Twitter Inc Shares Plummet After Revenue Miss

Twitter released its latest earnings report before opening bell this morning, posting adjusted earnings of 16 cents per share on $717 million in revenue. Analysts had been expecting 12 cents per share and $739.7 million in revenue.

Twitter’s user growth beats estimates

GAAP losses widened to 23 cents per share from 13 cents per share in the year-ago quarter. Mobile ad revenue accounted for 89% of the total ad revenue of $638 million, while data licensing and other revenue amounted to $79 million, a 14% year over year increase. U.S. revenue fell 5% year over year to $440 million, while international revenue grew 12% to $277 million. Adjusted EBITDA rose to $215 million from $191.4 million in the year-ago quarter.

Twitter said its average monthly active users grew 4% to 319 million, which was slightly ahead of the consensus at 318.2 million. The fourth quarter marked the third consecutive quarter of accelerating year over year growth in active usage. Total ad engagements skyrocketed 151% year over year as audience engagement for tweet impressions and time spent grew in the double digits year over year.

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“2016 was a transformative year as we reset and focused on why people use Twitter: it’s the fastest way to see what’s happening and what everyone’s talking about,” Chief Executive Officer Jack Dorsey said in a statement. “We overcame the toughest challenge for any consumer service at scale by reversing declining audience trends and re-accelerating usage.”

Twitter provides full-year guidance

The micro-blogging firm expects ad revenue for this year to be behind the growth in its audience. It expects its daily active usage to accelerate again this year. Twitter expects first quarter adjusted EBITDA to be between $75 million and $95 million and its adjusted EBITDA margin to be between 17% and 17.5%. Management expects their strategy to return the company to long-term revenue growth.

Shares of Twitter plunged in premarket trading after this morning’s earnings report, falling by as much as 11.43% to $16.58. The stock’s premarket volume reached 1 million shares, making it the most-active stock before opening bell.