February 22, 2024

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Twitter Active Daily Users Surge 34% To Record 186M In Q2, Revenue Dips, CEO Jack Dorsey Apologizes For Breach

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Twitter reported active daily users surged 34% last quarter to 186 million – a record since the company began reporting the data — even as revenue and earnings dipped from the year before on a challenged advertising climate amid COVID-19 and a wave of protests in May and June.

The stock rallied on the 20 million jump in users, up nearly 7% late morning in a glum market.

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In a letter to investors and a conference call with analyts, Twiter CEO Jack Dorsey apologized for a recent security breach, and he also confirmed the company is experimenting with new ways to generate sales including a subscription service. “We have a really high bar for when we would ask users to pay for Twitter,” Dorsey said, emphasizing that the idea is in “a very early phase.”

Revenue of $683 million was down 19% year over year reflecting what the social media giant called a moderate recovery in advertising demand relative to the last three weeks of March. The company was hit by the general ad downturn and a lack of sports and live events that generate significant sales for Twitter A subscription service and other initiatives reflect Twitter’s ongoing attempt to better monetize its growing user base.

Total costs and expenses grew 5% year over year to $807 million, as Twitter said it continue to balance targeted headcount growth with further reducing lower priority investments, resulting in an operating loss of $124 million.

The numbers come as Twitter and social media become central players in a national conversation about how big platforms police and curate content around politics, race and hate speech. A backlash against Facebook’s policies has resulted in a boycott by some advertisers this month.

Dorsey said Twitter has been “in the forefront” trying to do the right thing. It took the lead in slapping a first-ever warning on a Tweet by President Donald Trump in late May. Over the past few weeks, it removed more than 7,000 accounts linked to QAnon, a cult-like group that spreads conspiracy theories online.

“We were the first to ban political ads, we were the first to enforce our position on Tweets from world leaders, and this week we took down [QAnon] accounts as we found coordinated attacks by those accounts. So we want to make sure that we are showing our commitment,” Dorsey said.

In a letter to shareholders, Dorsey referred to the recent major breach of numerous high-profile accounts belonng to Bill Gates, Barack Obama and others where fake Tweets urged users to send Bitcoin to an account provided promising they would double their money.

Twittter “suffered a very public and disappointing security issue. 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 as they conduct their investigations,” Dorsey said.

“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.”

Twitter has recently finished a big push to rebuild its ad server and start to experiment with new formats. That includes the beta of a Video Carousel Card, an ad format with 2-6 horizontally swipeable images or videos that drive people to an app or website.

“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,” Dorsey said.

Twitter initially unveiled those plans recently via two job listings looking to assemble a team for a subscription-based platform codenamed Gryphon.

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