Twitter on Thursday said its user growth is surging amid weak revenue in what is expected to be one of its final earnings reports as a publicly traded company before billionaire Elon Musk takes the social media firm private.
Twitter’s base of monetizable daily active users – considered the company’s key reporting metric – grew 16% to 229 million during the quarter ending on March 31 – a period that concluded just days before Musk disclosed his 9% stake in the company.
That disclosure proceeded Musk’s effort to buy the company outright with a plan to dial down its content moderation policies.
But Twitter fell short of Wall Street’s expectations for first-quarter revenue, posting $1.2 billion against the $1.23 billion that analysts projected. The company attributed the shortfall in part to “headwinds associated with the war in Ukraine.”
The 16% increase in quarterly revenue marked Twitter’s slowest pace of growth in more than a year, according to Bloomberg.
The social media platform canceled its scheduled conference call with analysts to discuss the results – a decision company officials described as “customary during the pendency of an acquisition.”
Twitter’s board accepted Musk’s $44 billion buyout offer last week in a deal that is expected to be finalized later this year. Each side agreed to pay a $1 billion breakup fee if the deal falls through under certain conditions – such as Musk losing financing for the offer or Twitter’s acceptance of another unsolicited third-party offer.
“The transaction is subject to customary closing conditions and completion of regulatory review and Twitter’s stockholder approval,” Twitter said in a press release. “The transaction, which is expected to close in 2022, has been approved by the board of directors of Twitter.”
Twitter declined to provide guidance about its upcoming financial results and withdrew its preexisting forecasts, citing Musk’s pending acquisition of the company.
Shares were flat in premarket trading following its earnings release. The company’s stock closed at $48.64 on Wednesday, below Musk’s acquisition price of $54.20 per share.
The company also reported diluted earnings per share of 61 cents – though it noted the result was not comparable to the same period one year earlier due to its sale of the mobile ad platform MoPub.
Musk has outlined a series of changes he expects to implement at Twitter once the deal closes – including plans to remove automated bots from the platform, authenticate all users and make Twitter’s algorithm open source to promote transparency.
But the key to Musk’s vision is an unwinding of Twitter’s strict content moderation policies. Musk’s plan has unnerved some current Twitter employees and left-leaning pundits, who fear the billionaire’s emphasis on absolute free speech will lead to more abusive or harmful content.
Musk clarified his stance on Twitter’s policies toward free speech on Tuesday.
“By ‘free speech’, I simply mean that which matches the law. I am against censorship that goes far beyond the law. If people want less free speech, they will ask government to pass laws to that effect. Therefore, going beyond the law is contrary to the will of the people,” Musk said.
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