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Twitter Tops Forecasts with mDAUs Rising 24%

April 30, 2020

Twitter reported financial results for its first quarter 2020. The firm had earnings per share (EPS) of 11 cents with revenue of $808 million. Twitter's monetizable daily active users (mDAUs) came in at 166 million.

The Street was looking for Twitter to report earnings per share of 10 cents on revenue of $776 million with mDAUs at 164 million.

“In this difficult time, Twitter’s purpose is proving more vital than ever. We are helping the world stay informed, and providing a unique way for people to come together to help or simply entertain and remind one another of our connections. We’ve delivered our strongest ever year over year mDAU growth,” said Jack Dorsey, Twitter’s CEO.

“Public conversation can help the world learn faster, solve common problems, and realize we’re all in this together. Our task now is to make sure we retain that connection over the long term with the many people new to Twitter.”

“Revenue was $808 million in Q1, up 3% year over year, reflecting a strong start to the quarter that was impacted by widespread economic disruption related to COVID-19 in March,” said Ned Segal, Twitter’s CFO. “We are shifting resources and priorities to increase focus on our revenue products and reduce expense growth, ensuring our resources are allocated against our most important work. Revenue product has been elevated to our top company priority, as the current environment validates and creates even more urgency around delivering more direct response ad formats.”

First Quarter 2020 Operational and Financial Highlights 

  • Q1 revenue totaled $808(1) million, an increase of 3% year-over-year.
  • Q1 costs and expenses totaled $815 million, an increase of 18% year-over-year. This resulted in an operating loss of $7 million and -1% operating margin, compared to operating income of $94 million or 12% in the same period of the previous year.
  • Q1 net loss was $8 million, representing a net margin of -1% and diluted EPS of ($0.01). This compares to net income of $191 million, a net margin of 24% and diluted EPS of $0.25 in the same period of the previous year. Excluding a $124 million tax benefit related to the establishment of a deferred tax asset from an intra-entity transfer of an intangible asset, adjusted net income was $66(2) million, with adjusted net margin of 8% and adjusted diluted EPS of $0.09 in the same period last year.
  • Average monetizable daily active users (mDAU) were 166 million for Q1, compared to 134(3) million in the same period of the previous year and compared to 152 million in the previous quarter.

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(1) Please note that the sum of advertising revenue and data licensing and other revenue does not add up to total revenue in Q1'20 due to rounding. The sum of US revenue and international revenue does not add up to total revenue in Q1'20, also due to rounding.

(2) Please note that Q1'19 net income less our Q1'19 tax benefit related to the establishment of a deferred tax asset from an intra-entity transfer of an intangible asset does not equal adjusted net income due to rounding.

(3) Please note that the sum of US mDAU and International mDAU does not add up to total mDAU in Q1'19 due to rounding.

Outlook 

Given the unprecedented uncertainty and rapidly shifting market conditions of the current business environment, we are not providing quarterly revenue or operating income guidance for Q2. Although we are also not updating our previously withdrawn full-year outlook for expense and headcount growth, capital expenditures, or stock-based compensation at this time, please note the following:

  • Capital expenditures: While we remain committed to building out a new data center, recent developments may impact capex spend in full-year 2020. Current IT supply chain constraints are likely to affect timing of the buildout and elevated near-term capacity needs are driving increased spend on our existing infrastructure.
  • SBC: Stock-based compensation expense is closely tied to headcount, timing of grants, and vesting. We have diminished visibility for full-year 2020 expenses with reductions in our hiring ramp underway, but we do expect SBC to grow sequentially in Q2 by 25% or more.

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