Global pandemic and US protests: World in isolation, a surge of new users for Twitter

The global pandemic and US protests are forcing a pullback by advertisers on Twitter, but it's also led to an unprecedented surge of users. Average daily user growth spiked 34 per cent in the second quarter, the company said Thursday, the largest jump in users ever recorded by the company.

In an earnings call, CEO Jack Dorsey addressed an embarrassing hacking incident last week that compromised the accounts of high profile users, saying he felt "terrible" about it. Shares of Twitter surged more than 6% before the opening bell.

But the company took a huge tax hit to earnings, posting a net loss of USD 1.2 billion, or USD 1.56 per share, in the April-June period, compared with profit of USD 1.1 billion, or USD 1.43 per share, a year earlier.


Revenue fell by about a fifth to USD 683 million, far short of the USD 702 million Wall Street had expected, according to a survey of analysts by FactSet.

Twitter's advertising business was hit harder than its larger rivals Google and Facebook, and analysts had expected the bleeding to continue in the second quarter.

The company said ad revenue made a "gradual, moderate recovery" relative to levels in March but many brands then slowed or paused their spending in late May to mid-June, following the outbreak of Black Lives Matter protests in the U.S.

Ad revenue fell 15 per cent in the last three weeks of June, which was better than the 27 per cent decline in the final three weeks of March, with advertiser demand returning as the protests subsided, Chief Financial Officer Ned Segal said in the earnings call. New users have been flocking to the platform as they isolate, with the number of daily active users jumping to 186 million.

"Twitter's strength as a news and entertainment source has helped buoy engagement during the pandemic as housebound consumers use the platform for real-time news and information," said eMarketer analyst Jasmine Enberg.

But she does not expect this to continue as stay-at-home restrictions are beginning to lift and people are starting to return to more normal routines.