Twitter shares fell 11% in after-hours trading on Thursday as the company provided moderate revenue guidance for the second quarter, warned of rising costs and expenses, and stated that user growth may slow due to the coronavirus pandemic. The growth momentum seen during the period has weakened.
The social media company’s revenue and user numbers are roughly in line with analyst estimates, which is in stark contrast to better-performing digital advertising companies such as Facebook and Alphabet.
It stated that it expects revenue in the second quarter to be between US$980 million (approximately Rs 72.25 billion) and US$1.08 billion (approximately Rs 79.9 billion), which is lower than Wall Street’s estimate of US$1.06 billion (approximately Rs 78.5 billion). . From Refinitiv. The company also said that stock compensation for new employees will exceed expectations for this year.
Twitter said that it hopes to reset the product after years of stagnation, and announced bold goals in February to expand its user base, accelerate new features for users, and double its revenue by 2023.
Haris Anwar, a senior analyst at Investing.com, said: “During the pandemic, the explosive growth that Twitter experienced during the pandemic is slowing down quite quickly. By 2020, the Weibo site will start from the U.S. election. And pandemic-driven growth.”.
Advertising revenue in the first quarter was US$899 million (approximately Rs 66.5 billion), an increase of 32% over the same period last year, and exceeded the US$890 million (approximately Rs 65.9 billion) estimated by analysts. Total revenue for the quarter was US$1.04 billion (approximately Rs 77 billion), an increase of 28% year-on-year, slightly higher than the estimated US$1.03 billion (approximately Rs 76.2 billion).
The two largest digital advertising platforms, Google and Facebook, both exceeded revenue expectations in the first quarter. Advertisers believe that compared with Twitter, both have more ad formats and better ad targeting functions.
Asked during a conference call with analysts why Twitter would not see the same surge in growth as other digital advertising companies, Chief Financial Officer Ned Segal said that the company relies more on brand advertising, which is usually seen after the holidays. A slow start, which in reality exacerbated world events such as the Congressional riots on January 6.
According to data from FactSet, Twitter reported 199 million daily active users, an increase of 20% year-on-year, while analysts expected 200 million.
The San Francisco-based company once again warned that the increase in profitable daily active users (mDAU) (that is, the period of daily users who can view ads) may reach the “low double digits” in the next quarter, and it is possible It reached a low point in the second quarter.
Segal said that Twitter hopes to retain the users added during the COVID-19 pandemic so that “as the economy opens up, people can now watch events from the couch in person…they continue to come to Twitter. .”
“It’s too early” tells
Twitter pledged in February to increase its annual revenue from USD 3.7 billion (approximately Rs 27,380 crore) in 2020 to a goal of USD 7.5 billion (approximately Rs 55,550 crore) in 2023. The company recently snapped up news communication platform Revue and podcast company Breaker, and mocked a series of new products.
The company is also testing the live audio function Spaces to compete with Clubhouse. It is also studying ways for users to find topics of interest and provides creators with new ways to make money on the site, from tips to “super fans”, where fans can pay for exclusive content.
Twitter banned former US President Donald Trump after the congressional riots on January 6, but its content policy and algorithm system are still attracting attention. In recent weeks, as lawmakers are considering changes to the protection of social media platforms, both Dorsey and Twitter’s US public policy leaders have appeared before Congress.
Twitter said that it expects total revenue growth this year to exceed spending growth, provided that the impact of the coronavirus is small and that Apple’s changes will have a “modest impact.”
However, it stated in its outlook that stock-based compensation expenses will reach US$600 million (approximately Rs 44.44 billion) this year, which is higher than the previous forecast of US$525 million (approximately Rs 38.9 billion) to US$575 million (approximately Rs. ) 42.6 billion rupees) because the company has increased its recruitment efforts. It forecasts annual capital expenditures of US$900 million (approximately Rs 66.66 billion) and US$950 million (approximately Rs 70.04 billion).
Twitter said that by 2021, the number of employees and total costs and expenditures will increase by at least 25% year-on-year.
Thomson Reuters 2021 ©