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Twitter’s user base is growing, but its advertising business is in trouble

Twitter usage has spiked just like it did for other big platforms, as more people are flocking to it to keep up with news updates.

Twitter says it now has 166 million daily active users, a healthy 24 percent increase from the 134 million it was touting a year ago. CEO Jack Dorsey told investors during a conference call that “for the first time in history, the whole world is focused on learning how to solve one global problem. People are turning to Twitter to stay informed, to share solutions and to ask for help and support one another, and we see it in the numbers.”

As for how well the company did financially during the first quarter of 2020, the answer is a little less impressive. Twitter’s total revenue for that period was $808 million, and while that is a three percent increase year-over-year, it’s mostly made up of advertising revenue.

It’s no secret that ad spending took a significant hit starting in March, which has affected Google, Facebook even as the two companies saw a sizeable increase in overall web traffic.

For Twitter, ad revenue dropped around 27 percent year-over-year in the three weeks from March 11 to March 31. On a positive note, the company managed to offset some of that decline by reducing costs. Operating loss for those three months was $7 million, meaning that this was the first unprofitable quarter in the last two years. And while the company didn’t offer guidance for the coming quarters, it explained that it intends to stem losses by slowing hiring, lowering budgets for product development, and licensing users’ posts to researchers and marketers.

Twitter previously promised to work on adding features at an accelerated pace in 2020, including disappearing tweets and emoji reactions for direct messages. Now those plans will likely be delayed as the company says it will focus on improving its ad products to “increase our addressable market, with more access to advertising demand that may be more resilient through an economic downturn.”

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