Twitter wows on revenue but user growth drags

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Credit: Marisa Allegra Williams

The company is adding new users at a slower rate

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Twitter nearly doubled its revenue last quarter, handsomely beating forecasts, but it continues to battle slow user growth.

Twitter ended the fourth quarter of 2014 with 288 million monthly active users, up 20 percent from the same quarter a year earlier, it announced Thursday. That was the smallest growth rate Twitter has ever reported.

Still, it managed to increase sales thanks to a strong advertising business. Total revenue for the quarter ended Dec. 31 was $479 million, up 97 percent from a year earlier. Analysts had expected revenue of $453 million, according to Thomson Reuters.

Twitter's loss for the quarter was $125.4 million, much better than the $511 million it lost a year earlier. On an adjusted basis, which excludes certain expenses, earnings per share was $0.12, double the analyst estimate of $0.06.

Following the release of the results, Twitter's stock was up almost 9 percent in after hours trading, at $44.95.

"We closed out the year with our business advancing at a great pace," Twitter CEO Dick Costolo said in a statement.

For the full year, Twitter's revenue was $1.4 billion, more than double its 2013 revenue of $665 million.

Twitter has increased the sophistication and targeting of its ad products over the years, but it's under pressure to expand its user base more quickly. It's user growth rate has declined each quarter since it went public a little over a year ago.

One way it's tried to do this is by touting the value of tweets viewed on other websites, away from its own services. These "logged out" users could be a valuable source of ad revenue, Costolo has said.

Just this week, Twitter said it will begin displaying tweets from advertisers on outside properties, starting with Flipboard and Yahoo Japan.

It's also trying to make it easier for new users to enjoy its service. This week, for instance, it began testing a feature for new users on its Android app that automatically builds a list of people for them to follow.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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