Twitter reported accelerated growth in users in the second quarter, as more people took to the social media platform to discuss current events. However, the user growth did not translate into more revenues, as the advertising market remained weak during the coronavirus outbreak, and the company reported a loss for the quarter.
Average daily active users rose 34 percent year-on-year to 186 million, an increase of around 20 million compared to Q1. Twitter saw growth in the US and abroad, with double-digit increases in all of its top-ten markets, the company said.
Revenues fell 19 percent from a year earlier to USD 683 million. Twitter said it was particularly affected by a slowdown in late May and early June during the protests in the US, but this improved gradually to only a 15 percent annual decline in the latter weeks of June.
Total costs and expenses grew 5 percent year over year to USD 807 million, less than expected, as it balanced headcount growth with reductions in lower priority investments. This resulted in an operating loss of USD 124 million, compared to a profit of USD 76 million a year ago. The increase in costs is expected to increase to 10 percent in Q3.
The company's bottom line was a loss of USD 1.2 billion, compared to a profit of USD 1.1 billion in Q2 2019. The difference was due to the valuation of tax assets. Excluding the tax charge, the adjusted net loss was USD 127 million, compared to a profit of USD 37 million a year ago.
After a small increase in capex to USD 162 million, operating cash flow fell to USD 201 million from USD 339 million. Twitter added the period with total cash and equivalents of USD 7.8 billion.
During the quarter, Twitter completed its ad server rebuild, which the company says should help speed up product development. It wants to work on developing more direct response advertising, building on its strength in branding and resulting in advertising demand that may be more resilient through an economic downturn, it said. It launched a second trial of this in Q2 and also started rolling out a programme to share mobile device data with advertisers outside the EU/UK.
