Published: March 24, 2020 10:14:59 am
Twitter Inc pulled its first-quarter revenue outlook and forecast an operating loss on Monday as the coronavirus outbreak crimped ad sales, but said the pandemic boosted the number of active users on the microblogging platform.
The outbreak has made social media services such as Twitter vital for a broader population than usual, as people look to stay abreast of the latest news from authorities and keep in touch with friends virtually.
But many advertisers have pulled marketing budgets to rein in costs because of the virus-related uncertainty, and others are hesitant to advertise alongside coronavirus discussions for fear of associating their brands with the sensitive topic.
“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,” Chief Financial Officer Ned Segal said in a statement.
Twitter is the first major ad-supported U.S. platform to disclose the impact of the coronavirus and investors will now look how larger internet peers Facebook Inc and Alphabet Inc’s Google are coping. The tech firms have not disclosed any financial impact from the outbreak so far.
“This is not going to be business as usual, and the marketing industry is certainly going to see a real impact. I don’t think anyone knows how big. So we’re going to watch and look,” Facebook Chief Operating Officer Sheryl Sandberg told Bloomberg TV last week.
There are positive signs for the internet giants, though.
Hyundai, Toyota and GM were among automakers who started to run online ads last week directly or indirectly mentioning how they were adjusting practices because of the coronavirus, according to commercials seen by Reuters.
The warning from Twitter comes two weeks after it reached an agreement with Elliott Management that allowed Jack Dorsey to stay on as chief executive and added three new directors.
As part of the agreement, Twitter had pledged to grow daily users by 20% or more in 2020 and beyond, roughly in line with user growth in its fourth quarter.
Twitter said on Monday total monetizable daily active users (mDAU) jumped 23% to 164 million quarter-to-date, driven by the conversation around COVID-19, as well as ongoing product improvements.
“We’re seeing a meaningful increase in people using Twitter,” Dorsey said.
The company said it expects first-quarter revenue to be down slightly on a year-over-year basis. It had earlier estimated revenue to be between $825 million and $885 million, an 8.6% rise from a year earlier at the midpoint.
The company is scheduled to announce its results on April 30.
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