Twitter shares have fallen 20% as its active monthly users fell from 336m to 335m over the last three months, but revenues actually exceeded forecasts.
The company had been under pressure to suspend users for hate speech, abusive content and the spread of misinformation. It has been purging automated and spam accounts.
Monthly users fell to 335 million in the quarter and came in well below Wall Street’s expectations of 339 million. The San Francisco-based company warned user numbers would continue to decline in the third quarter.
“We continue to invest in improving the health of the public conversation on Twitter, making the service better by integrating new behavioral signals to remove spammy and suspicious accounts and continuing to prioritize the long-term health of the platform over near-term metrics,” the company said in a statement.
It’s larger rival Facebook lost $120bn in market value on Thursday after it warned sales growth was slowing and cost rising as it addresses concerns about personal data usage.
However, Twitter’s user numbers overshadowed the company’s impressive earnings. Revenue rose 24% to $711m, exceeding Wall Street’s expectation of $696m, as it raked in more in advertising, including $30m from the World Cup.
It posted its third consecutive quarter of profits. Net income was $100.1m in the second quarter compared with a loss of $116.5m in the same period a year earlier.
Analysis
Yuval Ben-Itzhak, CEO of social media marketing firm Socialbakers, said: “Twitter’s Q2 results fell short of expectations, despite the fact that in the first half of the year it launched some exciting platform improvements such as increasing video content and launching Bookmarks, as well as other ways to bring better returns to advertisers. It has also been taking important steps to make the platform more transparent for users and for marketers. By removing fake accounts from its platform, Twitter is showing its commitment to delivering an authentic, “digital-pollution” free environment. While it’s important for brands and influencers to have a solid follower base, the key is quality, not quantity.
“Authenticity is increasingly pervasive when it comes to social media marketing, and fake accounts which lead to inflated reach and performance numbers aren’t helping brands or influencers to engage in authentic conversation with their audiences. Despite the results, Twitter appears to be doing all the right things to hold onto advertisers’ spend. Twitter can certainly still attract brands and media publishers to the platform, and is driving strong revenues from its ad efforts. We should stay tuned for Q3!”
Aaron Goldman, CMO, 4C Insights,said: “Twitter’s continued growth is a strong indicator of advertiser confidence in the platform. Global Q2 events like the start of the World Cup as well as the NBA Finals demonstrated Twitter’s strength in live events and video by providing brands with opportunities to capture audience attention. Advertisers increased their Twitter spend through 4C by 26% year-over year, underscoring the growing importance of Twitter in the media mix. In addition to its strength in live video, Twitter offers options like emoji targeting, which we expect to drive continued growth as advertisers embrace the ability to connect with their audiences leveraging real consumer behavior.”
Abi Jacks, Director of Marketing,, Rakuten Marketing, said: “Twitter has endured a tricky relationship with investors, but latest earnings show it is not having the same trouble with advertisers. Though the platform captures less of the limelight for its recent advancements – not quite as notable as shoppable AR features – there have been some smart developments.
“Take the new Explore tab, Twitter is now starting to test Promoted Trend Spotlight ads, putting an engaging visual banner equipped with a GIF or image background atop the Trends list. The first batch of these came from Disney no less. Historically, Twitter’s biggest problem was that people skimmed past ads, but with the shift to an algorithmic Timeline and bigger focus on video, Twitter is retraining users to expect relevant content in every slot.”
Joe Rohrlich, General Manager of EMEA at Bazaarvoice, added: “It’s pleasing to see ad spend is growing. Importantly earnings are just as much about the holistic growth in advertiser spend as they are about the tussle between publishers to own the largest tranche. Interestingly, while Facebook and Google are losing some dominance in the market, Twitter isn’t the direct beneficiary – this accolade goes to Amazon, with shares in other companies dropping sharply anytime the e-commerce giant enters a new industry. Fortunately for the likes of Twitter, the immediate focus is grocery and as we’ve seen from the attention Google has been paying on this front, with the recent partnership with Carrefour. Now is the time for Twitter to cement itself as a go to for advertisers shifting budget from TV to digital.”
