Twitter's (TWTR) fourth-quarter results this morning included both some better-than-expected and worse-than-expected figures. Of all the metrics shared in the update, the social network's pullback in core users seems to have stolen the show -- and not in a good way. Twitter shares are down about 5% following the report.

Twitter headquarters. Image source: Twitter.

Here's a look at some of the key takeaways from the update.

Financial results
The social network continued to perform well financially. This has been the company's strong suit since it went public -- particularly when it comes to revenue growth.

Twitter's revenue for Q4 was $710 million, up 48% from the prior year and in line with what I was expecting. This revenue growth was driven primarily by $641 million in advertising revenue, which was up 48%, year over year.

The company's non-GAAP EPS for the quarter was $0.16, ahead of analysts' estimates for $0.12 and up about 33% from the year-ago quarter's non-GAAP EPS of $0.12.

The company had 320 million total monthly active users. While this was a 9% increase from the year-ago quarter, it was flat sequentially, marking Twitter's worst sequential progress in users since it went public. And a closer look highlights an even bigger problem: Excluding the Twitter's low-value SMS Fast Followers -- users who access the service through text messaging primarily on feature phones -- Twitter's monthly active users actually declined from 307 million in Q3 to 305 million in Q4.

But management noted in their letter to shareholders that the platform is already seeing a reversal of that trend:

We saw a decline in monthly active usage in Q4, but we've already seen January monthly actives bounce back to Q3 levels. We're confident that, with disciplined execution, this growth trend will continue over time.

Data retrieved from SEC filings and company press releases for quarters shown. Chart source: Author.

Another area where Twitter underwhelmed was in its guidance. For the first quarter, Twitter said it expects revenue of $595 million to $610 million. This would represent about 38% year-over-year growth. Notably, this would mark a rapid deceleration from the company's 48% year-over-year revenue growth in Q4 and its 58% year-over-year growth reported in Q3.

Other key takeaways
Here are some other key points from Twitter's quarterly update.

  • Video views on Twitter were up 220 times from December 2014 to December 2015, supported by the introduction of new native video capabilities introduced throughout the year.
  • Direct messages on Twitter were up 61% year-over-year, driven by new messaging features and an increased character limit, from 140 to 10,000 characters.
  • Twitter's active advertiser count hit 130,000 during Q4, up 90%, year over year.
  • Advertising growth for the year was driven by a 153% increase in ad engagements.
  • Average-cost-per-engagement, or the revenue Twitter collects from advertisers per engagement, declined 41% year-over-year, offsetting some of the gains from higher engagement.

Going forward, management said in its shareholder letter that "that 2016 will be a year of many changes for Twitter," and noted the company has "a new product roadmap which includes significant changes."