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Twitter Misses

July 22, 2022

Twitter reported financial results for its second quarter 2022. The firm lost 8 cents per share with earnings of 14 cents expected. On the top line, revenue was $1.18 billion with $1.32 billion sought be investors. Monetizable Daily Active Users (mDAUs) came in at 237.8 million with 238.08 million expected.

Twitter sad about the Elon Musk Transaction, "As announced on April 25, 2022, we entered into a merger agreement, pursuant to which Twitter agreed to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash. Upon completion of the transaction, Twitter will become a privately held company.

On July 8, 2022, representatives of Mr. Musk delivered a notice purporting to terminate the merger agreement. Twitter believes that Mr. Musk's purported termination is invalid and wrongful, and the merger agreement remains in effect. On July 12, 2022, Twitter commenced litigation against Mr. Musk and certain of his affiliates to cause them to specifically perform their obligations under the merger agreement and consummate the closing in accordance with the terms of the merger agreement. On July 19, 2022, Twitter's request for an expedited trial was granted, and the trial is being scheduled for October 2022.

Adoption of the merger agreement by our stockholders is the only remaining approval or regulatory condition to completing the merger under the merger agreement. The exact timing of completion of the merger, if at all, cannot be predicted because the merger is subject to ongoing litigation, adoption of the merger agreement by our stockholders and the satisfaction of the remaining closing conditions."

  • Q2 average monetizable daily active usage (mDAU) was 237.8 million, up 16.6% compared to Q2 of the prior year. The increase was driven by ongoing product improvements and global conversation around current events.
    • Average US mDAU was 41.5 million for Q2, up 14.7% compared to Q2 of the prior year.
    • Average international mDAU was 196.3 million for Q2, up 17.0% compared to Q2 of the prior year.

       
  • Q2 revenue totaled $1.18 billion, a decrease of 1% year-over-year, or an increase of 2% on a constant currency basis, reflecting advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk. When excluding MoPub and MoPub Acquire, year-over-year growth was 3%.1
    • Advertising revenue totaled $1.08 billion, an increase of 2%, or 6% on a constant currency basis. 
    • Subscription and other revenue totaled $101 million, a decrease of 27% year-over-year, or an increase of 7% year-over-year when excluding MoPub from the year ago period.1

       
  • Costs and expenses totaled $1.52 billion, an increase of 31% year-over-year. 
    • Costs related to the pending acquisition of Twitter were approximately $33 million in Q2. 
    • Severance-related costs were approximately $19 million in Q2.

       
  • Operating loss was $344 million, representing a -29% operating margin, compared to operating income of $30 million or 3% operating margin in the same period last year.

     
  • Net loss was $270 million, representing a net margin of -23% and diluted EPS of -$0.35. This compares to net income of $66 million, a net margin of 6% and diluted EPS of $0.08 in the same period last year. 

     
  • Net cash provided by operating activities in the quarter was $30 million, compared to $382 million in the same period last year. Capital expenditures totaled $154 million, compared to $276 million in the same period last year.

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