Twitter pins second quarter earnings decline on Elon Musk’s failed acquisition attempt
Twitter's second quarter results, which were
released on Friday, fell short of analyst expectations in terms of
profitability, sales, and user growth.
Twitter's stock dropped as much as 2% in premarket
trade.
“Except as otherwise stated, all financial results
discussed below are presented in accordance with generally accepted accounting
principles in the United States of America, or GAAP. As supplemental
information, we have provided certain additional non-GAAP financial measures in
this press release's supplemental tables, and such supplemental tables include
a reconciliation of these non-GAAP measures to our GAAP results. The sum of
individual metrics may not always equal total amounts indicated due to
rounding,” Twitter said in an official release.
It saw a loss of 8 cents, adjusted, vs analysts'
expectations of 14 cents for earnings per share. Its revenue was $1.18 billion
vs analysts’ $1.32 billion.
Refinitiv reports that there are 237.8 million
monetizable daily active users (mDAUs) as opposed to the predicted 238.08
million.
According to Twitter, revenue decreased 1% from the
prior year to $1.18 billion. Wall Street had anticipated $1.32 billion, or an
increase of 10.5% from the previous year. Refinitiv reported that Twitter's
earnings were 11 percent behind expectations, which was the worst revenue
shortfall in the company's history.
Twitter and other social media services that heavily
rely on advertising have suffered the effects of macroeconomic problems as
several advertisers and brands reduced their ad spend due to concerns about
inflation, interest rates, supply chain problems, and the conflict in Ukraine,
according to CNBC.
Twitter reported that: “Advertising revenue totaled
$1.08 billion, an increase of 2%, or 6% on a constant currency basis. While subscription
and other revenue totaled $101 million, a decrease of 27% year-over-year, or an
increase of 7% year-over-year when excluding MoPub from the year ago period.”
The business attributed a portion of the revenue
decline to uncertainty connected to the imminent takeover of Twitter by Tesla
boss Elon Musk, as well as downturns related to the ad sector relating to the
overall challenging macroeconomic environment.
Twitter announced it will not have an earnings
conference call, write a shareholder letter, or offer financial forecasts in
connection with the announcement of its second quarter 2022 earnings due
to the impending takeover of Twitter by an Elon Musk associate.
The quarter's costs and expenses increased 31%
YOY to $1.52 billion. The business experienced its first adjusted loss in
two years and second loss overall, swinging to a loss of 8 cents per share.
According to Twitter, the Musk acquisition's
associated expenses were about $33 million in Q2. The second quarter saw around
$19 million in severance-related expenses. According to the Wall Street
Journal, Twitter fired a third of its talent acquisition staff earlier this
month.
Musk and Twitter are engaged in a court dispute over
a proposed $44 billion takeover of Twitter. The Tesla Boss has attempted
to withdraw from the agreement. According to Musk, Twitter failed to provide
information regarding fake accounts and underreported the amount
of fraudulent profiles. Following claims that the billionaire has
refused to execute his duties to Twitter and its investors because the
transaction he made no longer serves his personal interests. Twitter filed
a lawsuit against Musk and a few of his associates earlier this month.
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