Even though Twitter has over 300 million active users, it still hadn’t managed to get into Profit club. In a shareholder document for the year ending 2015, the company stated that it had made a deficit of over $2.09 billion since it was set up due to significant operating losses. In spite of company’s revenue showing growth from $28.3 million in 2010 to $2.22 billion in 2015, it has yet to become profitable.
The company blamed its decline on the growth rate of its user base and the future revenue growth will be depending significantly on company’s ability to attract new users and increase overall engagement.
In its risks section of the document, the company admits that “despite our efforts to reduce barriers to consumption, people who are not our users may not understand the value of our products and services and new users may initially find our product confusing.”
It went on to add that “there may be a perception that our products and services are only useful to users who tweet, or to influential users with large audiences” and that such perception will be key problems for its business.
Twitter was set up in 2006 and hasn’t earned a profit since its beginning. This can be in spite important growth in its overall revenue and operate cost has also grown importantly.
An overall $2 billion loss may not be surprising and given its scale Twitter operates at and is a lot of money given that company has been operating for six years.