Twitter is expecting to incur an operating loss and revenue slip for its first quarter as it revealed it has been impacted by reduced advertising spend in light of the Covid-19 pandemic, despite seeing strong user growth.
The social network pulled its first-quarter guidance on Monday, as well as its full-year outlook for expenses, stock-based compensation, headcount and capital expenditures, amid economic uncertainty during the coronavirus outbreak.
Social media usage is growing as the public increasingly turns online for information about the virus and for entertainment during home confinement, with Twitter's total monetisable daily active users reaching approximately 164 million, up 23% from 134 million in the first quarter of 2019 and up 8% from 152 million in the fourth quarter of 2019.
While this would usually come hand in hand with growth in advertising spend, brands are taking drastic measures to ensure they are not affiliated with the virus, including cutting back on spend and implementing sweeping keyword blocking.
This has impacted Twitter's advertising revenue globally, chief financial officer Ned Segal revealed yesterday, adding that the impact has been "more significant" in the past few weeks as the virus became a global pandemic.
"We have made solid progress on our consumer and revenue product priorities, and we remain confident in our opportunity and strategy. We hope everyone stays healthy and safe," Segal said in a statement.
Accordingly, it expects first-quarter revenue to be down "slightly" year on year and to incur a GAAP operating loss, despite reduced expenses resulting from Covid-19 disruption. The company had predicted between $825m and $885m for its first-quarter revenue.
Twitter will provide an update on its first-quarter earnings call on 30 April.
Chief executive Jack Dorsey said: "Twitter's purpose is to serve the public conversation, and in these trying times our work has never been more critical. We're seeing a meaningful increase in people using Twitter and our teams are demonstrating incredible resilience adapting to this unprecedented environment.
"We'll continue to navigate this environment focusing on supporting our employees, customers and partners, while strengthening our service for everyone around the world and adjusting to a new operating and economic environment."
Shares of Twitter fell by more than 2% in after-hours trading following the announcement.