Twitter Inc’s (NYSE:TWTR) chief executive officer Dick Costolo has announced that he will step down from the role, with effect from July 1. He will be replaced on an interim basis by Twitter co-founder and chairman Jack Dorsey. Costolo will continue to serve on Twitter’s board.
The change was announced yesterday, with Costolo saying in a statement:"I am tremendously proud of the Twitter team and all that the team has accomplished together during my six years with the Company. We have great leaders who work well together and a clear strategy that informs our objectives and priorities.” The outgoing CEO also added that there is “no one better than Jack Dorsey to lead Twitter during this transition”.
Twitter has already formed a search committee to oversee the search for a permanent CEO to succeed Dorsey on a permanent basis. The committee is chaired by Twitter’s lead independent director, Peter Currie, and includes Peter Fenton and co-founder Evan Williams.
It is understood that it was Costolo’s decision to step down from the post. He said that he had brought the matter up with the board last year as it began talking about succession planning.
"Unfortunately this news isn't surprising," said Nate Elliott of management consultant Forrester Research, as quoted by Reuters. "The bottom line is that Twitter isn't very good right now at serving either its users or its marketers."
Twitter’s management has undergone a lot of changes recently, with several key figures leaving the company over the past year amid increased pressure over the company’s slow user growth and inability to attract advertisers at the same rate as its competitors. The company has been adding new features and making other changes to its service in an attempt to boost user engagement, but despite its efforts its user growth continues to slide. According to data from research firm eMarkeer, Twitter’s monthly user base will grow at 14.1 percent in 2015, compared with more than 30 percent two years ago. The researcher also estimates that Twitter had 1.6 percent of the US digital advertising market last year, up from one percent in 2013. In comparison, social media rival Facebook Inc (NASDAQ:FB) increased its share from 7.6 percent in 2013 to 10.4 percent the following year.
Having closed flat at $35.83 in yesterday’s regular trading, Twitter shares soared as much as 7.5 percent during after hours following the announcement. The company market capitalisation currently stands at $23.5 billion.