Twitter sales top estimates, sees rebound from Asia’s eased Covid-19 rules
Company lost $8m in the first quarter, or a penny per share, as revenues rose to $808m
Twitter is aiming to stem losses by slashing its own budgets, including by limiting hiring to product development, research and user support
Twitter on Thursday said its ads sales slightly rebounded in Asia after a plunge due to the coronavirus outbreak and it had accelerated work on tools to attract advertisers, becoming the latest tech company to report a lighter blow from the pandemic than forecast.
Twitter shares jumped 11 per cent in premarket trading.
The San Francisco-based social media company announced greater first-quarter revenue and a smaller loss than financial analysts had expected. Daily users who can view ads grew 24 per cent to 166 million, about 2 million above estimates, as people looked to Twitter for information related to the virus.
Twitter provided neither its usual guidance on sales for the current quarter nor any comment on whether US ad sales had bounced back as well. It did warn of smaller increases in non-advertising revenue. Making development of ad tools its leading priority also could complicate efforts to maintain user growth late into the year.
But the first-quarter results and signs of recovery mirrored those seen over the last week from Twitter’s main competitors for advertisers, including Facebook, Google parent Alphabet and Snapchat maker Snap.
Shares of those companies, including Twitter, have surged in the last week, erasing most or all their declines for the year.
The novel coronavirus halted travel, retail and entertainment in much of the world by March, leading to sudden budgets cuts at many advertisers and generating concerns about the prospects of ad sellers.
About 84 per cent of Twitter’s revenue comes from ads on its service and partner apps, and those sales were 27 per cent lower in the last three weeks of March than the same period in 2019, the company said on Thursday. But sales bounced back in Asia during late March as lockdowns lifted there, Twitter said, without providing specific figures.
In addition, Twitter said it hoped to release tools earlier than planned this year to attract business from mobile games and other app makers. Those companies are trying to gain market share among consumers stuck at home and are continuing to buy what the ad industry calls “direct response” ads.
Google on Wednesday also said it expected revenue from direct response ads sold by its YouTube unit to return to normal faster than from other ad types.
Twitter’s first-quarter revenue was $808 million, or 3 per cent growth compared with a year earlier, above the average estimate of $776 million among analysts tracked by Refinitiv.
Twitter had rescinded on March 23rd its first-quarter revenue outlook of between $825 million and $885 million because of virus-related uncertainty.
The company said that sales growth from licensing users’ posts to researchers and marketers, which was 17 per cent in the first quarter, is expected to “moderate” the rest of the year.
Twitter lost $8 million in the first quarter, or a penny per share, better than the average estimate of two cents per share.
The opening of a new data center to host tweets and user information could be pushed back because the virus made it difficult to acquire materials and required spending on improving some existing infrastructure, Twitter said.
Twitter is aiming to stem losses by slashing its own budgets, including by limiting hiring to product development, research and user support. Expense growth in 2020 is likely to be in “the low teens,” versus earlier plans to spend 20 per cent more than last year, Twitter said.
Focusing its product teams on advertiser tools could pose challenges for Twitter chief executive Jack Dorsey. He pledged in February to launch new features for users this year at a faster pace to stoke growth, while committing to activist investor Elliott Management on March 9th that he would increase daily users by at least 20 per cent this year.
The growth goal was part of an agreement allowing Dorsey to remain chief executive as a revamped board of directors evaluates Twitter’s leadership structure and succession plan. Elliott had expressed concern about Mr Dorsey, who is also chief executive of fintech company Square, taking on too much.