Twitter says ad revenue 'significantly' affected by coronavirus
Twitter says it expects to take a financial hit from coronavirus even though the outbreak has contributed to a surge in usage on the service.
On Monday, Twitter told investors to ignore guidance it gave at the end of last quarter regarding revenue and income. Twitter will report its quarterly results on April 30, and its announcement Monday was the first indication from a major social media platform that the industry has been affected by the pandemic.
“Twitter's purpose is to serve the public conversation, and in these trying times our work has never been more critical. We're seeing a meaningful increase in people using Twitter, and our teams are demonstrating incredible resilience adapting to this unprecedented environment,” said Twitter CEO Jack Dorsey in a press statement. “We'll continue to navigate this environment focusing on supporting our employees, customers, and partners, while strengthening our service for everyone around the world and adjusting to a new operating and economic environment.”
At the end of last year, Twitter forecast that it would generate between $820 million and $885 million in revenue and operating income of up to $30 million. However, on Monday Twitter retracted that forecast. In January, coronavirus, COVID-19, surfaced in Asia and has led to a worldwide emergency.
Twitter did say that the pandemic has led to a spike in daily users as more people flock to the service to get news and updates. Twitter said that so far this quarter it has seen 164 million daily users, which is 23 percent more than the first quarter of 2019.
The ad industry, in general, is expected to take a hit from companies pulling back on spending amid fears of a recession. Also, major advertising events have been canceled, because people are avoiding in-person gatherings. That means that network TV upfronts and digital content NewFronts have been on hold. Twitter is typically a major players at the Interactive Advertising Bureau’s yearly NewFronts, which were slated to take place in April. The digital advertising event is supposed to be an opportunity for internet companies to promote their video strategies for the year ahead.
“Twitter had a strong start to the year before the effects of COVID-19 began spreading more broadly, including a successful Super Bowl and overall strength in the U.S. The COVID-19 impact began in Asia, and as it unfolded into a global pandemic, it has impacted Twitter's advertising revenue globally more significantly in the last few weeks,” said Ned Segal, Twitter's chief financial officer. “We have made solid progress on our consumer and revenue product priorities and we remain confident in our opportunity and strategy. We hope everyone stays healthy and safe.”
Twitter’s stock price dropped about 2 percent in after-hours trading, on top of the losses the company has taken since the start of the year.