SAN FRANCISCO – Tweet this: Twitter's first quarterly financial report today justified its lofty stock price, but user growth is quite another thing.
The micro-blogging company's first report since it went public in November can be summed up in 140 characters: "Twitter crushes it" (My own tweet minutes ago.)
Twitter rang up revenue of $242.7 million, compared with projections of $217.8 million. It earned 2 cents per share vs. an expected loss.
But a less-than-sizzling growth rate of users sent the company's stock reeling as much as 15% in after-hours trading before it rallied slightly. (Twitter shares had been up 50%, to about $66 per share, from their first day of trading.)
"Twitter did not match Facebook's phenomenal growth,which is the gold standard," says Brian Blau, an analyst at Gartner. "It did not meet our expectations."
Nearly eight years ago, Twitter co-founder Jack Dorsey sent the first tweet: "just setting up my twttr." Today, Twitter has a steeper challenge: Convince Wall Street and investors it is worth $36 billion despite scant profits.
Until now, the company has followed the lead of its dot-com contemporaries. It built a base of 241 million people, and worried about revenue later. It did so without wallpapering the site in obtrusive ads that would alienate members.
If the Super Bowl is any indication, Twitter is a mainstay on Main Street as well as Wall Street. About half of the ads during the game incorporated Twitter in one way or another.
"I give them high marks, overall," says Steve Beck, managing partner of management consultancy cg42. "Mobile is strong and it's starting to see continued growth of data licensing."
Yet Wall Street can be fickle, as Twitter learned in after-hours trading.
Sometimes, financial results aren't enough.