TWTR Twitter Inc

By Deepa Seetharaman 

Twitter Inc. on Thursday said it would slash 9% of its workforce and redirect its focus from driving growth to delivering profits, an about-face following the retreat of several potential acquirer including Salesforce.com Inc.

The cost-cutting moves, which include shutting down its Vine video app, come as Twitter reported dwindling revenue growth for the third quarter and another loss over $100 million. Revenue rose just 8.2%, compared with over 50% growth in the year-ago quarter.

The social-media company is cutting around 350 jobs, largely in its sales, partnerships and marketing organization. Twitter said it would whittle down its sales channels from three to two and pull the plug on Vine, the six-second looping-video app acquired in 2012.

Twitter executives said the company has set a goal for next year of "driving toward" profitability in 2017. The company has posted quarterly net losses since going public in 2013, though they have narrowed each quarter this year. In the latest period, the loss shrank by 22% and beat expectations.

"We're getting more disciplined about how we invest in the business," Chief Executive Jack Dorsey said during a conference call with analysts. "We've fully funded our most critical initiatives."

Twitter's losses ballooned to well over $100 million per quarter after it went public, largely because of stock awards given to new hires. As a percentage of revenue, Twitter's stock-compensation costs totaled about 26%, among the largest for companies with $1 billion or more in annual revenue.

SunTrust Banks Inc. analyst Bob Peck previously said a cut of 8% would save Twitter as much as $100 million a year.

Twitter's results follow weeks of frenzied reports that the company was fielding acquisition offers from Salesforce.com, Walt Disney Co. and Google parent Alphabet Inc. -- only to have them all walk away earlier this month. Analysts don't expect another round of takeover interest soon.

During the call, Mr. Dorsey addressed the acquisition interest by saying the board was focused on maximizing shareholder value and wouldn't comment further on the deal rumors.

The lack of a deal puts added pressure on Mr. Dorsey to reinvigorate revenue and user growth through a series of product changes and advertising initiatives. Since he took over as permanent CEO about a year ago, Twitter's user growth has fluctuated between zero and the third quarter's 1.7%. Twitter added 4 million monthly active users in the latest three months to give it 317 million.

Twitter's third-quarter revenue gain of 8.2% was its smallest and marked the ninth straight period of slowing growth. The $615.9 million reported did surpass analysts' expectations of $606 million.

As Twitter's woes continue, bigger rivals like Facebook Inc. have pulled further ahead while smaller upstarts like Snapchat, Instagram and Pinterest are quickly gaining ground. Pinterest said this month it now has 70 million monthly users in the U.S., more than Twitter's 67 million.

"Twitter has gotten caught up in a conversation about slower growth and earnings," said Adam Berke, president and chief marketing officer of AdRoll, which helps advertisers build ad campaigns on sites including Twitter and Facebook. "Even though that's often unrelated to the effectiveness of their ad product, it affects their perception in the market as an interesting option."

Executives told analysts during the call that it would double down on its video strategy. Twitter has banked on a push to live-stream premium content such as National Football League games and the recent presidential debates. Twitter struck a $10 million deal with the NFL to broadcast Thursday night games, offering ad packages of up to $8 million for the season.

In the first seven games under the partnership through last week, Twitter has attracted an average audience of more than 200,000 viewers. Only two of the 10 Thursday night NFL games it acquired the rights to stream took place in the third quarter.

More than bringing in new ad-revenue opportunities, Twitter executives hope its live-streaming content will help broaden its user base to mainstream users -- namely, those who haven't understood the purpose of Twitter -- and increase engagement on the platform as people tweet about the games and shows being broadcast.

Morgan Stanley analysts project the NFL deal will generate just $11 million in incremental ad revenue in the fourth quarter.

Twitter said it wouldn't provide a revenue outlook for the fourth quarter as it digests the effect of its restructuring. The company expects to incur cash costs of $10 million to $20 million, as well as stock-based compensation expense of $5 million to $10 million associated with the job cuts, with most of the related charges coming in the fourth quarter.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

October 27, 2016 14:48 ET (18:48 GMT)

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