Twitter's Q2 sales mixed amid security issues; ad server rebuild complete
Twitter reported second quarter sales were a mixed bag as the company said it is addressing recent security issues and will be "transparent in sharing our learnings and remediations."
The company reported a second quarter adjusted loss of 16 cents a share on revenue of $683.44 million, down 19% from a year ago. Twitter reported a net loss of $1.23 billion, or $1.56 a share.
Wall Street was expecting break even results on a per share basis in the second quarter with sales of $701.6 million.
Twitter earnings land as the company wrestles with an attack of 130 high profile accounts. Twitter said that it believes 36 of the 130 targeted accounts had DM inboxes accessed.
- Twitter says hackers accessed DMs for 36 users in last week's hack
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CEO Jack Dorsey said about the security incident last week:
We moved quickly to address what happened and have taken additional steps to improve resiliency against targeted social engineering attempts, implemented numerous safeguards to improve the security of our internal systems, and are working with law enforcement. We understand our responsibilities and are committed to earning the trust of all of our stakeholders with our every action, including how we address this security issue. We will continue to be transparent in sharing our learnings and remediations.
On the ad front, Twitter said its ad server rebuild is complete and it is progressing on its performance ads roadmap. Twitter also saw its monetizable daily active usage hit 186 million in the quarter, up 34% from a year ago.
Twitter has been focusing on new ad formats such as its Video Carousel Card as well as new direct response offerings.
In a shareholder letter, Twitter noted:
During Q2, we completed our ad server rebuild, which re-architects and modernizes our ad server to support faster product development, increase stability, and help us scale our advertising business. We are already seeing significant benefits, including an overall increase in development velocity and more predictable delivery of feature improvements. The ad server rebuild improves the state of our systems and reinforces the foundation of our ad business.
However, Twitter's ad revenue fell 23% in the second quarter to $562 million. The company cited economic disruption due to the COVID-19 pandemic. Twitter said it saw gradual improvement in ad revenue from the last three weeks in March with the exception being late May due to civil unrest in the US. June ad revenue declined 15% but is improving.
Twitter said its data licensing and other revenue was $121 million, up 6% from a year ago.
In addition, the company said it may develop a subscription effort.
We are also in the early stages of exploring additional potential revenue product opportunities to complement our advertising business. These may include subscriptions and other approaches, and although our exploration is very early and we do not expect any revenue attributable to these opportunities in 2020, you may see tests or hear us talk more about them as our work progresses.