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Twitter Needs to Prove to Wall Street It's Still a Good Bet -- Here's How It Might Do That

Twitter reports earnings on Thursday.

Anthony Quintano for Re/code

Almost exactly one year ago, Twitter reported earnings for the first time as a public company — and investors freaked out.

Slower-than-expected user growth caused the stock to dip as much as 18 percent in after-hours trading. In the year since, Twitter’s executive team has been completely reshuffled, the stock has been on a roller coaster and CEO Dick Costolo has been under fire.

Twitter seems to be pushing hard to flip the script in 2015. Board members are going public with support of Costolo, and the company has been busily shipping product updates — lots and lots of product updates — in an attempt to flex its muscles for Wall Street.

In the past week alone, Twitter rolled out two new product tweaks intended to bring on new users, and started selling Twitter ads on other websites and platforms, like Flipboard. Twitter stock rose more than 6 percent Tuesday on the ads news.

On Thursday, Twitter has a chance to push that stock even higher when it reports fourth-quarter earnings.

Analysts estimate Twitter will bring in a profit of six cents per share on revenue of $453 million, but the bottom line won’t save Twitter if it doesn’t bring a few other metrics to the table.

Here’s what you should you expect heading into Thursday.

User Growth

This is an obvious one, yes, but Twitter’s user growth has been the primary topic of conversation since the company first unveiled its S-1 document more than 15 months ago. Investors will be watching the company’s monthly active users very closely.

Costolo likes to say that he wants to build the “largest daily audience in the world,” but Twitter’s current growth means the company won’t be getting there any time soon. Facebook, for example, has a user base almost five times the size.

The good news for Twitter is analysts aren’t expecting much for Thursday. Growth estimates sit between 19 percent and 21 percent over the same quarter last year, according to multiple analyst reports. Twitter showed 22 percent growth last quarter, so analysts are actually expecting things to slow down.

Twitter’s Quest for User Growth

If Twitter doesn’t blow people away with how big it grew last quarter, it will try to impress them with how big it plans to grow. The company will do this by highlighting new products that have come out in the past month, including a better way to sign up new users that Twitter started testing earlier this week.

Twitter is also testing a redesigned homepage to lure in visitors who don’t already have an account.

The concentric circles that Twitter used to describe its reach to analysts
The concentric circles that Twitter used to describe its reach to analysts

You can also expect Twitter to talk about its “logged out” audience — that is, the group of people who see tweets on websites or on television but don’t sign in to Twitter. Twitter refers to this as syndication, and the company argues it shows Twitter has influence beyond its 284 million registered users.

At analyst day in November, the company said these syndicated tweets generate 185 billion impressions per quarter. Twitter may update that number Thursday, but at the very least, expect them to reiterate its importance.

The company also believes it can generate revenue from this audience, although it only started to do so for the first time this week.

Product Praise

Twitter has a reputation for shipping new products and updates slowly. It’s why the VP of Product position at Twitter may be one of the scariest jobs in Silicon Valley (see above).

But that hasn’t been the case so far in 2015. Twitter has launched a number of noticeable product updates in the past month, including consumer video, group messaging and a way to surface content to users that they may have missed.

Twitter is clearly trying to execute at a faster pace. What we don’t know is whether this flurry of product updates is supposed to augment Thursday’s numbers, or cover them up. Either way, expect Twitter to highlight this product push to investors.

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