Twitter Keeps Changing Its Definition of Success

Twitter Inc. Headquarters As Company Raises $1.8 Billion After Boosting First Debt Sale

An employee works inside the Twitter Inc. headquarters in San Francisco, California.

Photographer: David Paul Morris

Another quarter, another new metric for Twitter Inc.

It hasn't been an easy time to explain the company's financials to investors. First-quarter results leaked early (during market hours Tuesday), forcing Twitter to publish results ahead of schedule. Revenue and growth figures missed estimates, and the stock slumped.

Over the past several quarters, executives have made changes in how Twitter's performance should be measured. The tweaks are starting to cause some concern among analysts and investors, because visibility into the future performance of a young company is critical for making investment decisions. Here's a summary of the times that Twitter has told Wall Street to think differently about its performance1:

Monthly active users

302 million people used Twitter on a monthly basis in the latest quarter. While that's a big number, it's a small fraction of Facebook Inc.’s 1.4 billion and WhatsApp’s 800 million. In the latest conference call, Twitter didn't offer any forecasts on monthly active user growth, even though the company did offer an outlook in the previous quarter. While Twitter said it didn’t have enough information offer a forecast, Chief Financial Officer Anthony Noto said user additions were "off to a slow start in April."

SMS fast followers

Twitter is now telling investors that it will start counting people who send and receive tweets via SMS, or text messaging, on mobile phones. With those additions, Twitter's total user number would have been 308 million, and the company will start including them in the future, along with historical comparisons.

Audience size

After it became clear that Twitter's user growth was slowing, the company started releasing other metrics on its audience. 500 million people view tweets without logging onto Twitter, Chief Executive Officer Dick Costolo has said, making the case that the service's impact is much wider. About 125 million people come to the home page and don't sign up, and 500 million tweets are posted every day.  Those numbers weren't updated in the first quarter.

Cost per objective measurement

During the first quarter, Twitter also started setting higher standards for what counts as interaction with an advertisement. Essentially, the company changed how it charges marketers for direct response ads, which require customers to do something, such as clicking or signing up for something. Before, Twitter tracked "cost per engagement," which only required interacting with a tweet. Twitter said this was one of the reasons quarterly sales missed expectations by $20 million, and why it had to cut its revenue forecast for the year. 

Timeline views

This data is no longer available. When Twitter held its initial public offering in November 2013 , executives pointed to this figure as a way to measure engagement by how often people checked the site. As views declined, Twitter explained that the product had improved to the point where clicking around was less necessary because it's now easier to see conversations and embedded pictures. As a result, timeline views have become less relevant, the company said, and they were scrapped in the latest quarter. Asked for a better number, Noto told analysts: "We’d like to be able to give you more visibility on this."

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  1. 1 All of the terminology is actually used by Twitter.