Twitter says Apple mobile software release caused loss

Sarah Frier and Tim Higgins
Bloomberg News

Twitter Inc., which posted disappointing fourth-quarter user growth, gave a surprising reason for the slowdown: Apple Inc.’s new mobile software.

The San Francisco-based company said Apple’s September rollout of iOS 8, the iPhone maker’s new mobile operating system, cost it 4 million new users for integration-related reasons. There was an “unforeseen bug in the release of iOS 8 as it related to Twitter,” Chief Executive Officer Dick Costolo said on a conference call Thursday.

“We moved on multiple fronts to minimize its impact, but it wasn’t a one-size-fits-all fix,” Costolo said. A Twitter spokesman later said the problems were related to the social network’s integration with the Apple update, rather than a glitch in the software itself.

Apple users reported several snafus after iOS 8 debuted. Some popular applications crashed more often, and iPhone owners complained about having to delete photos, videos and apps to make room for the new software. The Cupertino, California-based company issued software updates to try to fix the issues.

Apple didn’t immediately comment on Twitter’s remark.

“The iOS 8 rollout had a lot of glitches, but I don’t think Twitter was being affected by the ones that got a lot of press,” Slaven Radic, CEO of app-developer consultancy Tapstream Network Inc., wrote in an email. “There was an intermittent Twitter-specific bug in early iOS 8 where saved Twitter accounts had to be re-authorized to work, which basically meant that users had to remove the Twitter account and re-add it.”

Key measure

Twitter’s monthly active users rose 20 percent in the December quarter to 288 million, less than the average analyst estimate for 22 percent growth, according to data compiled by Bloomberg. Investors have focused on that measure to gauge the Web company’s growth as it works to add advertising revenue and new products to reach profitability. On the call, the company also cited “seasonality” for the slower user additions.

“We obviously have a great relationship with Apple,” Costolo said on the call.

Aside from the slower-than-estimated user growth, the microblogging company posted fourth-quarter revenue that topped estimates and forecast that its number of new users will pick up. Revenue increased 97 percent to $479.1 million. Profit excluding some items was 12 cents a share, compared with an average estimate of 6 cents. The net loss narrowed to $125.4 million.

Twitter said Thursday it expects to add 13 million to 16 million users in the first quarter, similar to the number it added in the early part of 2014. That would indicate sequential user growth of about 4.5 percent, compared with 1.4 percent in the prior period. The company ended the fourth quarter with 288 million users.

The company’s shares rose about 9 percent to the equivalent of $44.85 at 11:02 a.m. in Frankfurt. That compared with a closing price of $41.26 yesterday in New York.