How Twitter Justifies Its Decline in Active Users
Twitter’s user growth rate fell behind Facebook’s
Twitter (TWTR) stock has risen 28.0% since the day it disclosed its 4Q15 results. The company made several attempts to bring in new users and retain existing ones by introducing different features such as “Moments,” promoted tweets, embedded video feeds, and ads for logged-out users.
Despite all these attempts, the company has seen a sequential decline in domestic users from 66 million to 65 million. On the other hand, global users excluding SMS Fast Followers fell from 307 million to 305 million quarter-over-quarter. Twitter’s MAU (monthly active users) growth came in at 9% year-over-year (or YoY) while Facebook (FB) and LinkedIn’s (LNKD) registered users grew by 14% and 7%, respectively.
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Decline in active users
In its 4Q15 earnings call, Twitter mentioned that the decline in active users came from both seasonality and its decision to reduce the volume of mail sent to dormant users to bring them back to the service. According to Twitter, the decline in active users was offset by the marketing spending in Q4.
During 4Q15, the daily active users (or DAUs) remained flat compared to the same period last year. The retention rate in 4Q15 has seen a relative increase compared to 3Q15 and is expected to maintain the same rate in 1Q16, according to Twitter.
1Q16 could bring a lot of opportunities for the company to capitalize on its “Moments” strategy. For example, users can view pictures and videos of events as they happen such as the Grammys and the Super Bowl. Moreover, the company’s continuous improvement in product development may help increase its user retention rate and keep users active for a longer period.
In the subsequent articles, we will focus on Twitter’s effort to increase ad load and revenues drivers. We’ll also offer a comparative analysis with its peers.