SAN FRANCISCO (Reuters) – Twitter Inc (TWTR.N) missed Wall Street’s lowered expectations for quarterly revenue on Thursday despite surging usage, as the coronavirus-spurred economic slowdown battered the company’s largely events-oriented digital ads business.
FILE PHOTO: The Twitter logo and stock prices are shown above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., January 23, 2018. REUTERS/Lucas Jackson
Ad sales, which make up 82% of Twitter’s revenue, sank 23% to $562 million, which the company attributed to brand spending pauses tied to the pandemic and U.S. civil unrest. Analysts had expected $585 million, according to IBES data from Refinitiv.
Even as current events prompted advertisers to pull back, people continued to flock to Twitter to discuss them. The company clocked its highest-ever yearly growth of daily users who can view ads, increasing 34% to 186 million, above analysts’ target of 176 million.
Twitter has struggled to build out its ad offerings, leaving it reliant on a suite of promotional tools geared toward advertising around big events and product launches, which have all but vanished during the pandemic.
The company said it finished rebuilding its ad management technology in the second quarter, which would support faster development of new formats going forward, and was rolling out measurement tools for “direct response” ads used by app developers.
Total revenue came in at $683 million, down 19% year-over-year, helped by steadier sales growth from the licensing of users’ posts to researchers and marketers.
Twitter reported a second-quarter loss of $1.2 billion, largely driven by the reversal of a tax benefit established last year, when the company transferred intellectual property to Ireland. Because of the second quarter’s steep coronavirus-related losses, Twitter did not make enough money to take advantage of the tax benefit.
Adjusted to exclude the tax considerations, the company incurred a loss of $127 million, or 16 cents per share, roughly in line with analyst expectations of a $125 million loss. It had an adjusted profit last year of $37 million.
Echoing earlier guidance, Twitter said it expects data licensing revenue to “moderate” for the rest of the year.
It also said it was exploring “subscriptions and other approaches to complement our advertising business,” although it was not expecting any revenue to result this year.
Costs and expenses grew 5% to $807 million, below the increase in the low teens that Twitter had forecast. The company said it anticipated expense growth of 10% or more in the third quarter.
Social media rival Snap Inc (SNAP.N) missed user growth estimates earlier this week, as its usage bump from coronavirus lockdowns petered out sooner than expected, but it beat targets for revenue gains.
Reporting by Katie Paul; Editing by Leslie Adler