Twitter advertising revenue tumbles 22% as it admits pandemic and civil unrest are taking a toll
Twitter’s advertising revenue fell by 22% in the second quarter of the 2020 calendar year.
The numbers come as the platform grapples with security breaches and its role in political conversations and debates, as well as civil unrest in the United States and a global ad market downturn due to COVID-19.
CEO and co-founder Jack Dorsey was immediately apologetic on his call with investors this evening (local time).
Twitter is at the centre of a political storm
“Last week was a really tough week for all of us at Twitter, and we feel terrible about the security incident that negatively affected the people we serve and their trust in us. Security doesn’t have an end point – it’s a constant iteration to stay steps ahead of adversaries. We fell behind both in our protections of social engineering for our employees, and restrictions on our internal tools. And for that, I apologise on behalf of our company. We move quickly to lock down and fix, and [tried] to be transparent and frequent in our updates to the public. We will continue to go above and beyond here as we continue to secure our systems and work with external firms and law enforcement,” he said in relation to its recent security breach.
The breach happened after the reported financial quarter, with much of the downturn instead attributed to the pandemic, and brand uncertainty during civil unrest in the United States.
Chief financial officer Ned Segal said brand confidence had started to return, but protests and political uncertainty took their toll on the platform.
Twitter’s Q2 revenue
“We saw a gradual moderate recovery relative to March levels throughout most of Q2, with the exception of late May to mid June, when many brands slowed or paused spend in reaction to US civil unrest. There was a lot happening in June,” he told investors.
Despite the fall in advertising revenue, data licensing revenue climbed 6% to US$121m.
The company also revealed an operating loss of US$124m, or -18% of total revenue, compared to US$76m or 9% for the same period in 2019. It attributed the negative shift to lower revenue and higher personnel costs.
In February, the company said it was looking to grow its headcount by 20% to improve its offering to consumers and advertisers. At that time, it had cracked US$1bn quarterly revenue, which this quarter was down to US$683m. The same quarter last year had US$841m.
Total costs grew 5% year-on-year to US$807m. The network said it was pursing targeted headcount growth while reducing lower priority investments.
Sales and marketing costs, however, decreased 14% to US$207m, primarily due to reduced marketing campaigns, customer events and travel.
Despite the declines, monetisable daily active users were up 34% year on year, reaching 186m in the second quarter of the 2020 calendar year. The social media giant said this was driven by global conversation around current events and ongoing product improvements.
Twitter’s monetisable daily active users (mDAU)
COVID-19’s impact on the ad market may have been negative, but Twitter pointed to its role in bringing people to the platform.
“The year-over-year increase in [monetisable daily active users] was primarily driven by external factors, such as continued shelter-in-place requirements for many people, and increased global conversation around the COVID-19 pandemic and other current events. Our work to serve the conversation around COVID-19, to help people find trusted sources of information, to better organise and surface the many topics and interests that bring people to Twitter, and innovations such as virtual watch parties for movie launches and virtual concerts helped us serve our larger audience,” a statement to investors said.
Twitter’s full financials for the quarter (Click to enlarge)
It also pointed to its credentials in tackling misinformation and problematic content throughout the pandemic.
“As a part of our health work, we aggressively targeted misinformation and toxic or abusive content relating to COVID-19. During Q2, we shipped over 40 automations and tooling improvements to support COVID-19 content review. Since introducing our COVID-19 coverage, we have removed approximately 15,000 Tweets and challenged 4.5m accounts. Over 160m people have visited the COVID-19 curated page over 2bn times in aggregate.”
topics
Ad recession
coronavirus
COVID-19
financial results
jack Dorsey
Ned Segal
social media
Twitter
Time to review their sales director…. and their commercial strategies…
Twitter have an amazing amount of Data which should be picking up the loss of ad revenue right now…
Companies this size have been ‘pivoting’ to embrace new products available to them. I haven’t seen anything from Twitter to say they’ve been doing the same…
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