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Honeymoon over for Dorsey as Twitter results disappoint again

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Anthony Quintano / Creative Commons
If Twitter could grow its user base as easily as Jack Dorsey appears to be able to grow his beard, the company would be laughing now. But Q3 figures posted Tuesday pointed to continued slowing growth (of the user base, not Jack’s hairy appendage), a decline the company is desperate to reverse amid increasing investor concern.

The microblogging service now has 320 million monthly active users globally, marking an increase of just four million on the previous quarter. The disappointment was compounded by the fact that analysts had forecast user numbers reaching 324 million. Take away SMS followers and Twitter’s user base stands at 307 million, up by only three million since the end of June, while since the end of March it’s added a total of just five million.

Looking at the U.S. alone, Twitter’s user base has remained virtually unchanged at around 66 million for the last three quarters.

Compare the numbers to say, Instagram, which has seen its global user base increase by 100 million to 400 million in the last nine months alone, and you begin to understand the scale of the challenge facing Twitter at the present time.

Revenue for the quarter ending September 30 reached $569 million, up 58 percent on a year earlier ($361 million) and $10 million higher than analyst forecasts. And while the company failed to turn a profit – reporting a net loss of $132 million – the losses were lower than the $175 million reported for the same period in 2014.

Commenting on the data, Dr. Sotirios Paroutis, associate professor of strategic management at Warwick Business School in the U.K., told Digital Trends that the company’s latest financials “provide the basis for some early optimism that Twitter’s attempt to simplify its organisation and services is working….[But] more work is needed to keep simplifying the experience, and keep engaging developers, advertisers, and users.”

Paroutis pointed to the recent launch of Moments as one of Twitter’s major moves to simplify the experience, describing it as “a fundamental shift” in the company’s thinking. Moments offers users a way to easily follow tweets linked to specific unfolding events and is part of Twitter’s ongoing effort to make the service easier to understand for new users.

Following the release of the latest financials, which were accompanied by a weak Q4 forecast, Twitter shares plunged 13 percent to just over $27 in after-hours trading.

Although he’s been running the show since Dick Costolo stepped down from the top job in July, Dorsey only took on the CEO role on a permanent basis at the start of this month. However, with these latest financials encompassing the Twitter co-founder’s first full quarter in charge, investors hoping the company can emulate Facebook’s success appear to have a long wait ahead of them.

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