Twitter's Q2 performance fell short of expectations, blaming Musk and the advertising industry's headwinds!

It is learned that the Q2 results announced by Twitter on July 22 were lower than analysts' expectations for earnings, revenue and user growth. Twitter attributed its decline to Musk's indecision in the acquisition and the uncertainty caused by the headwinds in the advertising industry. Twitter's stock price closed up about 0.8% after the earnings report was released. The following is a summary of Twitter's Q2 earnings report:

• Revenue: Down 1% year-over-year to $1.18 billion, below Refinitiv's forecast of $1.32 billion and a 10.5% year-over-year increase, the largest forecast miss in Twitter's history, with a gap of nearly 10%.

• Profit: Net loss of $270 million, compared with a profit of $66 million in the same period last year. The loss margin was 23%, mainly due to soaring costs and expenses.

• EPS: Adjusted loss of 8 cents, versus expected earnings of 14 cents, Twitter's costs and expenses increased 31% year-over-year to $1.52 billion in the second quarter. The company lost 8 cents per share, its first adjusted loss in two years and only the second loss in its history.

• Daily active users: 237.8 million, vs. 238.08 million expected. U.S. daily active users: 41.5 million, up 15% year-over-year, international daily active users: 196.3 million, up 17% year-over-year. Daily active users have grown 16.6% since last year, driven by product improvements and a slightly higher conversion rate for international users.

Twitter and other social media companies that rely heavily on advertising have felt the pinch of the economic challenges as concerns about inflation, interest rate issues, ongoing supply chain problems and the war in Ukraine have caused some advertisers and brands to adjust their ad spending. On July 21, Snap also reported Q2 results that missed expectations and said it planned to slow hiring due to weak revenue growth, causing its stock price to plunge 25% in extended trading.

Twitter said that costs related to Musk's acquisition in the second quarter were about $33 million. Expenses related to severance were about $19 million. The company fired a third of its talent earlier this month, according to the Wall Street Journal. Given the current tug-of-war over the acquisition with the world's richest man, Twitter said it would not provide forward-looking guidance for the third quarter and did not hold a conference call with analysts to discuss earnings results.

Twitter is now embroiled in a legal dispute with Musk's $44 billion acquisition proposal. Musk claimed that Twitter underreported the number of spam and fraud accounts and failed to provide information about fake accounts, and therefore announced the cancellation of the acquisition. In view of this, Twitter announced that it would sue Musk, accusing the billionaire of "refusing to fulfill his obligations to Twitter and its shareholders." A Delaware Court of Chancery judge has ruled that the Twitter acquisition case will be tried in October.

Editor ✎Estella/

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