UPDATED 20:18 EDT / MARCH 23 2020

APPS

Coronavirus pandemic prompts Twitter to withdraw earnings guidance

Twitter Inc. has become the latest company to withdraw its earnings guidance in light of the unprecedented global COVID-19 pandemic.

The company said today that it was withdrawing its revenue and operating income guidance for the first quarter as well as its outlook for expenses, stock-based compensation, headcount and capital expenditures for the full year.

While noting that it’s currently difficult to ascertain the short-term financial impact of the pandemic, Twitter said it expects revenue to be slightly down in the first quarter from a year ago. The company added that it expected to incur a net operating loss as reduced expenses during the pandemic are unlikely to offset its reduced level of revenue.

Twitter had previously forecast revenue of between $825 million and $885 million in the first quarter and operating income of between zero and $30 million.

People trapped at home in lockdowns and similar coronavirus measures is turning out well for Twitter’s user numbers, however. The microblogging service said its quarter-to-date average total monetizable daily active users, its preferred metric, is currently sitting at 164 million, up 23% from the first quarter of 2019 and up 8% in the last quarter.

Twitter’s shares rose more than 3% today, while the Nasdaq index fell a little over a quarter percentage point and the Dow Jones Industrial Average fell 3%.

“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 a statement. “We’re seeing a meaningful increase in people using Twitter and our teams are demonstrating incredible resilience adapting to this unprecedented environment.”

Twitter is far from alone in being forced to revise or withdraw its guidance. Apple Inc. was among the first companies to warn of the financial impact on its bottom line Jan. 29, following up again Feb. 17. Microsoft Corp. warned Feb. 26 that its third-quarter results would come in lower than expected because of supply chain issues.

With stores being forced to close because of the coronavirus pandemic, the advertising market on which Twitter relies has started to decline. Neil Begley, senior vice president of Moody’s Investors Service, told the Los Angeles Times March 11 that “potential broader coronavirus contagion in the U.S. will have a short-term negative effect on U.S. advertising, stemming from a swift and deep economic pullback.” But he added that he believed that the duration of the sector’s contraction may be short-lived. That was just before the widespread shutdowns now being seen across the U.S.

EMarketer takes a rosier long-term outlook, saying March 19 that it still expected worldwide ad spending to grow this year but at a slower rate than previously predicted.

Photo: Unsplash

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