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How Twitter Will Grow in 2014

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Microblogging social networking cloud service Twitter publicly announced its earning for the first time late Wednesday, and the numbers offer great insight. During the earnings call, Twitter’s CEO was very optimistic about his company’s future and laid out his plans for growth in 2014.

For the fourth quarter of 2013, Twitter reported revenue of $243 million, which is a 116 percent year-over-year gain. All that revenue, however, still doesn’t mean that Twitter is profitable as the company reported a Net Loss of $511 million. For the full year, Twitter’s revenue came in at $665 million, while the full year Net Loss was reported at $645 million.

Looking forward, Twitter provided guidance for the first quarter of 2014 for total revenue in the range of $230 million to $240 million. For full year 2014, Twitter expects total revenues of between $1.15 billion and $1.2 billion.

Twitter’s CFO, Mike Gupta explained to analysts on the call what drives Twitter’s business forward. Twitter’s primary business drivers are reach, engagement and monetization.

“We measure reach in terms of our active user base or monthly active users,” Gupta said. “We measure engagement by looking at timeline views per monthly active user, and we measure monetization in terms of ad revenue per 1,000 timeline views.”

In the fourth quarter of 2013, Gupta said that ad revenue per 1,000 timeline views reached $1.49, up 76 percent from the prior year. The other primary driver for Twitter is mobile. Gupta said that in the fourth quarter, more than 75 percent of total ad revenue came from mobile device, up from 55 percent in 2012.

Twitter in 2014

“With confidence in our ability to scale revenue, we are doubling down in 2014 to accelerate the growth of our core user base,” Twitter CEO Richard Costolo said during his company’s earning call.

Twitter has a few efforts underway to accelerate that user base.

“By bringing the content of Twitter forward and pushing the scaffolding of the language of Twitter to the background, we can increase high-quality interactions and make it more likely that new or casual users will find this service as indispensable as our existing core users do,” Costolo said.

Costolo noted that Twitter has improved user timeline visibility, search and inline social actions.

“Recent changes like putting direct messaging front and center in our native mobile apps on iOS and Android are also driving increased interaction, with messaging up more than 25 percent just since that change,” Costolo said. “Search has also become one of our fastest-growing features, with a 120 percent increase in total searches year-over-year.”

While growing the user base and interaction are key goals for Twitter in 2014, so too is improving monetization.

“We see significant room also for monetization growth in 2014,” Costolo said. “We’re rolling out and scaling new ad products with great success.”

Those new ad products include improved targeting capabilities that enable advertisers to reach their target markets more accurately.

“One of our core values as a company is to reach every person on the planet,” Costolo said. “In 2014, we’re focused on building a Twitter that is truly accessible and valuable to everyone.”

Sean Michael Kerner is a senior editor at Datamation and Follow him on Twitter @TechJournalist

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