Twitter usage increases, sending shares despite quarterly ad sales estimates failing By Reuters

By Katie Paul and Elizabeth Culliford

SAN FRANCISCO (Reuters) – Twitter Inc (N 🙂 reported its highest annual growth in daily users viewing ads, beating analyst estimates for usage and sending its shares up to 6% in pre-market trade on Thursday.

The company failed to meet Wall Street’s low expectations for quarterly revenue despite rising usage, as the economic slowdown fueled by the coronavirus hit the company’s largely targeted digital ad business.

Ad sales, which account for 82% of Twitter’s revenue, fell 23% to $ 562 million, a drop the company attributed to pauses in brand spending linked to the pandemic and civil unrest in the U.S. Analysts had expected $ 585 million, according to IBES data from Refinitiv.

But even as current events prompted advertisers to pull out, people continued to flock to Twitter to discuss them. The average daily active monetizable Twitter user (mDAU) increased 34% year-over-year to 186 million, above analyst target of 176 million.

Twitter has struggled to develop its advertising offerings, leaving it dependent on a set of promotional tools geared towards advertising around major events and product launches, which have all but disappeared during the pandemic.

The company said it finished rebuilding its ad management technology in the second quarter, which would support the faster development of new formats in the future, and that it was implementing measurement tools for “direct response” ads used by developers. Of applications.

Total revenue reached $ 683 million, down 19% from the previous year, helped by steady growth in sales of user publication licenses for researchers and marketers.

Twitter reported a second-quarter loss of $ 1.2 billion, largely due to the reversal of a tax benefit established last year, when the company transferred the intellectual property to Ireland. Due to heavy second-quarter coronavirus-related losses, Twitter didn’t make enough money to take advantage of the tax benefit.

Adjusted to exclude tax considerations, the company incurred a loss of $ 127 million, or 16 cents a share, roughly in line with analyst expectations of a loss of $ 125 million. It had an adjusted profit last year of $ 37 million.

Echoing earlier guidance, Twitter said it expects data license revenue to “moderate” for the rest of the year.

He also said he was exploring “subscriptions and other approaches to complement our advertising business,” although he did not expect any revenue this year.

Costs and expenses grew 5% to $ 807 million, below the increase in low adolescence that Twitter had predicted. The company said it anticipated spending growth of 10% or more in the third quarter.

Rival on social media Snap Inc (N 🙂 omitted user growth estimates earlier this week, as its increase in use of coronavirus locks depleted earlier than expected, but exceeded revenue earnings targets.