Twitter CEO Jack Dorsey is seated prior to testifying before a Senate Intelligence Committee hearing on foreign influence operations on social media platforms on Capitol Hill in Washington, September 5, 2018.
Joshua Roberts | Reuters
Twitter reported second-quarter earnings Thursday that missed analyst expectations on revenue and beat on active users. The report comes one week after Twitter suffered a serious hack compromising the accounts of major figures including former U.S. President Barack Obama and Tesla CEO Elon Musk.
Twitter’s stock was up about 7% during premarket trading on the report.
Here are the key numbers:
- Loss per share: $1.39, adjusted, which is weighed down by a $1.1 billion loss related to a non-cash deferred tax asset, making it difficult to compare to analyst estimates.
- Revenue: $683 million vs. $707 million expected, according to Refinitiv
- Monetizable daily active users (mDAUs): 186 million vs. 172.8 million expected, according to StreetAccount
Twitter grew mDAUs 34% year over year in the quarter, the highest rate since it began reporting the metric. Twitter attributed the growth in large part to shelter-in-place orders around the world and more global conversations about the pandemic and other major events. Twitter has been experimenting with virtual events to spark conversation as large sporting events have been cancelled.
Last quarter, Twitter offered few signs of recovery after advertising spend took a hit at the start of the pandemic in the U.S. in March. But in Thursday’s letter to shareholders, Twitter said, “We saw a gradual, moderate recovery relative to March levels throughout most of Q2, with the exception of late May to mid-June, when many brands slowed or paused spend in reaction to US civil unrest.”
Twitter said advertising revenue came to $562 million, down 23% year over year. Advertising revenue was down just 15% year over year in the last three weeks of June, according to the report.
“Demand gradually improved once brands returned after the protests subsided,” Twitter said.
The company said it has now finished its ad server rebuild after it had blamed the server for its Q3 2019 earnings whiff. The completed project should allow Twitter to better target and monetize ads.
This quarter, executives will likely face questions from analysts on its earnings call about the security of its platform following a major hack last week. Hackers were able to access the Twitter accounts of major figures, including former Vice President Joe Biden and Microsoft founder Bill Gates, and post scam messages from their accounts soliciting cryptocurrency.
Twitter has since said the hackers manipulated employees to gain access to internal systems that allowed them to reset passwords and log into 45 of 130 targeted accounts. For eight accounts of non-verified users, (likely meaning accounts for less prominent figures) the attackers downloaded the accounts’ information. On Wednesday, Twitter said it believes the attackers accessed the direct message inboxes of up to 36 of the targeted accounts.
Twitter’s hack has once again made it a subject of government scrutiny. But beyond the hack, Twitter has had to navigate an executive order from President Donald Trump targeting a liability shield for tech platforms, and more recently, a call for its CEO to testify in front of a congressional antitrust panel alongside CEOs from Amazon, Apple, Facebook and Google. Conservative lawmakers and Trump have repeatedly claimed the company exerts bias in its moderation policies, which Twitter has denied.
In its letter to shareholders, Twitter noted that it has “stepped up” its annotation of tweets that it believed violated its policies against misleading information. Internal models showed those actions prevented 68 million unannotated impressions from occurring. It’s also rolled out specific improvements to detect Covid-19 related misinformation.
This story is developing. Check back for updates.