Twitter misses 2nd quarter earnings expectations
Twitter reported second quarter 2022 financial results that came under expectations, due to market conditions. Q2 revenue totaled $1.18 billion, a decrease of 1% year-over-year, 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.
Advertising revenue totaled $1.08 billion, an increase of 2%, or 6% on a constant currency basis while subscription and other revenue totaled $101 million, a decrease of 27% year-over-year.
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.
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.
Given the pending acquisition of Twitter by an affiliate of Elon Musk, the company will not host an earnings conference call, issue a shareholder letter, or provide financial guidance in conjunction with the second quarter 2022 earnings release.
Elon Musk Transaction
As announced on April 25, 2022, Twitter 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 Musk delivered a notice purporting to terminate the merger agreement. Twitter believes that Musk’s purported termination is invalid and wrongful, and the merger agreement remains in effect, that’s why, on July 12, 2022, Twitter commenced litigation against 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.
In addition, 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 the 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.