Wall Street has been disappointed by the slow pace of improvements, with investors sending Twitters stock down 11% Monday evening after the company reported meager growth in sign-ups and usage during the third quarter.
The lack of growth there comes from Twitters relative lack of innovation, said Nate Elliott, an analyst at Forrester who studies social media. The experience on Twitter today is the same experience people have always had on Twitter.Mr. Costolo, too, said he wanted the company to innovate more quickly.
We have to continue to grow our monthly active users and make it increasingly a daily use case for them, he said during a webcast with investors to discuss the financial results.
In its financial report, Twitter said that 284 million people logged into its service at least once a month during the third quarter, up 4.8 percent from 271 million in the second quarter. But it attracted fewer new users during the three months than it did in the first or second quarters.
Usage of the service by existing customers has also stalled. On average, regular users pulled up their Twitter feeds slightly less frequently than during the previous quarter. And the company disclosed that in its top 20 markets, fewer than half of Twitters monthly visitors check out the service daily.
Thats roughly unchanged from a year ago, when Twitter filed its paperwork to sell stock to the public, and well below the 63 percent daily usage reported by Facebook, the largest social network.
In essence, Twitters efforts to attract and retain users, from simplifying the sign-up process for newbies to better organizing tweets about big events like the World Cup and the National Football Leagues season, have not yet yielded significant benefits.
Twitters revenue, most of which comes from advertising, increased sharply in the third quarter. Revenue more than doubled to $361.3 million, compared with $168.6 million a year ago, exceeding Wall Streets projection of $352 million.
The company said it collected $1.77 in ad revenue per 1,000 users, its highest level ever and up 83 percent from last years third quarter. Twitter recently expanded its options for marketers to buy video ads and ads inside other companies mobile applications.
Twitter is still losing money as it spends hundreds of millions of dollars on stock compensation for its rapidly growing work force.
In the third quarter, its net loss was $175.5 million, or 29 cents a share, compared with a loss of $64.6 million, or 48 cents a share, in the period a year earlier.
Excluding those compensation costs and certain other expenses this year, Twitter earned a profit of 1 cent a share, meeting analysts expectations.
Twitter also raised its financial projections for the fourth quarter, predicting revenue of $440 million to $450 million and adjusted profits of $100 million to $105 million.
That was below the expectations of some Wall Street analysts, contributing to the drop in Twitters stock in after-hours trading.