Twitter Q1 sales miss views, firm lowers FY outlook; Shares plummet

A portrait of the Twitter logo in Ventura, California December 21, 2013. REUTERS/Eric Thayer

Twitter (TWTR) shares came under heavy pressure Tuesday amid disappointing first-quarter figures and a dimmed full-year outlook.

The micro-blogging site revealed a net loss of $162 million, or 25 cents a share. On an adjusted basis, earnings came in at seven cents a share, topping expectations in a FactSet Research Systems survey by three cents. Sales of $436 million, up 74% from the prior year, missed estimates of $456 million.

Average monthly active users, a closely-watched statistic, came in at 302 million, essentially matching estimates, and marking an 18% increase from the same period in 2014.

For the full-year, Twitter sees revenue of $2.17 billion to $2.27 billion, lower than the $2.37 billion Wall Street analysts were forecasting.

The San Francisco, Calif.-based firm said a lower-than-expected contribution from newer direct response marketing products was negatively affecting sales.

"It is still early days for these products, and we have a strong pipeline that we believe will drive increased value for direct response advertisers in the future," CEO Dick Costolo said in a statement.

"We remain confident in our strategy and in Twitter's long-term opportunity, and our focus remains on creating sustainable shareholder value by executing against our three priorities: strengthening the core, reducing barriers to consumption and delivering new apps and services."

As part of an effort to boost its ad business, the company revealed plans to buy TellApart, a marketing firm. Twitter also forged a deal with Google's (GOOGL) DoubleClick platform to improve its ability to measure ad performance.

Nasdaq leaks results early

Selerity, a company that focuses on real-time news, data and content analytics, tweeted the results at 3:07 p.m. ET, well ahead of the scheduled release after the close of trading in New York. Twitter later issued the figures on its investor relations page.

Twitter blamed Nasdaq OMX Group (NDAQ) for accidentally releasing the results early.

"Nasdaq hosts and manages our IR website and we explicitly instructed (them) not to release our results until after the market close, and only upon our specific instructions, which is consistent with prior quarters," Krista Bessinger, Twitter's senior director of investor relations said in a conference call.

A Nasdaq spokesperson confirmed, a unit that helps many big-name firms manage their online investor relations presence, did indeed accidentally post an "early version" of the results. Nasdaq is investigating the cause of the error, and said other clients were not affected.

The event, while relatively rare, is certainly not without precedent. Selerity found Microsoft's (MSFT) results hidden on the software behemoth's website back in 2011. Meanwhile, in 2012, Google's financial printer R.R. Donnelley (RRD) accidentally filed the yet unfinished version of the search heavyweight's earnings release with the Securities and Exchange Commission. The filing infamously still said, "Pending Larry quote," an allusion to CEO Larry Page.

In an interview with Yahoo Finance, Selerity CEO Ryan Terpstra explained the company utilizes a software algorithm to comb through investor relations pages in a bid to locate useable information and present it on Twitter. In this case, the software determined the time-period was correct, meaning the release was referring to first-quarter information, the release was in the proper format, and it came from an official Twitter website (albeit hosted by Nasdaq). After swiftly determining that information, Selerity unleashed a tweet that roiled Twitter shares.

Volatile trading

Twitter's shares traded in a wide range on Tuesday, hitting a high of $52.22 and a low of $38.38, according to data from FactSet. The stock, which is listed on the New York Stock Exchange (ICE), was down 25.7% at the lows of the session, ending down by 18.18%.

NYSE and Nasdaq both investigated trades taking place between 3:47 p.m. ET and 3:48 p.m. ET, although they eventually determined they would stand.

Twitter shares plunge on April 28, 2015.
Twitter shares plunge on April 28, 2015.