Fly like a bird, Twitter, fly up into the sky. Please, take Vine with you.
Twitter’s 3Q 2016 earnings beat Wall Street’s expectations as the company posted a strong adjusted revenue of $616 million. This is an 8% increase over last year’s numbers, with adjusted earnings of 13 cents per share.
However, there’s also bitter news: 9 percent of its staff was dismissed, amounting to 350 people who are now looking for employment.
According to Recode, employees received an e-mail just right before the earnings announcement. The cuts were focused on Twitter’s marketing and sales teams.
In a press release, Anthony Noto, Twitter’s CFO said,
“We’re getting more disciplined about how we invest in the business, and we set a company goal of driving toward GAAP profitability in 2017. We intend to fully invest in our highest priorities and are de-prioritizing certain initiatives and simplifying how we operate in other areas.”
The layoffs may be an attempt by the company to lower their potential acquisition cost. Those close to the company feel that Twitter is simply “too bloated,” and pay too much in stock-based compensation. Back in June, the company had around 3,860 employees and paid $168 million in stock-based compensation.
However, the bigger news is that the company announced that they will be shutting down Vine. The Vine Twitter account posted the following crypt message:
We have some important news to share about Vine. Read more here: https://t.co/jPveGelXgS
— Vine (@vine) 27 de octubre de 2016
In a blog post, they wrote,
“Today, we are sharing the news that in the coming months we’ll be discontinuing the mobile app.”
Twitter purchased Vine for $30 million back in 2012 as part of its video strategy. Back in 2013, six months after it was launched, the video service racked up an impressive 40 million users. However, earlier this year, Vine’s General Manager Jason Toff left the company to join Google. In the blog post, there wasn’t any explanation as to why. Rather, they just wrote the following,
“Thank you. Thank you. To all the creators out there — thank you for taking a chance on this app back in the day. To the many team members over the years who made this what it was — thank you for your contributions. And of course, thank you to all of those who came to watch and laugh every day.”
For now, Vine videos won’t be deleted. According to the blog post, they’ll still be accessible on the main website.
“Nothing is happening to the apps, website or your Vines today. We value you, your Vines, and are going to do this the right way. You’ll be able to access and download your Vines. We’ll be keeping the website online because we think it’s important to still be able to watch all the incredible Vines that have been made. You will be notified before we make any changes to the app or website.”
Twitter’s future looks uncertain.
With the dismissal of its employees, and the shuttering of its video service, the company has yet to find a potential buyer. The latest rumor, however, is that Disney expressed yesterday renewed interest in purchasing the social network.
Vine reportedly had a staff of around 50. It’s unclear if the current Vine staff will fold into Twitter, or if they will have to look elsewhere along with Twitter’s 350 dismissed sales employees. Speaking with Recode, Twitter COO Adam Bain explained that before Thursday, the company has three sales channels:
- A direct sales organization for selling to big brands
- A mid-market organization for dealing with direct response customers and smaller brand markets
- An SMB channel for small business.
Bain told the site,
“We’re essentially taking our first two channels, and condensing them down together so we end up with just two channels.”
Twitter’s stock had gone up over 4% since the news, surging 3.4% in premarket trade.
It has since gone back down to just 2% following the Vine news. The company reported a net loss of $102.9 million, or 15 cents per share. Earnings per share came to 13 cents. According to MarketWatch, the company beat FactSet’s consensus of 9 cents. Last year, they reported a loss of $131.7 million, or 20 cents per share. Average monthly users also rose to 317 million, beating FactSet once again, which estimated 316.4 million users. This year, the stock tumbled 25% prior to today’s news.
Despite the company not yet being profitable, CEO Jack Dorsey explained Twitter’s current strategy.
“Our strategy is directly driving growth in audience and engagement, with an acceleration in year-over-year growth for daily active usage, Tweet impressions, and time spent for the second consecutive quarter.”
We see a significant opportunity to increase growth as we continue to improve the core service. We have a clear plan, and we’re making the necessary changes to ensure Twitter is positioned for long-term growth. The key drivers of future revenue growth are trending positive, and we remain confident in Twitter’s future.”
The company aims for profitability in the upcoming year.