Earlier today we looked at the big numbers for Twitter’s IPO filing with the SEC, and for the most part they were pretty underwhelming.
For me, the biggest disappointment was Twitter’s slow rate of active user growth. Twitter, like almost every online platform, defines an active user as someone who accesses the platform once or more per month. Through June 2013, Twitter has 218 million active users. That’s a jump of just 14 million actives, or 6.8 percent, since March. What does this slow acquisition of signups mean for Twitter’s future?
First, let’s look at the numbers that Twitter provided in its IPO filing, which tallied monthly active user averages from March 2012 through June 2013 on a quarterly basis. I’ve recompiled the chart in the filing which you can see below.
First, the good news. Twitter grew almost 48 percent in the one year period between March 2012 and March 2013, rising from 138 million monthly actives to 204 million.
That’s a healthy number no matter how you look at it. The problem is over the last six months, where Twitter’s growth rate has visibly slowed.
Since end December 2012, when Twitter boasted 185 million actives, the company has added just 33 million new users.
This is growth of just 18 percent.
Like many analysts, I had (wrongly) assumed that Twitter was going to be closer to 250-300 million active users heading into its IPO. Instead, it’s (still) closer to 200 million.
Now, we may have seen another impressive growth spurt in the quarter between June 2013 and September 2013, but even if Twitter replicates its March 2013 through June 2013 acquisition rate of 6.9 percent, that means we’re looking at 233 million active users as of right now.
But even that number could be off. Take a look at this chart, which shows quarter-on-quarter active user growth, in percentage terms, between June 2012 and June 2013.
If Q3 2013 user growth is down then we’re looking at a lower number – 5 percent growth gives us 229 million actives.
Equally, if Twitter has rebounded back to its 10 percent levels of Q3 2012, Q4 2012 and Q1 2013, the platform now has about 240 million active users.
We’ll know more when they next update (which could be right ahead of the IPO), but even the better estimates are still a whisker on the soft side. As I’ve repeatedly said I’m bullish about Twitter’s IPO, but I don’t think the business, when measured either in users or cash, is as good as we were perhaps anticipating. Which underlines my prediction that Twitter’s IPO will be the opposite of Facebook’s – a first-day closing pop, followed by a slow decline over several months as investors look for evidence of a turnaround in profitability.
(Twitter eggs image: Garrett Heath via Flickr.)
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