Twitter Inc. reported a surprising decline in revenue that the social-media company blamed on advertising weakness and uncertainty related to its pending $44 billion acquisition by Elon Musk.
The Wall Street Journal reports Twitter’s results follow rival social-media company Snap Inc. posting its weakest-ever quarterly sales growth because of “increasing competition for advertising dollars that are now growing more slowly.”
Twitter, in its news release Friday, cited “advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter.” The company won’t host an earnings conference call because of the pending transaction, which the company is suing Mr. Musk to complete.
Twitter’s revenue fell to $1.18 billion from $1.19 billion a year ago, and was below the average analysts’ estimate of $1.32 billion on FactSet. The company reported a loss of $270 million, or 35 cents a share, compared with year-ago earnings of $65.6 million, or 8 cents a share.
Advertising revenue rose 2% from a year earlier to $1.08 billion. In the first quarter, advertising revenue grew 23%.
The number of Twitter’s monetizable average daily active users increased to 237.8 million from 229 million in the first quarter and 206 million a year ago. U.S. users–who make up the company’s biggest market–grew to 41.5 million from 39.6 million in the first quarter and 37 million a year ago. The company said the increase was driven by product improvements and global conversation around current events.
Earlier this week, Delaware Chancery Court’s chief judge granted Twitter’s request to fast-track its lawsuit against Mr. Musk. A five-day trial is scheduled for October despite opposition from the billionaire’s lawyers, who argued that a trial should take place on or after Feb. 13 of next year.
Musk has said his primary reason for backing out of the deal is a lack of faith in Twitter’s estimate that less than 5% of its monetizable daily active users are spam or fake accounts. He has said that estimate is probably too low.
Twitter has said for years in its securities filings that the number of fake and spam accounts on its platform could be higher than its estimates. The company said in its lawsuit against Mr. Musk that he has buyer’s remorse over the fall in share prices since he agreed to the deal in April.
In a recent court filing, Musk’s team said they became concerned about Twitter’s user numbers after the company disclosed in its April earnings report that it had overstated its user base for nearly three years through the end of 2021 because of an error in how it accounted for people linked to multiple accounts. The revision reduced the number of monetizable daily active users by 0.9% for the fourth quarter of last year.
CNBC reports Given the pending acquisition by Musk, Twitter said it will not provide forward-looking guidance for the third quarter. It’s also not hosting a conference call with analysts to discuss the earnings results.
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