Twitter Inc. on Friday blamed its ongoing battle to close its $44 billion takeover by Elon Musk and the weakening of the digital advertising market due to a surprise drop in quarterly revenue and a net loss.
The results come as Twitter has sued Musk for abandoning its bid to buy the company, and is now preparing for a legal showdown in a trial that begins in October. The uncertainty of the deal has worried Twitter advertisers and caused chaos within the company.
LOOK: The trial between Twitter and Elon Musk will be held next October
Total second quarter revenue was $1.18 billion, compared to $1.19 billion a year earlier. Analysts had expected $1.32 billion, according to data from Refinitiv IBES.
“Twitter is now in the unenviable position of convincing advertisers that its ad business is strong, regardless of how its court battle with Musk ends, and its second-quarter earnings show the platform has a lot of work to do to do that.”Jasmine said. Enberg, principal analyst at the research firm Insider Intelligence.
Twitter shares opened flat at $38.90 on Friday.
The company’s shares hinge on potential trial results, and its financials aren’t moving the needle for investors, said Dan Ives, an analyst at Wedbush Securities.
Twitter said its net loss was $270 million, or 35 cents a share, compared with a profit of $65.6 million, or 8 cents a share, a year earlier.
His adjusted loss of 8 cents fell short of expectations for an adjusted profit of 14 cents.
Monetizable daily active users, a closely watched metric by investors that measures users who see ads on Twitter, grew 16% to $237.8 million but missed analyst expectations of $238.7 million.
The San Francisco-based company said bot and spam accounts made up less than 5% of users during the quarter, a figure it has repeated since 2013.
Musk has seized on the ratio of bot and spam accounts as his reason for backing out of the deal, accusing Twitter of withholding information about the actual number of such accounts on the service.
Twitter said it would not provide financial guidance, issue a shareholder letter or hold an earnings conference call, citing the “pending acquisition” by Musk.
LOOK: Transgender daughter of Elon Musk changes her name to eliminate her relationship with him
The costs and expenses of the company increased by 31%. Expenses related to the Musk settlement totaled $33 million during the quarter, while severance-related costs were $19 million.
The social media platform rescinded some job postings for new hires in May. Chief Executive Parag Agrawal previously told employees the company needed to cut costs.
Inflation pressures and fears of a recession this year have forced some advertisers to cut their marketing budgets.
On Thursday, Snapchat’s parent company, Snap Inc, posted weak revenue growth and declined to make a forecast, citing “incredibly challenging” conditions as advertisers cut spending.
