Twitter’s usage surged during the coronavirus pandemic and civil rights protests, adding 20m new daily users in its second quarter from the previous three months, but sales still fell as the internet group warned of a choppy advertising market.
Revenues dropped 19 per cent year on year to $683m, representing a less steep decline than in the March quarter but still falling short of Wall Street’s consensus expectations, which had been looking for about $700m for the three months ending in June.
To supplement ad revenues, Twitter’s chief executive Jack Dorsey said on Thursday that users would “likely see some tests” of new subscription-based services later this year.
“We have a really high bar for when we would ask consumers to pay for aspects of Twitter,” Mr Dorsey said. Twitter is in the “very, very early stages of exploring” new ways to generate revenues, he said, including subscriptions, commerce and “helping people manage paywalls”, such as for news outlets.
Mr Dorsey said he hoped these ideas, unlikely to generate meaningful revenues this year, would “complement” ads and increase Twitter’s “revenue durability”.
Advertising has proven a volatile business for Twitter over recent months — even more so than for its larger rivals Facebook and Google. Twitter has relied more on branding campaigns, often tied to live events such as sports or movie and product releases that have been in short supply since March, and it has been weaker in the “direct response” ad formats that are most popular with online retailers and mobile app publishers.
Despite the hit to sales, Twitter’s shares jumped as much as 6 per cent in pre-market trading on Thursday as it reported that average monetisable daily active users rose 34 per cent year on year to 186m, far ahead of most analysts’ estimates.
While Twitter pointed to a “moderate recovery” in ads since March’s turbulence, it said many brands pulled back their spending again from mid-May to late June during the Black Lives Matter protests. Advertising revenue was down 15 per cent year on year in the last three weeks of June. “We continue to see headwinds to global advertising demand,” Mr Dorsey said.
He credited both product improvements, such as allowing users to follow topics, as well as news-driven usage for the accelerated growth, which hit its highest growth rate since 2016.
A fall in advertising pricing outweighed the increased engagement but Twitter said it had now completed a vital IT system upgrade that should strengthen its offering to marketers, including in direct response.
Twitter swung to a net loss of $1.2bn in the quarter, primarily due to a deferred tax asset valuation and other non-cash expenses. Without those one-offs, Twitter said its adjusted net loss was $127m, compared with $37m in adjusted net income in the same period last year.
Over the past week, Twitter has been scrambling to recover from a hack that targeted some of its most high-profile users, including Joe Biden, Elon Musk, Bill Gates and Jeff Bezos. Twitter said on Wednesday that private messages from up to 36 users were accessed during the attack.
Mr Dorsey on Thursday admitted Twitter “fell behind” in its internal controls. “We moved quickly to address what happened, and have taken additional steps to improve resiliency against targeted social engineering attempts, implemented numerous safeguards to improve the security of our internal systems, and are working with law enforcement,” he said.
Get alerts on Twitter Inc when a new story is published