Twitter, in possibly last quarterly report, sees user growth
By KELVIN CHAN and BARBARA ORTUTAY
AP Business Writer
LONDON (AP) — Twitter’s quarterly profit, revenue and the number of daily users on its platform are rising but its quarterly report, released days after agreeing to be sold to billionaire Elon Musk, offered scant details about what it expects on the financial front for the rest of the year.
The social media company on Thursday reported net income of $513 million, or 61 cents a share, but that includes a big one-time gain from the sale of its MoPub business, clouding comparisons with the year-ago period.
Revenue, most of it from ads, rose 16% to $1.2 billion in the three months to March compared with the same period last year, though the company said the figure reflected “headwinds associated with the war in Ukraine,” without elaborating.
Twitter reported an average of 229 million daily active users in the quarter, which was about 14 million more than a revised 214.7 million daily users in the previous quarter.
The San Francisco company canceled a conference call with executives and industry analysts that usually accompanies its results, so there will be little further insight into the company’s current financial condition.
“Given the pending acquisition of Twitter by Elon Musk, we will not be providing any forward looking guidance, and are withdrawing all previously provided goals and outlook,” the company said.
Musk, who’s paying $54.20 for each outstanding share of Twitter, did not speak publicly on the quarterly report, perhaps among its last as a publicly traded entity.
Musk’s $44 billion deal to buy Twitter was announced earlier this week and is expected to close sometime this year. But before the deal is completed, shareholders will have to weigh in, as well as regulators in the U.S. and in countries where Twitter does business. So far though, few hurdles are expected, despite objections from some of Twitter’s own employees, along with users who worry about Musk’s stance on free speech and what it might mean for harassment and hate speech on the platform.
Angelo Zino, tech analyst at CFRA, said the results, combined with a slew of challenges facing the digital ad industry, should solidify the board’s decision to approve Musk’s offer.
“We see little reason to believe Twitter could extract greater shareholder value remaining public,” he said in a research note.
Still, Twitter shares have yet to reach the buyout price and on Thursday, the company’s stock rose slightly to $49.11.
The gap between the deal price and current stock price seems to indicate that some investors remain uncertain about when and whether the deal will be completed, said Harry Kraemer, a former CEO and chairman of Baxter International who is now a professor at Northwestern University’s Kellogg School of Management.
One factor in the uncertainty is how unusual it is for an individual to buy a multibillion-dollar company.
In the case of a publicly-traded company acquiring another, investors can examine the buyer’s financial disclosures and see whether they have the cash to fund the deal. The buyer can also issue shares to raise funds, as needed.
“But in this case, Tesla is not buying the company, Elon Musk is,” Kraemer said. “Elon Musk is an individual. You can’t look at a balance sheet and see where the cash is coming from.”
Another factor is Musk’s propensity to change his mind, fueling fears he could back out of the deal, even if he has to pay a $1 billion break-up fee.
Musk, who also runs the electric car company Tesla, as well as SpaceX and other ventures, says he plans to take Twitter private. If he does, the company will no longer be beholden to shareholders or publicly report its financial results, which have been mixed at best since the company went public in 2013.
Twitter has struggled to consistently post profits as a public company while generating lackluster revenue growth compared to the two dominant forces in digital advertising, Google and Facebook.
On one hand, going private could give Twitter more room to experiment while focusing less on short-term profit and its stock price. On the other hand, even the world’s richest man is likely to want the company to make money.
“I think there is nothing better for Twitter than Elon Musk buying it and ideally replacing the board, and also doubling down on investments into products and new revenue-generating sources,” John Meyer, a technology entrepreneur and investor, told The Associated Press earlier this week.
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Barbara Ortutay reported from Oakland, California.
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