(REUTERS/Kacper Pempel)

Exactly a year ago today, Dick Costolo announced Twitter's first earnings report as a public company. Yet however monumental that day may have been for Costolo as CEO, today's update could be even more critical.

That's because in recent months, pressure has been building on him. Some big investors have been growing impatient, talking about their frustration and loss of confidence with the company's direction as Twitter fine-tunes its business plan. The stock, though up recently on a flurry of news from the company, is still sitting below the $44.90 where it closed on its opening day more than a year ago. One analyst told CNBC in December that Costolo's future is the No. 1 question he gets from large investors — and that he thinks there's a good chance Costolo won't be CEO within a year's time.

For those whose knowledge of Twitter's business isn't much longer than a 140-character tweet, here's a rundown on why Costolo has been under pressure, what the board has been saying, and what Twitter investors will be watching for when the company announces earnings on Thursday afternoon.

Why exactly has Costolo been under pressure?

For one, investors have been focused on seeing faster growth in Twitter's monthly active users — that's the number of users who log in at least once a month, even if they're not actively tweeting. That growth has been slowing, and doesn't look great compared to other social media sites like Facebook. Additionally, some investors have shown concerns over Costolo's strategy shifts, whether the service is easy enough for new members to use, and the churn among Twitter's top executive ranks.

Since Twitter went public, Costolo has shifted his focus from increasing those core monthly users to growing Twitter's broader audience (which includes those who visit the site but don't log in, as well as those who see Twitter content on other sites across the Web). That change in strategy has left some investors feeling like they have gotten mixed messages, or that Twitter may have gone public before its strategy was nailed down.

Then there's the turnover at the top. There have been a number of moves among Twitter's top management team since the company went public a year ago. Among them: Two vice presidents of product have been replaced, the company's senior vice president of engineering left, the chief financial officer moved into a role running strategic investments, and Ali Rowghani resigned as chief operating officer in June following reported tensions. That's a lot of change in a very short time.

Some changes are normal for a newly public company. But when they involve so many direct reports to the CEO, says Harvard Business School professor Bill George, who has been critical of Costolo's leadership, "it's a very bad sign. Great CEOs retain their team." (An email to a Twitter spokesperson for a response, as well as to comment on other details in this report, was not immediately returned.)

So what's the company been up to lately? 

A lot. At an event with analysts in November, Costolo and his team promised a slew of new product changes, including new group messaging and video tools, a "what you missed" feature designed for less-frequent users, as well as changes to its homepage and an "instant timeline." Twitter has since followed through on introducing or testing all those features, which could help ease concerns over how easy the site is for new users, and how fast the company launches new features.

On Tuesday, the company said it would begin displaying its "promoted tweets" on outside news sites or apps, giving advertisers a chance to reach a wider audience. Bloomberg also reported Wednesday that sometime in the first half of this year, tweets will start to show up in Google's search results, yet another way to get Twitter in front of a wider audience and potentially boost advertising revenues. The stock, consequently, has jumped on the recent frenzy of news.

What kind of manager is Costolo?

Costolo has been described in reports as reactive and abrupt in his choices, but also decisiveself-deprecating and funny. He was actually an improv comedian before turning his main focus to tech (Costolo helped start three companies before joining Twitter in 2009). After PayPal co-founder Peter Thiel said on CNBC there's "probably a lot of pot-smoking going on" at Twitter, Costolo tweeted: "working my way through a bag of Doritos. I'll catch up with you later."

He's known for being highly involved in training at Twitter, running his own six-hour management course for engineers and product managers. He also seems surprisingly willing to take personal responsibility for some of the company's issues, such as how it's been fighting trolls who post abusive remarks. In a candid internal memo reported by the Verge late Wednesday, Costolo responded to a recent article about a female comedian's experience with trolls on social media.

"We suck at dealing with abuse and trolls on the platform and we've sucked at it for years," the memo reportedly said. He added that he was "frankly ashamed of how poorly we've dealt with this issue during my tenure as CEO" and took pains to call it his responsibility. "It's nobody's fault but mine."

The response was "tremendous," according to Jeff Sonnenfeld, a senior associate dean for leadership programs at the Yale School of Management. "Unlike almost everyone else in tech, he's willing to be personally accountable for fixing those problems," he said.

So is the board defending Costolo?

Yes. Twitter’s board has seven members other than Costolo, and three of them—including two of Twitter’s founders—have spoken out on his behalf. In early January, Peter Currie, a Silicon Valley veteran and Twitter board member, wrote that he is “very confident in @dickc and the talented team he has.”

Twitter co-founders Evan Williams and Jack Dorsey (the board’s chairman) stood in front of employees recently and said the company’s board was “super supportive” of Costolo, according to a report from technology scribe Kara Swisher. Dorsey also wrote a 17-part “tweetstorm” in which he said “there isn't a single person who has been thinking longer about Twitter” than Costolo, and that he "was one of our first angel investors, our advisor, our COO, the creator of our revenue engine, and our CEO who assembled the team." 

Is that a good sign?

Maybe. Yale's Sonnenfeld says that when a board pops up with a vote of confidence, it actually often means there are changes ahead — but that this looks like an exception to that rule. "The fact that it's the founders says a lot," he says. "That's a good sign. They are in his camp."

Still, Harvard's George points out that the comments mean directors recognize the need to shore up support, "so people don't feel the board is losing confidence." It could also be a sign, reports Swisher, that the company is trying to shut down any rumors in order to ward off activist investors.

Who else is defending Costolo?

 Some in the tech community have voiced their support for him, as have advertising agency executives. In a recent piece in Digiday, ad honchos praised Twitter's agency relations under Costolo's leadership, saying the company's team has been attentive and willing to go above and beyond for agencies. A few tech writers have also suggested that Costolo shouldn't be shown the exit.

So what's going to happen?

For now, all eyes will be on this afternoon's key results. Investors will be watching that core user growth rate, of course, as well as looking for more details on Twitter's new advertising deals. No doubt they'll also be watching Costolo — what he says and what he leaves unsaid — on this critical day for the company.

Read also:

What Twitter CEO Dick Costolo is like as a leader

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