Twitter CEO Dick Costolo is stepping down after five years, effective 1 July, and the board of directors decided co-founder and chairman of the board Jack Dorsey will serve as interim CEO while they look for a replacement.
Costolo (pictured) will continue to serve on Twitter’s board and Dorsey will continue as CEO of Square, the payments and financial services company he co-founded in 2009.
Twitter’s board has formed a search committee – which includes board members Peter Currie, Peter Fenton and co-founder Evan Williams, but not Dorsey – to find a permanent CEO and will consider both internal and external candidates for the position, it said.
When asked by Wall Street Journal (WSJ) if he would take the job if it was offered to him, Dorsey said “I’m not going to answer that question because it’s not what I’m focused on”.
While Costolo told WSJ that he is only leaving because he wants to move on, the report also says that he had replaced or lost five execs reporting directly to him during Twitter’s first year as a public company and senior executives were frustrated with him as they dealt with Wall Street’s scrutiny after going public.
Although Twitter’s Q1 revenue was up 74 per cent, year-on-year, to $435.9 million, in Q1 it was below the firm’s own estimates, while a $162 million loss was 23 per cent greater than in Q1 2014.
Twitter projected full-year 2015 revenue of between $2.17 billion and $2.27 billion, down from its earlier forecast of $2.3 billion to $2.35 billion.
Costolo pinned some of the blame for the revenue shortfall on “lower-than-expected contribution from some of our newer direct response products”, which are advertisements that resemble tweets and enable users to click on them and take an action, such as downloading an app.
“It is still early days for these products, and we have a strong pipeline that we believe will drive increased value for direct response advertisers in the future,” he had said at the time.
In its announcement about Costolo, Twitter said it is reaffirming its outlook for Q2 2015.
“The company continues to expect revenue to be in the range of $470 million to $485 million and adjusted EBITDA to be in the range of $97 million to $102 million,” it said.
Dorsey said that the company “has an exciting lineup of products and initiatives coming to market, and I look forward to continuing to execute our strategy while helping facilitate a smooth transition as the board conducts its search.”
Last month it was reported that Twitter had been in advanced talks to acquire Flipboard since the start of the year, with a deal potentially worth more than $1 billion, but negotiations have now stalled.