Twitter Posts Loss Amid User-Growth Concerns

As investors looked for signs of renewed growth at Twitter Inc. on Wednesday, the company's fourth-quarter earnings report showed the beleaguered social media company needs more time.

Shares of the company sold off after hours, declining 7.4% as the company said 320 million users now sign in to the service at least once a month, flat with the prior quarter and up 9% from the same quarter a year earlier.

The metric indicates Twitter's recent efforts to attract more users under co-founder and CEO Jack Dorsey have so far fallen flat—and Twitter's user growth has been a key item for investors.

Excluding those who access Twitter through messaging platforms, called "SMS Fast Followers" and who tend to reside in emerging markets, the company said its monthly active user base fell to 305 million, a decline from 307 million in the third quarter.

Twitter's user growth as well as metrics such as how often a user signs in and scrolls through the service are important because investors believe it indicates how big its advertising business can eventually become. The company is often compared with Facebook Inc., which has roughly five times as many users and who it competes with for online advertising dollars.

Twitter is expected to grab a 9% share of world-wide social network ad spending this year, according to eMarketer. In comparison, Facebook is projected to capture 65.1%.

Twitter posted a revenue of $710.5 million for the period ended December 31, compared with $479.1 million a year earlier—sharp growth, but just edging out the $709.9 million analysts had expected, according to Thomson Reuters.

At the same time, Twitter has yet to turn a profit. It posted a loss of $90.2 million, or 13 cents a share, compared with a year-ago loss of $125.4 million, or 20 cents a share. Excluding certain expenses, Twitter said it would have earned 16 cents a share. Analysts had expected earnings of 12 cents a share on that basis.

Twitter is trying to find its footing under Mr. Dorsey, the co-founder of the product who returned as the company's permanent CEO to much fanfare in October. His appointment lifted employee morale and investors appeared pleased with the choice to bring Twitter's original product guru back to the fore.

Write to Yoree Koh at yoree.koh@wsj.com

(END) Dow Jones Newswires

February 10, 2016 16:55 ET (21:55 GMT)

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