Twitter Reports Q2 Drop in Users, Stock Falls 12 Percent

Social network beats Wall Street’s revenue projections, but loses 1 million users during second quarter

Last Updated: July 27, 2018 @ 6:21 AM

A third-straight quarterly profit and better-than-expected revenue couldn’t save Twitter from taking a sharp dive on Wall Street on Friday morning after the company reported a decline in users during the second quarter.

The social network posted revenue of $711 million and earnings of 17 cents per share for the three months ending June 30 — matching analyst estimates for earnings and running past sales estimates of $696.2 million, according to Yahoo Finance. Revenue increased 24 percent year-over-year.

But while its sales were growing, Twitter’s user base was headed in the opposite direction, with the company reporting 335 million monthly active users (MAUs) during Q2 — a drop of 1 million MAUs from last quarter. Twitter pointed to “prioritizing the health of the platform,” as well as new EU privacy laws as reasons for its decline.

“Our second quarter results reflect the work we’re doing to ensure more people get value from Twitter every day,” Twitter CEO Jack Dorsey said in a statement accompanying earnings. “We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviors that distort and distract from the public conversation.”

Twitter reported that daily active users increased 11 percent year-over-year but declined to share how many users that actually is. Wall Street wasn’t impressed with the company’s user numbers, with the stock dropping more than 12 percent in pre-market trading.

Twitter’s Q2 revenue growth wasn’t enough to offset its decline in users (via Google)

Twitter has made several moves in recent months to clean up its app. The San Francisco-based company purged millions of inactive accounts from follower counts earlier this month, while also exiling more than 100,000 bot accounts. Twitter’s stock had already taken a hit after the Washington Post reported that 70 million suspicious accounts had been deleted between May and June, with investors worried Twitter’s efforts to make its platform less toxic would also negatively impact its user growth.

The company has placed an emphasis on promoting the “health of public conversation,” as Dorsey put it, in 2018. But Twitter has taken criticism from critics on both the right and the left as it looks to meet its goal. Comedian Seth Rogen blasted Dorsey earlier this month, saying “the dude simply does not seem to give a f–” about white supremacists using the platform.

While investors grapple with Twitter’s decline in users, the company did report its third straight quarterly profit.

Twitter will hold a conference call at 8:00 a.m. ET to discuss its earnings.