Twitter Inc (TWTR.N) posted the slowest revenue growth since it went public four years ago, sending shares down more than 10 percent on Thursday on fears that rivals Snapchat and Facebook Inc(FB.O) were winning the war for advertising.
Revenue from advertising fell from a year ago and a 4.0 percent year-on-year rise in users to 319 million fell short of Wall Street forecasts as well.
The election of prolific tweeter Donald Trump as U.S. president failed to produce a "Trump Bump" in Twitter's results, and Twitter declined to give guidance on future revenue with Chief Executive Jack Dorsey asking for patience.
The microblogging service has struggled to find a formula that will attract a new crop of users or advertisers even as rivals have ridden a wave of rising investment in internet advertising.
The lack of revenue growth has raised questions about Dorsey's leadership and whether the company would be bought by a bigger media firm. Financial markets speculated about a sale of Twitter last year, but no concrete bids were forthcoming.
Dorsey told analysts on a conference call on Thursday that Twitter was investing in machine learning and searching for ways to engage advertisers.
"It will take time to show the results we all want to see, and we're moving forward aggressively. The whole world is watching Twitter," he said.
Quarterly revenue growth was the slowest since Twitter went public in 2013. Advertising revenue in the fourth quarter declined 0.5 percent year-over-year to $638 million, and the company said that advertising revenue growth would continue to lag user growth during 2017.
"There isn't a growth story here," said Michael Pachter, a Wedbush Securities analyst. "They have to convince advertisers that they will reach an expanding audience," he said.
NO TRUMP BUMP
The election of Trump had been seen as a positive for Twitter, since the president uses the platform frequently generating coverage by news media.
"The shocking part is that the Trump effect was zero. Their growth actually slowed during the quarter," Pachter said.
Chief Operating Officer Anthony Noto told analysts that Trump had broadened awareness of how the platform can be used, but that Twitter cannot rely on the president alone.
"The magnitude of the impressions of the platform is so large it would be very hard for an event or single person to drive sustained growth," Noto said.
Twitter's user base in the fourth quarter grew to 319 million, less than the 319.6 million expected by analysts, according to market research firm FactSet StreetAccount.
Dorsey also faced concerns about his dual role as the chief executive of both Twitter and Square Inc (SQ.N).
"Running two companies is not the best idea," Steve Ballmer, a Twitter investor and a former Microsoft Corp (MSFT.O) chief executive, told CNBC.
Ballmer added that Twitter needs to make more progress, but that he thinks it is still a valuable service and that he has confidence in it.
Total revenue grew 1.0 percent to $717.2 million, missing analysts' average estimate of $740.1 million, according to Thomson Reuters I/B/E/S.
San Francisco-based Twitter was the subject of takeover chatter last year involving big names such as Salesforce.com Inc (CRM.N) and Walt Disney Co (DIS.N), although a clear offer never materialized.
Twitter was also hit by a string of executive departures in 2016, including in its products team, which had three heads in less than a year. In October, the company said it would cut 9.0 percent of its global workforce as part of a broader restructuring.
Twitter's net loss widened to $167.1 million, or 23 cents per share, in the fourth quarter ended Dec. 31, from $90.24 million, or 13 cents per share, a year earlier.
The company's adjusted profit, however, beat sharply lowered estimates.
Excluding various items, the company earned 16 cents per share in the fourth quarter, beating the average estimate of 12 cents per share.
Restructuring charges in the latest quarter ballooned to $101.2 million from $12.9 million a year earlier.
(Reporting by David Ingram in New York and Supantha Mukherjee in Bengaluru; Additional reporting by Aishwarya Venugopal in Bengaluru; Editing by Peter Henderson, Saumyadeb Chakrabarty and Bernadette Baum)