Twitter users rise but revenue falls short amid Musk takeover plans

29 Apr 2022

Image: © MichaelVi/Stock.adobe.com

Analysts speculated that Twitter may have wanted to finalise the acquisition deal with Elon Musk before publishing its mixed first-quarter report.

In what could be its last earnings report as a public company, pending a $44bn deal with Elon Musk, Twitter shared mixed first-quarter results.

In the first three months of 2022, Twitter saw revenue rise 16pc to $1.2bn. Most of this ($1.11bn) came from advertising, representing a 23pc increase compared to the same period last year.

Future Human

The revenue result is on the lower end of the prediction Twitter made earlier this year. It also fell short of analyst expectations of $1.23bn according to Refinitiv. Twitter’s earnings per share for the quarter were $0.04, slightly higher than analyst predictions.

Twitter was more successful in terms of user growth, as monetisable daily active users (mDAU) reached 229m in the first quarter, a 15.9pc increase on the same period last year.

However, the social media company also issued a correction on the previous two years of mDAU numbers. Twitter said that it launched a feature in March 2019 that allowed people to link multiple separate accounts together. This led to Twitter overcounting user numbers from the first quarter of 2019 to the fourth quarter of 2021.

The corrected mDAU figures for this period are between 1.4m to 1.9m less in each quarter than Twitter previously reported.

In light of the pending takeover deal with Musk, which was accepted earlier this week, Twitter did not host an earnings call or provide any outlook on the quarters ahead. The social media company said it expects the acquisition deal to close this year.

Analysts had speculated that Twitter may have wanted to finalise the deal with Musk before publishing its mixed first-quarter results, CNBC reported earlier this week.

Twitter and Musk

The pending deal follows nearly a month of back-and-forth between the world’s richest man and the social media platform.

At the beginning of April, it was revealed that Musk had bought a significant stake in Twitter and that he would be joining its board. Days later, the board plan fell through and the Tesla boss then offered to take full control of the company with a “best and final” offer.

On Monday (25 April), the two sides reached the $44bn takeover agreement.

Reports are now swirling over what Musk may plan to do with the company.

He told banks that he could rein in executive and board pay at Twitter in a bid to slash costs and would find new ways to monetise tweets, according to Reuters sources. Bloomberg also reports that Musk’s pitch for financing included potential job cuts at Twitter.

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Leigh Mc Gowran is a journalist with Silicon Republic

editorial@siliconrepublic.com