Twitter attributes revenue dip to Elon Musk and ad industry headwinds

Twitter's ongoing spat with Tesla chief Elon Musk is impacting its business. It recently posted revenue of US$1.18 billion for the second quarter of the year, a 1% year-over-year decrease. The company attributed this to the ad industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter by Musk. Snap also recently reported slower growth and attributed it to macroeconomic challenges and increasing competition for ad dollars that are now growing more slowly.

Meanwhile, when excluding MoPub and MoPub Acquire, Twitter said year-over-year growth was 3%. Ad revenue totaled US$1.08 billion, an increase of 2%, while subscription and other revenue totalled US$101 million, a decrease of 27% year-over-year. Twitter also witnessed an operating loss of US$344 million, representing a -29% operating margin and US$270 million in net loss, representing a net margin of -23%. According to CNN, Twitter's shares dipped by about 2% in pre-market trading last Friday after its financial results were reported.

Although Twitter's revenue dipped, the social media firm saw a 16.6% growth in monetisable daily active usage (mDAU) to 237.8 million compared to the previous year. According to Twitter, the increase was driven by ongoing product improvements and global conversation around current events. Average international mDAU was 196.3 million for the second quarter, up 17.0% compared to the same period last year. Meanwhile, average US mDAU was 41.5 million for the period, up 14.7% compared to Q2 of 2021.

Given the pending acquisition of Twitter by Musk, Twitter did not host an earnings conference call, issue a shareholder letter, or provide financial guidance in conjunction with its Q2 2022 earnings release. Earlier this month, Twitter sued Musk after he backed out of the US$44 billion deal on 8 July. In the regulatory filing previously seen by MARKETING-INTERACTIVE, Twitter also accused Musk of "knowingly, intentionally, willfully and materially" breaching an agreement to buy over the social media company.

Separately, Musk said in a prior filing that he was pulling out of the deal because Twitter breached multiple provisions of the agreement, including failing to turn over sufficient data on fake or spam accounts and letting go of high-ranking executives and a third of the talent acquisition team, reported Reuters. This came after Twitter finally agreed to sell the company after initially resisting it. Days after agreeing to sell, however, Twitter admitted it overstated user numbers for about three years. The company explained in its financial earnings release that an error was made in March of 2019 when it launched a feature that allowed users to link multiple separate accounts together to conveniently switch between accounts.

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