Twitter’s total revenue shrinks for the first time as ad revenue decline steepens

Twitter released its first quarter earnings results on Wednesday morning. Here’s a quick rundown of how the social network’s business is doing. TL;DR version: Twitter’s audience size problem has faded, but its money problems have grown.

Twitter’s total revenue is no longer growing

Twitter’s old money problem was that it had never turned a profit. Then its ad revenue started to shrink. Now its total revenue is shrinking too, and Twitter has three money problems. In Q1 2017, Twitter’s total revenue shrank for the first time, dropping by 8 percent year over year to $548.3 million. And its ad revenue shrank for the second straight quarter but at a steeper clip, dropping by 11 percent year over year to $473.8 million. And yes, the company recorded another net loss, this time of $61.6 million.

Twitter’s ad revenue continues to shrink and at a steeper clip

Twitter’s year-over-year advertising revenue growth peaked at 129 percent in Q2 2014 and has been on a slowdown ever since. In Q1 2017, it declined for the second straight quarter.

Twitter’s audience size continues to grow and at a steeper clip

The number of people worldwide using Twitter every month is growing, as is the number in the US.

Even better, this appears to have finally become a trend again for Twitter. Both Twitter’s global and US user bases appear to have rebounded since bottoming out a year ago.

Twitter continues to get more people engaging with ads but at lower prices

Since Q1 2015, the number of times people engage with ads on Twitter — by clicking on their links, watching their videos, retweeting them and so on — has gone up and up, up 139 percent year over year in Q1 2017. But since Q3 2015, the amount of money Twitter makes per ad engagement has gone down and down, down 63 percent in Q1 2017.

On- and off-Twitter ad revenues continue to shrink

For the third straight quarter, the money Twitter made from running its ads on other publishers’ properties failed to grow; in Q1 2017 it dropped by 8 percent year over year to $58.0 million. That’s a problem for a two-year-old revenue stream. But the bigger problem is that for the second straight quarter, the money Twitter made from running its ads on its own properties failed to grow; in Q1 it fell by 11 percent year over year to $415.0 million.

About The Author

Tim Peterson

Tim Peterson, Third Door Media’s Social Media Reporter, has been covering the digital marketing industry since 2011. He has reported for Advertising Age, Adweek and Direct Marketing News. A born-and-raised Angeleno who graduated from New York University, he currently lives in Los Angeles. He has broken stories on Snapchat’s ad plans, Hulu founding CEO Jason Kilar’s attempt to take on YouTube and the assemblage of Amazon’s ad-tech stack; analyzed YouTube’s programming strategy, Facebook’s ad-tech ambitions and ad blocking’s rise; and documented digital video’s biggest annual event VidCon, BuzzFeed’s branded video production process and Snapchat Discover’s ad load six months after launch. He has also developed tools to monitor brands’ early adoption of live-streaming apps, compare Yahoo’s and Google’s search designs and examine the NFL’s YouTube and Facebook video strategies.