Twitter Inc. plans to lay off a few hundred employees, mostly in sales and marketing, and shut down its Vine video app as the social media service strives to produce an annual profit for the first time next year.
Initiatives such as streaming live video of NFL games are helping boost ad sales at Twitter, but not quickly enough to justify what investors and analysts have complained is a bloated workforce out of sync with the company’s prospects. Several other firms, including Salesforce.com Inc. and Walt Disney Co., have considered and then rejected the opportunity to acquire Twitter in recent weeks.
The once fast-growing San Francisco company has produced nine straight quarters of slowing revenue growth compared with the prior-year quarter. And monthly active users, the company’s key usage measurement, has stagnated for the last year.
The cuts to the 3,910-person workforce, announced early Thursday alongside Twitter’s latest quarterly financial results, acknowledge the difficulties.
“Once a company gets to our scale and growth, it’s important to drive toward margins and profitability,” Chief Financial Officer Anthony Noto said. “It’s an important milestone to reach for investor appeal.”
The belt-tightening targets some departments beyond sales. Hours after the earnings announcement Thursday, Twitter said it would shut down its Vine video app “in the coming months.” Twitter acquired the six-second looping video app months after its founding in 2012. It developed a loyal following, but demand sank as users slowly found more intriguing tools and financial incentives on other social media apps.
Since returning a year ago to the helm of the company he co-founded, Chief Executive Jack Dorsey has focused the company on adjusting the user interface in hopes of encouraging more activity. Some of the changes, such as automatically surfacing the most interesting posts users might have missed between visits to the app, have been welcomed by users.
Although 700 million accounts have been active on Twitter over the last year, just 317 million are active each month and a much smaller number each day. Rival gateways to news and entertainment — chiefly Snapchat, Instagram and Facebook — are outpacing it. For example, Facebook has added 319 million monthly users since the end of 2014.
Twitter said the design changes over the last year have made it more attractive to advertisers.
Twitter shares rose 0.6 percent in trading Thursday to close at $17.40, well below the initial issue price of $26 when the company went public nearly three years ago.
