Twitter posted a second-quarter loss on Thursday, but the social media giant’s stock rose on higher user growth amid the coronavirus pandemic.
The company’s stock rose by $2.06, or 6 percent, to $39.24 before the market open as investors reacted to the user gains. The San Francisco-based social media company, led by CEO Jack Dorsey, reported an adjusted loss of $1.39 per share owing to a COVID-19-related non-cash tax allowance of $1.1 billion. That fell short of a Wall Street forecast of earnings at 3 cents per share, according to a Zacks Consensus estimate.
But Twitter saw its daily active user (DAU) base, a new metric for the social media company, rise to 186 million, up 34 percent from 139 million users in the year-ago period and 166 million users as of the end of the first quarter.
Analysts had forecast 178.8 million users for the latest quarter. Twitter is no longer reporting monthly active users as a metric.
Quarterly revenue at $683 million was down 19 percent from a year-earlier $841 million. That fell well short of the consensus estimate of $704.4 million from Thomson Reuters.
Total advertising revenue for the period came to $562 million, down 23 percent from a year-earlier $727 million. That missed analyst forecasts and underlined how the pandemic has impacted the digital advertising market.
“Despite the pandemic, brands have found innovative ways to join the conversation on Twitter to connect with their customers,” said Ned Segal, Twitter’s CFO. U.S. ad revenue came to $283 million, down 25 percent year-on-year. International ad revenue at $279 million was down 20 percent from the year-ago period.
During the first quarter, Twitter had noted a fall-off in ad revenue in the second half of March as the coronavirus spread worldwide. The social media giant, in its latest results, noted a modest recovery in the second quarter, interrupted from late May to mid-June when marketing brands “slowed or paused” their advertising spending in reaction to U.S. civil unrest following the death of George Floyd at the hands of police officers in Minnesota.
“During the last three weeks of June, advertising revenue declined 15 percent year-over-year. Demand gradually improved once brands returned after the protests subsided,” Twitter explained.
During the morning analyst call, Dorsey addressed the recent hack of high-profile users on the social media site. “Last week was a really tough week for all of us at Twitter. We feel terrible about the security incident that negatively affected the people we serve and their trust in us,” he said.
Dorsey added in a statement that accompanied his financial results as he discussed the security of the Twitter platform: “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. We understand our responsibilities and are committed to earning the trust of all of our stakeholders with our every action, including how we address this security issue.”
The Twitter boss also talked about the company exploring future subscription plans for the social media platform as a new revenue source beyond advertising. “We have a high bar for when we would ask consumers to pay for aspects of Twitter. … We do think there’s a world where subscription is complementary to advertising,” Dorsey told analysts.
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