Reports 24% Year-over-Year Growth in Monetizable Daily Active Usage (mDAU) and Total Revenue of $808 Million
SAN FRANCISCO, April 30, 2020 — Twitter, Inc. (NYSE: TWTR) today announced financial results for its first quarter 2020.
“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.
- Advertising revenue totaled $682 million, up approximately $3 million year-over-year.
- Total ad engagements increased 25% year-over-year.
- Cost per engagement (CPE) decreased 19% year-over-year.
- Data licensing and other revenue totaled $125 million, an increase of 17% year-over-year.
- US revenue totaled $468 million, an increase of 8% year-over-year.
- International revenue totaled $339 million, a decrease of 4% year-over-year.
- Advertising revenue totaled $682 million, up approximately $3 million 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.
- Average US mDAU were 33 million for Q1, compared to 28 million in the same period of the previous year and compared to 31 million in the previous quarter.
- Average international mDAU were 133 million for Q1, compared to 105 million in the same period of the previous year and compared to 121 million in the previous quarter.
(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.
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.
For more information regarding the non-GAAP financial measures discussed in this press release, please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.
First Quarter 2020 Webcast and Conference Call Details
Twitter will host a conference call today, Thursday, April 30, 2020, at 5am Pacific Time (8am Eastern Time) to discuss financial results for the first quarter 2020. The company will be following the conversation about the earnings announcement on Twitter. To have your questions considered during the Q&A, Tweet your question to @TwitterIR using $TWTR. To listen to a live audio webcast, please visit the company’s Investor Relations page at investor.twitterinc.com. Twitter has used, and intends to continue to use, its Investor Relations website and the Twitter accounts of @jack, @nedsegal, @Twitter, and @TwitterIR as means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD.
Second Quarter Earnings Release Details
Twitter expects to release financial results for the second quarter of 2020 on July 23, 2020, before the market opens at approximately 4am Pacific Time (7am Eastern Time). On the same day, Twitter will host a conference call to discuss those financial results at 5am Pacific Time (8am Eastern Time).
About Twitter, Inc. (NYSE: TWTR)
Twitter is what’s happening in the world and what people are talking about right now. From breaking news and entertainment to sports, politics, and everyday interests, see every side of the story. Join the open conversation. Watch live-streaming events. Available in more than 40 languages around the world, the service can be accessed via twitter.com, an array of mobile devices, and SMS. For more information, please visit about.twitter.com, follow @Twitter, and download both the Twitter and Periscope apps at twitter.com/download and periscope.tv.
A Note About Metrics
Twitter defines monetizable daily active usage or users (mDAU) as people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com or Twitter applications that are able to show ads. Average mDAU for a period represents the number of mDAU on each day of such period divided by the number of days for such period. Changes in mDAU are a measure of changes in the size of our daily logged in or otherwise authenticated active total accounts. To calculate the year-over-year change in mDAU, we subtract the average mDAU for the three months ended in the previous year from the average mDAU for the same three months ended in the current year and divide the result by the average mDAU for the three months ended in the previous year. Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology.
The numbers of mDAU presented in our earnings materials are based on internal company data. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring usage and engagement across our large number of total accounts around the world. Furthermore, our metrics may be impacted by our information quality efforts, which are our overall efforts to reduce malicious activity on the service, inclusive of spam, malicious automation, and fake accounts. For example, there are a number of false or spam accounts in existence on our platform. We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2020 represented fewer than 5% of our mDAU during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated. We are continually seeking to improve our ability to estimate the total number of spam accounts and eliminate them from the calculation of our mDAU, and have made improvements in our spam detection capabilities that have resulted in the suspension of a large number of spam, malicious automation, and fake accounts. We intend to continue to make such improvements. After we determine an account is spam, malicious automation, or fake, we stop counting it in our mDAU, or other related metrics. We also treat multiple accounts held by a single person or organization as multiple mDAU because we permit people and organizations to have more than one account. Additionally, some accounts used by organizations are used by many people within the organization. As such, the calculations of our mDAU may not accurately reflect the actual number of people or organizations using our platform.
In addition, geographic location data collected for purposes of reporting the geographic location of our mDAU is based on the IP address or phone number associated with the account when an account is initially registered on Twitter. The IP address or phone number may not always accurately reflect a person’s actual location at the time they engaged with our platform. For example, someone accessing Twitter from the location of the proxy server that the person connects to rather than from the person’s actual location.