Twitter is the latest social media company to report a first quarter boost, after it posted record quarterly user growth and topped analyst sales projections on Q1 financials Thursday morning. At the same time, the company warned that its ad business took a severe hit in mid-March due to the coronavirus pandemic.
The company, led by CEO Jack Dorsey, added 14 million monetizable daily active users during Q1 for an increase of 24% year-over-year; both the net user gains and the growth rate were Twitter records for a single quarter. Twitter, in its letter to shareholders, said this was “driven by typical seasonal strength, ongoing product improvements, and global conversation related to the COVID-19 pandemic.” Overall, Twitter now has 166 million daily users.
For the first quarter, Twitter reported sales of $807.6 million, surpassing analyst estimates of $776 million; the company’s 11 cent loss per share was a penny shy of the 10 cent loss per share Wall Street anticipated. Twitter’s 3% year-over-year sales growth due to a “strong start to the quarter that was impacted by widespread economic disruption related to COVID-19 in March.”
Twitter’s share price, after already going on a strong run over the last month, was up 3.73% in premarket trading to $32.25 per share. Heading into Thursday morning, the company’s share price had already increased 33% since the beginning of April.
Twitter, in its letter to shareholders, said these are “unprecedented times” and that the company is pleased to see users are leaning on the app for pandemic news, among other interests. “Our work has never been more important,” the company said. “More people than ever are coming to Twitter to learn about COVID-19, to connect with their interests, and to find people with common experiences.”
One thing worth noting: The company’s ad revenue from March 11 until the end of the month dropped 27%, with Twitter saying the ad downturn was “particularly pronounced” in the U.S. due to the pandemic. Despite not sharing a Q2 revenue estimate, Twitter sounded as if it’s optimistic its ad concerns will subside as the U.S. economy begins to open back up. As the shareholder letter said: “Advertising weakness in Asia began to subside as work and travel restrictions were gradually lifted.”
Both Alphabet and Facebook this week said their ad businesses were hit hard by the pandemic, with Facebook saying it faced “unprecedented uncertainty” moving forward. But both tech giants hinted April had shown signs of recovery on the ad front — something noticeably missing from Twitter’s Q1 report. During the company’s financial call on Thursday morning, CFO Ned Segal warned the company’s April performance was similar to the second half of March, when ad sales dipped dramatically.