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Twitter Exhibits Weak User Growth in 2Q15

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A fall in user engagement

Twitter (TWTR) didn’t report a significant rise in the number of average MAUs (monthly active users) in 2Q15. The company reported MAUs of 304 million excluding SMS (short message service) users. It has risen 12% YoY (year-over-year). However, it only accounts to 2 million more MAUs from 1Q15.

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Measures fail to impact user growth

Investors expect Twitter to attract new users since the company has been trying to address the issue of weak user growth for quite some time. In 1Q15, Twitter started adding SMS followers to its MAU base.

SMS followers are users who have chosen to get tweet notifications through SMS. These are followers who don’t have Internet connections on their phones. They’re typically users in emerging markets (EEM) who use feature phones.

Besides the above, Twitter also redesigned its homepage for users who aren’t logged in. The intent was to attract new users. More than 500 million people come to Twitter each month, but don’t log in.

However, these initiatives failed to impact the growth of Twitter’s audience. During the 2Q15 earnings conference call, Jack Dorsey, Twitter’s interim CEO, stated that “Product initiatives we’ve mentioned in previous earnings calls like instant timelines and logged out experiences have not yet had meaningful impact on growing our audience or participation. This is unacceptable and we’re not happy about it.”

What has slowed down Twitter’s MAU growth?                                              

Compared to Twitter, Facebook (FB) has an MAU base of 1.44 billion. Twitter has faced a number of issues that have slowed down its MAU growth. In 3Q14, the implementation of an authentication measure negatively affected user growth in a number of Asia-Pacific countries.

According to a report from the Wall Street Journal, the authentication measure was an anti-spam measure that prevented Twitter users from logging on using the BlackBerry (BBRY) app.

Similarly, in 4Q14, Twitter said it lost about 1 million users due to the rollout of Apple’s (AAPL) iOS 8. Users either forgot their passwords or never bothered to redownload the Twitter app. Twitter lost another 3 million users due to an integration bug in Apple’s Safari mobile browser.

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