Twitter confirmed rumors Thursday that the company would be making significant staff cuts — cuts that are actually deeper than expected.
As previously reported, Bloomberg got early word that for the second year in a row, the beleaguered microblogging company would be making an eight percent staff cut. However, Twitter announced today that the layoffs would actually be a little larger, with nine percent of the workforce (about 350 people) heading to the chopping block.
“We have a clear plan, and we’re making the necessary changes to ensure Twitter is positioned for long-term growth,”CEO Jack Dorsey said via an email sent to staff before both the company's 4 a.m. PT earnings call and the announcement that the company would also be shuttering its video platform, Vine.
“The restructuring allows us to continue to fully fund our highest priorities, while eliminating investment in non-core areas and driving greater efficiency,” the company said in its letter to investors. (you can read the full investor report here
According to the Chron, the announced layoffs will hit the company's sales and marketing teams the hardest — a contrast from the layout round in 2015, which slashed staff in their engineering and product sectors.
In their quarterly earnings announcement, Twitter announced that their average monthly active users climbed 3 percent to 317 million during the third quarter, while average daily active usage increased 7 percent. Advertising revenue rose 6 percent to $545 million, with mobile advertising making up 90 percent of the total ad revenue. They posted a loss of $102.9 million, or 15 cents per share. They declined to give a revenue forecast for the fourth quarter or full year due to the cuts made in the sales department, the Associated Press reports.
These earnings are better than expected, everyone agrees, but analysts remain skeptical that Twitter's eggs haven't gone rotten. Apparent frustration over Dorsey's failure to usher in a buyer this fall (possibly due to their ineffectual abuse management) led one to write earlier this week that "We believe it is imperative for Mr. Dorsey to come on board full-time given his sway as a founder...If he's not willing to do so, then we argue Twitter needs to find someone else who will," CNet reports.
Twitter's "management appears unfocused and complacent, while the narrative has shifted to buyout rumors,” Wedbush analyst Michael Pachter said in a note to investors.
“Until Twitter is focused on attracting new users, driving increased use by its existing users, and demonstrating its value proposition to people who don't use the service, we expect it to grow very slowly. Its service is too complicated and difficult to use for the average Internet user despite multiple changes.”
And perhaps Dorsey hears those concerns, as in a statement today he said that “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.”
According to MarketWatch, news of the layoffs and better-than-expected earnings sent the stock soaring today, with 3.4% surge in premarket trade.
Previously: Twitter Is Cutting Vine, Which Will Be Discontinued