(Bloomberg) -- Twitter Inc. slashed its revenue forecast and warned of a loss for the current quarter, citing a decline in advertisers’ spending on its social network during the coronavirus outbreak.
First-quarter sales will be down “slightly” year-over-year, compared with analysts’ average estimate for growth of 11%, according to a Bloomberg survey. San Francisco-based Twitter said it expects to incur an operating loss in the period, according to a statement on Monday, and withdrew its annual projections for headcount and capital spending.
“The Covid-19 impact began in Asia, and as it unfolded into a global pandemic, it has impacted Twitter’s advertising revenue globally more significantly in the last few weeks,” Chief Financial Officer Ned Segal said in the statement.
Before this quarter, the company had posted nine straight periods of profitability under generally accepted accounting principles. Even as the pandemic led Twitter to scrap prior financial projections, it has had a positive impact on user growth, which has picked up as more people flock to the service for breaking news updates. So far in the first quarter, 164 million users on average have visited Twitter every day, the company said, up by 12 million from the prior quarter and a 23% jump from a year earlier.
“Twitter’s purpose is to serve the public conversation, and in these trying times our work has never been more critical,” Chief Executive Officer Jack Dorsey said in the statement. “We’re seeing a meaningful increase in people using Twitter, and our teams are demonstrating incredible resilience adapting to this unprecedented environment.” Twitter advised all of its global employees to start working from home earlier this month.
It’s unclear how the downbeat financial outlook will impact Dorsey’s job. Earlier this month, the company settled with a group of activist investors who wanted to push co-founder Dorsey out, essentially putting him on a performance improvement plan to increase usage and jump-start Twitter’s sales growth.
As part of the agreement, Twitter set what it described as “ambitious” goals around user additions and revenue. The company is targeting 20% user growth year-over-year in 2020, and said it aims to “accelerate revenue growth on a year-over-year basis and gain share in the digital advertising market.”
The coronavirus outbreak is already threatening Twitter’s ability to meet those revenue targets. Dorsey has also said he’s reconsidering plans to work as much as half of the year in Africa, a decision driven by the spread of the outbreak, but also because of heightened scrutiny of his role.
Twitter shares, which closed at $24.69 in New York trading, were little changed after the announcement. They’ve declined 23% this year amid a broader rout in the stock market.
(Updates with comment from Dorsey and details about Twitter’s deal with activist investors.)
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