Twitter fell short of Wall Street earnings expectations for the second quarter of 2020 as total revenue fell 19%, despite packing on a record 20 million daily active users in the period.
What Twitter calls “monetizable” daily active users increased 34% year over year to 186 million, adding 20 million in Q2 and representing the highest quarterly year-over-year growth rate “since we began reporting mDAU growth,” said Jack Dorsey, Twitter’s CEO, in announcing earnings.
Even with the earnings miss, Twitter shares were up more than 6% in pre-market trading Thursday. The company didn’t provide guidance for Q3, except to say it expects total costs and expenses to increase 10% or more year-over-year, as it plans to increase capex spending in infrastructure “to support audience growth and product innovation.”
Dorsey also addressed the massive and unprecedented coordinated July 15 attack on high-profile accounts of multiple celebrities, politicians, tech titans and companies. Twitter said the hackers targeted about 130 separate accounts, of which they sent tweets from 45. In addition, the attackers accessed the direct-message inboxes of 36 accounts, including one elected official in the Netherlands, Twitter said Wednesday. The Bitcoin scammers hijacked accounts with tens of millions of followers, including those of Jeff Bezos, Elon Musk, Kanye West and Kim Kardashian West, Barack Obama, Joe Biden, Bill Gates, Mike Bloomberg, Wiz Khalifa, Apple, Uber and Square’s Cash App.
“We moved quickly to address what happened, and have taken additional steps to improve resiliency against targeted social engineering attempts, implemented numerous safeguards to improve the security of our internal systems, and are working with law enforcement,” Dorsey said. “We understand our responsibilities and are committed to earning the trust of all of our stakeholders with our every action, including how we address this security issue.”
Dorsey added, “We will continue to be transparent in sharing our learnings and remediations.”
Twitter’s Q2 revenue was $683 million in Q2, down 19% year over year, reflecting “moderate recovery” in advertising demand relative to the last three weeks of March, CFO Ned Segal said. “Despite the pandemic, brands have found innovative ways to join the conversation on Twitter to connect with their customers,” he said in prepared remarks.
From late May to mid-June, when advertisers “slowed or paused” spending in reaction to protests in the U.S. following the police killing of George Floyd, Twitter said. During the last three weeks of June, Twitter’s ad revenue declined 15% year over year and “demand gradually improved once brands returned after the protests subsided,” according to the company.
Twitter reported adjusted earnings per share of 16 cents; analysts on average had expected EPS of 32 cents and revenue of $707.5 million.
Most of Twitter’s user growth in the most recent quarter came from overseas. Average U.S. monetizable DAUs were 36 million for Q2, up from 33 million in the prior quarter, while international mDAUs were 150 million, up 17 million sequentially.