Twitter misses Q2 expectations with revenue of $683M, down 19% YoY, but reports 186M mDAUs, up 34% YoY, and ad revenue of $562M, down 23% YoY
- Twitter reported second-quarter earnings Thursday that missed analyst expectations on revenue, but showed strong growth in users.
CNBCLauren Feiner
Context & Ripple Effects
This quarter extends a pattern the related coverage has documented twice before: in Q2 2017Twitter beat on revenue but monthly active users sat flat at 328M, and by Q3 2019 it was missing estimates again even as monetizable DAUs climbed 17%. The through-line is an audience that grows faster than the dollars attached to it.
What changed this time is direction: users are accelerating — 186M mDAUs, up 34% YoY — while revenue moves sharply the other way, down 19%, with advertising down 23%. The spread between those two lines is now the widest in this coverage arc, which makes the monetization question, not the user question, the story.
First-order effects
Advertisers are the immediate lever: at $562M, ad revenue fell 23% YoY against a 34% larger audience, meaning brands paid materially less per user than they did a year earlier.
Twitter's investor case flips from growth to efficiency — after the 18%-plus share drop that followed the Q3 2019 miss, another revenue miss alongside record user growth puts direct pressure on management to explain why more users aren't producing more money.
Second-order effects
A widening gap between audience growth and ad revenue pushes Twitter toward non-advertising revenue lines, since each additional mDAU is now worth less than the last rather than more.
Rivals selling to the same brand budgets face a buyer that has just demonstrated it can pull spend hard and fast — ad platforms' pricing power in future negotiations weakens when one major platform's rates fall 23% in a single year.
Third-order effects
If the pattern holds — audience compounding while per-user ad revenue declines — social platforms get valued less on user counts and more on realized revenue per active device, forcing disclosure and product changes aimed at closing that gap.
Sustained divergence between usage and ad spend would push the ad industry structurally toward performance-based formats and away from the brand advertising that dominates Twitter's mix, reshaping how every platform monetizes its feed.
The trend: Social media economics are decoupling audience scale from advertising yield, making revenue per active user — not raw DAU growth — the metric that determines platform valuations.
This earnings should be enough to change narrative on $TWTR. Strong usage metrics and confirmation of subscription/e-commerce plans. Think stock trends up (and valuation re-rate) w big gaps on new rumors ... loosely similar to what $SPOT went through earlier this year https://twi…
Data licensing and other revenue totaled $121 million, an increase of 6% after a strong first half of renewals from many of our largest Data and Enterprise Solutions (DES) customers. We continue to expect this growth to moderate over the course of 2020. $TWTR
On mDAU: Growth continued to accelerate in Q2 & to be broad-based, with double-digit growth rates in all top 10 markets. We grew US mDAU by 24% and international mDAU by 37%. $TWTR
Avg monetizable DAU grew 34% y/y to 186 million, driven by global conversation around current events & ongoing product improvements. This marks the highest quarterly y/y growth rate we've delivered since reporting mDAU growth. We have 20M more avg mDAUs in Q2'20 vs. Q1'20. $TWTR …
Total costs & expenses grew 5% y/y to $807 million, as we continue to balance targeted headcount growth w/ further reducing lower priority investments. We incurred an operating loss of $124 million. $TWTR
By region, Q2 US ad revenue was $283 million, a decrease of 25%, reflecting brand spend pauses related to the pandemic and US civil unrest. Int'l ad rev was $279 million, down 20%. Int'l markets typically have a higher mix of direct response, which overall performed better. $TWTR
On revenue: Total revenue was $683 million in Q2, down 19% due to a decline in advertising revenue across most markets. US revenue was $365 million, a decrease of 20%. Total int'l revenue was $319 million, a decrease of 18%. $TWTR
We incurred an operating loss of $124 million, or -18% of total revenue, compared to operating income of $76 million or 9% for the same period in 2019. The decrease in year-over-year operating income is primarily due to lower revenue and higher personnel-related costs. $TWTR
Twitter grew mDAU by 34% and revenue is down 23% year over year. The revenue decline is surprising given Snap saw revenue grow 17% year over year for the same quarter. Must be an advertiser mix challenge (e.g. no summer movies advertising on Twitter ). https://www.cnbc.com/...