In Q1 2020, Twitter reported 24 percent year-on-year (YoY) increase in daily active users to 166 million, which it said is at least in part to the coronavirus pandemic. Although Q1 earnings beat estimates, the company’s advertising business slowed, which Twitter also attributes to the pandemic. Stock was up 12 percent during premarket trading on news of the report, but then fell 7.8 percent during the earnings call because executives didn’t reassure investors that the advertising slump would recover or stabilize.
CNBC reports Twitter Q1 numbers, including $808 million in revenue, 11 cents earnings per share (EPS), and 166 million monetizable daily active users (mDAUs). Based on Refinitiv consensus estimates, Wall Street expected EPS of 10 cents on revenues of $776 million and, based on StreetAccount estimates, 164 million mDAUs.
Twitter chief financial officer Ned Segal reported the “weakened advertising spending at the end of March” was in part due to cancelled and postponed events … [and] added that as the economy in Asia began to reopen, it’s seen a lessened impact in the region in terms of ad spending.”
Segal recounted some of Twitter’s wins during the pandemic, such as watch parties for ESPN documentary “The Last Dance.” Describing March 11 to March 31 as full of a “wide range of outcomes,” he said Twitter “was able to see revenue growth because deterioration by the end of March remained ‘relatively steady’ directionally.” Twitter has suspended full year guidance and stated that, “its plans to build a new data center will likely be delayed, impacting CAPEX spend in the 2020 fiscal year.”
Twitter said that, “it still expects stock-based compensation to grow sequentially in the second quarter by at least 25 percent … [and that] its mDAU growth represented the strongest ever year-over-year.” It also experienced “double digit growth in its top 10 markets.” Revenue growth of 3 percent was the result of “a strong start to the quarter that was impacted by widespread economic disruption related to COVID-19 in March.”
With regard to advertising, Twitter stated that Q1 should be seen as two periods, “with January through the beginning of March performing as expected and the end of March taking a hit.” Total advertising revenue reached $682 million, up about $3 million from last year, but “from March 11 (when many events around the world began to be canceled and we made working from home mandatory for nearly all our employees globally) until March 31, our total advertising revenue declined approximately 27 percent year over year.”
During the pandemic, Twitter began to focus on “revenue-generating products including its Mobile App Promotion (MAP) product … [and is] lowering hiring and non-labor expense plans while continuing to invest in engineering, product and trust and safety.”