Twitter to Lay Off 9% of Workforce as Revenue Slows

(Reuters) – Twitter Inc’s quarterly revenue growth slowed sharply in the third quarter but topped analysts’ expectations, and the company said it would cut 9 percent of its global workforce.

The social network has been struggling to sign up new users amid competition from nimbler rivals such as Instagram and Snapchat. Twitter‘s shares rose nearly 4 percent to $17.97 in premarket trading on Thursday.

Revenue rose about 8 percent to $616 million, above the average analyst estimate of $605.8 million. The company reported a 20 percent rise in revenue in the previous quarter and 58 percent last year. Excluding items, the company earned 13 cents per share, beating the average analyst estimate of 9 cents, according to Thomson Reuters I/B/E/S.

The microblogging service said its user base ticked up 3 percent to 317 million average monthly active users in the third quarter from 313 million in the second quarter.

Analysts on average had expected 316.3 million monthly active users, according to market research firm FactSet StreetAccount. Twitter had 3,860 employees globally as of June. The layoff could hurt the company’s image in San Francisco, where the competition for engineering talent is fierce.

The company, led by co-founder Jack Dorsey, said it expected to incur cash expenditures of about $10 million to $20 million in the fourth quarter, mostly in severance costs. “We’re getting more disciplined about how we invest in the business, and we set a company goal of driving toward GAAP profitability in 2017,” said Chief Financial Officer Anthony Noto.

The company’s net loss narrowed to $102.9 million, or 15 cents per share, in the third quarter ended Sept. 30, from $131.7 million, or 20 cents per share, a year earlier.

(Reporting by Supantha Mukherjee and Anya George Tharakan in Bengaluru; Editing by Saumyadeb Chakrabarty)