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 current COVID-19 pandemic, despite seeing strong user growth.
The social network pulled its Q1 guidance on Monday (March 24) 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 (mDAU) reaching approximately 164 million, up 23% from 134 million in Q1 2019 and up 8% from 152 million in Q4 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 the impact has been "more significant" in the last few weeks as the virus has spread into 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 Q1 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 $825 million and $885 million for its first quarter revenue.
Twitter will provide an update on its first quarter 2020 earnings call on April 30.
Twitter CEO 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," he added.
Shares of Twitter fell more than 2% in after hours trading following the announcement.