Twitter blames Musk and ad market headwinds for declining revenue
Twitter on Friday said Elon Musk’s contentious takeover bid, combined with macroeconomic factors affecting the ad market, were to blame for the tech giant missing Wall Street’s revenue expectations for the second quarter.
Why it matters: Twitter’s share price, which is typically a reflection of performance as well as other factors, could play a role in possible negotiations with Musk later this year, if the two parties decide to settle their dispute out of court.
Details: Twitter told investors that the “uncertainty” related to Musk’s pending acquisition was impacting performance.
- It also cited headwinds pertaining to the current ad market. Snap, which also depends on advertising revenue, reported an earnings miss and weak forward-looking guidance in response to the macroeconomic challenges hitting the ad market.
- Twitter’s revenue came in at $1.18 billion last quarter, a decline of 1% from the second quarter the year prior.
- Wall Street analysts were expecting Twitter to grow revenues by around 10%, which shows how dramatically Twitter’s results missed expectations.
Yes, but: Like Snap, Twitter was still able to expand its user base at a healthy pace during the last quarter, although it missed growth expectations slightly.
- Twitter now has 237.8 million monetizable daily active users (mDAUs), up from 229 million last quarter.
By the numbers, via CNBC:
- Earnings per share: A loss of 8 cents, adjusted, vs expected earnings of 14 cents, according to a Refinitiv survey of analysts
- Revenue: $1.18 billion vs. $1.32 billion
- Monetizable daily active users: 237.8 million vs 238.08 million expected, according to Refinitiv
The big picture: Analysts expect growth in the advertising market to decelerate significantly in coming months, as the economy responds to broader issues coming out of the pandemic, such as high inflation and supply chain problems.
- Twitter makes the vast majority of its revenues from advertising, although it has tried to introduce a few subscription products in the past year to help diversify its business.
- On Friday, Twitter said subscription and other revenue totaled $101 million, an increase of 7% year-over-year when excluding the sale of an ad tech firm called MoPub in January.