Twitter Inc. (TWTR - Get Report) shares plunged Friday after the social media group posted solid second quarter earnings and a robust outlook, but noted that changes to its content rules meant fewer people are using the microblogging website.
Twitter said its non-GAAP earnings for the three months ending in June came in at 17 cents a share, a figure that matched the consensus forecast. Total sales rose 24% to $711 million, the company said, topping the Street forecast of $696 million. Ad sales, which comprise the bulk of the group's revenues, were 23% higher from the same period last year at $601 million. The average number of monthly active users fell by 1 million from last year 335 million, a figure fell short of expectations and the company noted that operating expenses would continue to rise over the next two quarters.
"Our second quarter results reflect the work we're doing to ensure more people get value from Twitter every day," said CEO Jack Dorsey. "We want people to feelsafe freely expressing themselves and have launched new tools to address problem behaviors that distort and distract from the public conversation."
"We're also continuing to make it easier for people to find and follow breaking news and events, and have introduced machine learning algorithms that organize the conversation around events,beginning with the World Cup," he added. "These efforts contributed to healthy year-over-year daily active usage growth of 11 percent and demonstrate why we're investing in the long-term health of Twitter."
Twitter shares were marked 15.6% lower in the opening 30 minutes of trading and changing hands at $36.34 each, a move that would still leave the stock with a year-to-date gain of around 50%.
Twitter was caught up in yet another headline-generating controversy only yesterday, when its most famous user, President Donald Trump, accused the micro-blogging website of "shadow banning" Republican lawmakers by limiting the visibility of their views in search results, vowing to "look into this discriminatory and illegal practice at once"".
Dorsey replied post late Tuesday that promised site doesn't "shadow ban based on political viewpoints" and noted that search rankings are more about immediacy than anything else.
Following up on this with a lot more detail. We don't shadow ban, and we certainly don't shadow ban based on political viewpoints. We do rank tweets by default to make Twitter more immediately relevant (which can be flipped off). More on ranking signals: https://t.co/ORjJfyBvhc— jack (@jack) July 27, 2018
Earlier this month Twitter said it removed millions of fake or dormant accounts from its microblogging site, but rejected a Washington Post report that suggested the purge would impact its quarterly user metrics.
"Most accounts we remove are not included in our reported metrics as they have not been active on the platform for 30 days or more, or we catch them at sign up and they are never counted," Twitter CFO Ned Segal said on Twitter last week. "If we removed 70M accounts from our reported metrics, you would hear directly from us."