Micro-blogging site, Twitter Inc. TWTR has been benefiting from the growth in advertising revenues, which is also its primary source of revenue generation. Twitter’s unique open platform continues to attract users due to its openness, real-time content, conversational format and distribution ability.
In the recently reported fourth-quarter results, Twitter reported a 97% increase in revenues on a year over year basis and a lower-than-expected loss. Mobile user growth and strength in international markets were the vital growth drivers for the company. In the reported quarter, the company entered as many as 13 new markets expanding its sales footprint to 73 countries.
Twitter remains a beneficiary of the growing mobile user base across the globe. According to a report by comScore, mobile market penetration in the U.S. increased 4% sequentially in the fourth-quarter to 74.9% and the uptrend is likely to continue.
In the last quarter, Twitter registered a rise in its mobile user base compared to its desktop user base. The company has also been undertaking efforts like the recent addition of the TweetDeck Teams feature and increased security of the accounts to attract more users to its platform. Furthermore, the company continues to focus on improving user engagement, which is expected to expand its user base over the long term
Also, Twitter has been taking strategic initiatives to enter the fast growing e-commerce market. In November, the company launched a new feature named “Twitter Offers” that is wholly dedicated to e-commerce. The company has already made a number of acquisitions in this regard including CardSpring. Partnerships with the likes of Starbucks, American Express AXP and Amazon AMZN for offering e-commerce services are also positives.
However, rising investments in product development, costs related to international expansion and higher sales & marketing expenses are expected to weigh on the company’s profitability in the near term.Increasing competition from the likes of Facebook FB, Google Plus, Weibo, Pinterest, LINE and Kakao also remains a concern.
A deeper insight on Twitter can be obtained from our most recent research report issued on Mar 4, 2015.
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