Twitter today announced that its ads sales slightly rebounded in Asia after a plunge due to the coronavirus outbreak but had worked out on tools that will attract advertisers which makes the company the latest to report a lighter blow from the pandemic as a tech company.
The shares of the social media company jumped 11 person in premarket trading. Twitter further announced a greater Q1 revenue and a smaller loss than financial analyst had expected and the daily users who view ads grew 24% to 166 million about 2 million above estimates because more people flicked to the platform for information and updates over the pandemic.
But with this, Twitter did not provide any information about sales for the current quarter as well as not disclosing whether its US ad sales bounced back as well.
It did warn of smaller increases in non-advertising revenue. Making development of ad tools its No. 1 priority also could complicate efforts to maintain user growth late into the year. But the first-quarter results and signs of recovery mirrored those seen over the last week from Twitter’s main competitors for advertisers, including Facebook, Google parent Alphabet Inc and Snapchat.
The shares of the aforementioned companies including Twitter have surged in last week which erased most of all their declines for the year so far.
Travel bans were placed on almost every nations of the world as well as disrupting both the retail and entertainment industry at large which had caused a sudden budget cuts for many advertisers and this generated concerns about the prospects of ad sales for tech companies that relies on this for survival.
Twitter is able to generate 84% of its revenue from its services and partner applications and those sales were 27% lower in the last three weeks of the month of March compared to that of the previous year back in 2019. But sales bounced back in Asia during late March as lockdowns lifted there, Twitter said, without providing specific figures.
Twitter also plans to release tools later on this year which is meant to attract businesses from mobile games and other app makers. These companies are trying to gain market share among consumers who are currently being stuck at home.
Google on the other announced on Wednesday it expected revenue from direct response ads sold by its YouTube unit to return to normal faster than from other ad types.
By the Q1 of the year, Twitter had made US$808 million which is about 3% growth compared to the previous year which is above the estimate of US$776 million among analysts tracked by Refinitiv. The company then rescinded on March 23 its first-quarter revenue outlook of between US$825 million and US$885 million due to the situations of the pandemic. The company said that the sales growth from licensing users’ posts to researchers and marketers which was about 17% in the first quarter and that is expected to sit at the moderate level through the year.
Twitter lost $8 million in the first quarter, or a penny per share, better than the average estimate of two cents per share.
The opening of a new data center to host tweets and user information could be pushed back because the virus made it difficult to acquire materials and required spending on improving some existing infrastructure, Twitter said. But the company is aiming to curb off the losses by slashing its own budgets which includes limiting its hiring to product development, research and user support. Expense growth in 2020 is likely to be in “the low teens,” versus earlier plans to spend 20% more than last year, Twitter said.
Twitter however continues to maintain its focus as one of the leading social media platform globally with the CEO of the company, Jack Dorsey also being the CEO of another finance company, Square, Inc. which however leaves Elliot concerned because “He’s taking on too much”