Analyst view: Slowing growth in Twitter's user base demonstrates need for service development and innovation
"Twitter's 1Q14 results saw a repeat of the key take outs from the previous quarter - increased revenues but slowing growth in Twitter's user base. Monthly active users (MAUs) increased by 25% y-o-y to 255 million in 1Q14, compared with a 30% y-o-y increase in 4Q13. Engagement metrics were also sluggish, with timeline views increasing 15% y-o-y in 1Q14, compared with a 26% y-o-y increase for 4Q13. This is disappointing and shows that Twitter's efforts to improve the platform and the user experience have not gone far enough. As we have said before, Twitter needs to demonstrate is that it has a well thought out road map for service development and innovation. Its habit of making reactive, periodic tweaks to the service is not the best way forward. In the earnings call, CEO Dick Costolo highlighted the surge in Twitter usage during the Oscars ceremony, but what Twitter needs to do is drive sustained engagement on a daily basis rather than ride on spikes driven by special events. On a more promising note, advertising revenues increased by 125% y-o-y, with mobile advertising contributing an impressive 80%. There was also was good progress for Twitter's MoPub mobile advertising network that now reaches more than 1 billion iOS and Android users each month. Twitter is also promising an integrated bidding system in 2Q14, which should please advertisers."
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