Perhaps investors are changing their taste in prominent social media ISVs. Could the search for a telltale sign of promise have shifted from substantial growth in users to what may be a meaningful increase in revenue? From the after hours trading experience of LinkedIn and Twitter on February 5, 2015, it would appear to be the case.
Twitter and LinkedIn both reported solid revenue growth in the quarter ending December 31, 2014. But in the case of Twitter this plus was offset by anemic growth in the number of active users. Tiernan Ray wrote in Barrons (http://blogs NULL.barrons NULL.com/techtraderdaily/2015/02/05/twitter-q4-drops-8-q4-beats-maus-288m/): “[Twitter] said its monthly average users (MAUs) rose 20%, year over year, to 288 million from 284 million in the prior quarter. That was down from a rate of 23% growth in Q3. Of those MAUs, 80% were on mobile devices, about the same as the prior quarter.”
Hannah Kuchler of the Financial Times (http://www NULL.ft NULL.com/intl/cms/s/0/ffe39094-ad7c-11e4-a5c1-00144feab7de NULL.html?siteedition=intl#axzz3QuTkmehy) also remarked on management’s forward-looking guidance, “that was above the average analyst forecasts”.
Investors looked like they liked what they were hearing and reading. Twitter’s share price was up over 10% after hours.
LinkedIn shares were also up substantially, approximately 6% above the close. The quarterly earnings report included very similar highlights: substantial growth in revenue. But I found a different nugget: Maria Armental wrote in the Wall Street Journal: (http://www NULL.wsj NULL.com/articles/linkedin-reports-strong-revenue-gains-1423172761?mod=WSJ_TechWSJD_NeedToKnow)“The professional social network, which this month launched a localized version in simplified Chinese and traditional Chinese that has nearly doubled its Chinese member base to more than 8 million, said nearly 70% of total members come from outside the U.S.” Eight million users is certainly not a very big number for the country with the biggest population in the world. But LinkedIn is succeeding (as Apple is also succeeding, though in a much bigger way) in a market that continues to elude Microsoft and curiously enough Google (Android) (http://www NULL.androidpit NULL.com/billion-android-devices-shipped-in-2014).
As a user I must attest to a much more promising experience from my efforts with Twitter than has been the case for how I have worked on my LinkedIn profile. I make a lot of use of Twitter’s Analytics. As my tweets have magnetized more impressions there has been, over time, a substantial increase in the page views of this blog. But perhaps the best result of all has been a growth in our following on Facebook. But I will write more on this point in a later post.
Ira Michael Blonder
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