313 million - it's only a 3% increase year-over-year and a 1% increase from Q1. In other words, MAUs may as well have stayed flat.
The good news, if you can call it that, pretty much ends there. Twitter brought in $602 million in revenue in the quarter, but that's lower than the $606.8 million investors were expecting. It's also the company's slowest quarterly revenue growth since it went public three years ago, according to Yahoo Finance.
As if that wasn't bad enough, Twitter adjusted its Q3 revenue outlook to between $590 million to $610 million, much less than the $678.18 million analysts are looking for.
All this combined to send Twitter's stock tumbling in after-hours trading (Netflix knows how that feels).
Is live video the answer?
Despite Wall Street's reaction, Twitter is encouraged by the growth - however small - it's seeing. The company reiterated its commitment to its five priorities of the year in a letter to shareholders: refining its core service, live-streaming video, creators and influencers, safety, and developers.
"We made meaningful progress across each in Q2 and we're encouraged to see the direct benefit of recent product changes already driving increases in engagement and retention," the company wrote.
Video is far and away the cornerstone of Twitter's future. The platform wants to be the place where people come to see what's happening and there's no better way to do that than by showing live news, politics, events, sports and entertainment.
Twitter said it's encouraged by the success of its Wimbledon and Republican and Democratic National Convention live streams, and has more planned in partnership with Major League Baseball, National Football League and National Hockey League in the coming months. Its live video platform is still in the testing phase, but it plans to roll out a final product in the fall.
Video, along with other platform changes, has led to double-digit growth in several engagement metrics, Twitter execs said on an earnings call, which is a good sign that video keeps users on the platform. However, actually earning money from videos is a whole other story, and not something Twitter has figured out just yet.
Advertisers, it turns out, aren't flocking to put video ads on Twitter. More video and more engaged users should encourage spending, but if its user numbers continue to stay small and show no signs of growth, that's a huge point against marketers wanting to pour money into the platform. Other, bigger social networks that do also live video (read: Facebook), are a better home for marketing dollars, at least right now.
All Twitter can do, and what it's prepared to do, is push out more live video, improve the experience for users, and work to convince advertisers it's worth their while. Big gets like NFL games should help with this, but it's no sure bet this will be enough to assuage investor concerns.
Making safety a (real) priority
Video isn't the only area of improvement/worry on Twitter's plate.The platform's troll troubles are well-documented, and it has taken steps to improve reporting, blocking and banning (read this excellent Gary Marshall piece for a sensical solution).
By the same token, Twitter is keen on preserving freedom of expression, and its aware of the tightrope it walks between the two.
Though it was discussed in the shareholder letter, little time was devoted to safety during the earnings call, save for a few remarks by CEO Jack Dorsey.
Dorsey addressed safety and freedom of expression together - it sounded like he was reading from prepared remarks, ready to address the elephant in the room, though we can't confirm this as the call was audio-only - saying each is "really, really important" to Twitter and that the two are intertwined.
"We are not and never will be a platform that shows people part of what's happening and what's being said," Dorsey remarked. "We are a place for social commentary. At [Twitter's] best, it allows people to reach across divides. We hope, and we recognize it's a high hope, that it can elevate civil expression."
"Abuse is not civil expression," he continued. "No one deserves to be the target of abuse online. We haven't been good enough in ensuring that's the case."
Twitter has long admitted it hasn't done enough to combat abuse, and Dorsey said the company is continuing to make improvements, including building new tech solutions and making sure its policies are consistently implemented and properly communicated. He also stressed that improvements aren't enough - they must be done "faster" in order to help users feel safe on the platform.
Tweet into the future
The service that's synonymous with brevity is under enormous pressure to increase users and make more money. Yes, there are positive signs, but either analysts have to alter their expectations, or Twitter has to get real about what it can achieve (that altered Q3 outlook is a sign it's willing to do so).
Dorsey, who's also the CEO of Square, had little panic in his already tranquil voice, saying he believes Twitter has "so much farther to go" and that there are "really health signs" the company is headed in the right direction.
"I have a lot of confidence in our ability and that our five areas are the right ones to drive growth over time," he said.
That may be the case, and it could be that in two or three quarters, we see Twitter's five priorities really pay off. The only problem is that Twitter may not have a lot of time to make this happen. No pressure, or anything.
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