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Twitter withdraws revenue guidance for Q1 due to COVID-19, but daily users up 8% QoQ

Twitter

Twitter withdrew its revenue and operating income guidance for the first quarter (January–March) of 2020 due to the impact of COVID-19 on global economy and its “effect on advertiser demand”. However, its total monetisable daily average users (mDAU) reached 164 million in Q1, up 23% from Q1FY19 and up 8% from Q4FY19. This comes at the heels of Twitter’s most successful quarter where it crossed $1 billion in quarterly revenue for the first time.

Operating loss expected: The company expects the Q1 revenue to be “down slightly” on a YoY basis and expects to incur an operating loss as it the reduced expenses during this time will not offset loss in revenue. In its letter to shareholders for last quarter, it had expected total revenue between $825 million and $885 million in Q1FY20 and an operating income between $0 million and $30 million.

Other forecasts withdrawn for the full year: Earlier, Twitter had said that it expected to increase its headcount by 20% or more, and a 20% growth in its total costs and expenses. But now the company has withdrawn its outlook for expenses, headcount, stock-based compensation, and capital expenditures for the full year.

What happens to the new data centre? In its letter to shareholders for Q4FY2019, Twitter had said that it would build a new data centre in 2020 “to add capacity to support audience and revenue growth”. We have reached out to Twitter to know what will happen to that.

Social media platforms rely on automated content takedowns during the pandemic: Twitter, Facebook and YouTube are now primarily relying on automated content takedowns as contracted workers who moderate content have been sent home because of the COVID-19 pandemic. Twitter has increased its “use of machine learning and automation”, but clarified that it would not “permanently suspend any accounts based solely on our automated enforcement systems”. YouTube announced that it would “temporarily” rely on automated content takedowns which will happen without human review, but strikes usually won’t be issued in these cases (YouTube follows a three-strike system).

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