Twitter Revenue Growth Could Slow Significantly In 2015


  • Twitter's user growth has slowed significantly and user engagement has declined.
  • Twitter's revenue growth could become a function of growth in user monetization rates.
  • Twitter's revenue growth could slow to just over 60% in 2015.

Author's Note

Twitter's revenue growth has been driven largely by two factors, growth in Twitter's timeline views, and growth in its ad revenue per 1000 timeline views (monetization rate).

Twitter's user growth has really tapered and user engagement levels have been on the decline, implying that the only way for Twitter (NASDAQ:TWTR) to sustain its revenue growth, is to improve its monetization rate.

With revenue growth becoming a function of growth in monetization rates, Twitter looks poised for a slowdown in revenue growth unless it manages to improve user growth or engagement levels. That of course assumes that Twitter's ad revenue per 1000 timeline views will continue to grow at the pace at which it did in 2014. In reality, this growth rate has dropped quite a bit from its levels 2013.

Twitter's revenue guidance pegs growth at about 64% to 68% YoY, which is in the range that we're talking about. However, investors are used to seeing Twitter beat its guidance, and might still be factoring in a huge beat.

You can see our Twitter stock analysis for a quick round-up of key fundamentals like cash flows, daily updated valuation multiples

Twitter Revenue Growth To Slow Significantly In 2015: Video Transcript

Hello and welcome to this videograph about Twitter's revenue growth outlook for twenty fifteen.

Twitter Timeline Views Growth

Twitter, measures user monetization in terms of advertising revenue per thousand timeline views. Since 2012, Twitter's timeline views, and thereby its revenue, have been driven in part, by the platform's user growth. But over twenty fourteen, Twitter's user growth has slowed significantly, implying that bulk of the growth in timeline views will have to come from an increase in the timeline views per user.

However, Twitter's timeline views per active user have declined, not just from levels seen in twenty thirteen, but also sequentially, towards the end of the year. In the absence of strong growth in users and engagement levels, Twitter's revenue growth becomes a function of the growth in its user monetization rate. Even under the assumption that twitter's revenue per thousand timeline views will continue to grow at the same pace, Twitter's revenue growth could slow to a little over 60%.

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