Twitter experiences net loss despite record increase of daily users

Twitter has experienced a net loss in the first quarter of this year. Despite a record growth increase in daily twitter users, a 24% increase to 166 million in the first quarter, the company experienced a net loss of $8.4 million. While the growth in users can perhaps be attributed to Covid-19 lockdowns, the pandemic may have forced the company to take on additional expenses.

Traffic reached an all-time high in the first quarter, while advertising sales have risen by about 3% from last year. Despite this, advertising has still taken a plunge. The ad-based platform’s losses were in the same realm of those of Alphabet and Facebook. Advertising accounts for the bulk of Twitter’s sales, with data licensing primarily accounting for the rest.

Twitter’s growth can then be attributed partly to the increase in corona-related conversation as well as new and improved products. It notes that the company is shifting resources to focus more on revenue products such as performance ads beginning with mobile application promotion ads. This includes the server rebuild that implements microservices architectures that enable direct response advertising and make it easier to make changes on the go.

Twitter’s CEO Jack Dorsey expressed that the platform’s role is more vital than ever in current times. By helping the world stay informed, and keeping people connected in times of social distancing, Twitter’s growth is projected to only get better in the coming quarter, as their shares increase by more than 5% in pre-market trading.

The pandemic in 2020 has taken a toll on Twitter’s growth but this did not come as a surprise, however the quarter revenue exceeded the consensus predicted by Wall Street analysts polled by Bloomberg. In short, Twitter growth hit the mark on sales, but missed in earnings. No layoffs have been announced, but the company has put a halt on recruitment, in spite of their ambitious plans, pre-pandemic.