By Katie Paul and Elizabeth Culliford
SAN FRANCISCO (Reuters) – Twitter Inc (N 🙂 reported its strongest annual growth in daily users who can see ads, topping analysts’ estimates on usage and sending its shares up 6% in pre-market trading on Thursday.
The company missed Wall Street’s lowered expectations for quarterly revenue despite skyrocketing usage as the economic downturn caused by the coronavirus hit the largely event-oriented digital advertising business.
Ad sales, which account for 82% of Twitter’s revenue, fell 23% to $ 562 million, a decline the company attributed to breaks in the brand’s spending linked to the pandemic and U.S. civil unrest . Analysts were expecting $ 585 million, according to IBES data from Refinitiv.
But even though current events have prompted advertisers to step down, people have continued to flock to Twitter to discuss it. The average number of monetizable daily active users (mDAUs) of Twitter increased 34% year-over-year to 186 million, above analysts’ target of 176 million.
Twitter has struggled to expand its advertising offerings, leaving it reliant on a suite of promotional tools geared towards advertising around major events and product launches, which all but disappeared during the pandemic.
The company said it completed rebuilding its ad management technology in the second quarter, which would allow more rapid development of new formats in the future, and was deploying measurement tools for “direct response” ads used by application developers.
Total revenue was $ 683 million, down 19% year-over-year, driven by more steady sales growth through licensing of user publications researchers and marketers.
Twitter reported a loss of $ 1.2 billion in the second quarter, largely due to the cancellation of a tax benefit established last year when the company moved its intellectual property to Ireland. Due to the large coronavirus-related losses in the second quarter, Twitter did not make enough money to take advantage of the tax break.
Adjusted to exclude tax implications, the company incurred a loss of $ 127 million, or 16 cents per share, roughly in line with analysts’ expectations for a loss of $ 125 million. He had an adjusted profit last year of $ 37 million.
Echoing previous indications, Twitter said it expects data licensing revenues to “moderate” for the remainder of the year.
He also said he was exploring “subscriptions and other approaches to complement our advertising business,” although he didn’t expect any revenue to result from it this year.
Costs and expenses rose 5% to $ 807 million, below the increase in weak teens that Twitter had predicted. The company said it expects spending growth of 10% or more in the third quarter.
Competing social media Snap Inc (N 🙂 missed user growth estimates earlier this week as its use due to coronavirus lockdowns wore off earlier than expected, but it exceeded revenue gains targets.
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