Twitter's user growth soars amid coronavirus, but uncertainty remains

Twitter saw a big bump in daily users during the first quarter as people turned to the site for real-time information about the coronavirus outbreak. Even so, uncertainty about the economy is casting a shadow over the company.

For the first quarter, Twitter counted 166 million daily active users who see ads, a 24% uptick compared with 134 million in the same period last year, the company said Thursday.

"For the first time in history, the whole world is focused on learning how to solve one global problem," Twitter CEO Jack Dorsey said on a conference call with Wall Street analysts on Thursday morning. "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."

Twitter raked in $808 million in revenue during the quarter, up 3% year over year, and well above the $775.96 million that analysts surveyed by Thomson Reuters estimated. Revenue from advertising makes up the bulk of that; it came it at $682 million, up slightly from a year earlier.

But financial figures were taking a grim turn toward the end of the quarter as Twitter started to feel the economic disruptions of the coronavirus pandemic. Twitter CFO Ned Segal said on the conference call that the company saw a significant decrease in global ad expenditures. From March 11 to 31, Twitter's ad revenue declined approximately 27% year over year, he said.

For the quarter as a whole, Twitter posted a loss of 1 cent per share, beating the loss of 2 cents per share forecast by Wall Street analysts. That compares with the positive 25 cents per share reported a year earlier.

In early trading Thursday, Twitter shares were down roughly 4% to around $29.90.

Twitter had dialed down expectations in March when it withdrew its first-quarter guidance because of the coronavirus outbreak, which has slowed economies and prompted lockdowns around the world. At the time, the company indicated that first-quarter revenue would be down year over year.

Also in the first quarter, Dorsey faced a threat to his leadership. Paul Singer, the billionaire founder of the activist hedge fund Elliott Management, wanted to oust Dorsey from the company. The fund reached an agreement with Twitter that kept Dorsey in charge of the social network.

Looking ahead, Segal said that work on a rebuild of the company's ad server system that began in 2019 should be completed by the end of the second quarter. That is designed to help Twitter be more responsive to advertisers' needs.

The company said it remains committed to building a new data center, but that the timing could be affected by IT supply chain constraints and by its spending on existing facilities to address higher demand for its service.

As for attracting more people to Twitter, Dorsey emphasized the company's efforts on making conversations more relevant and accessible, pointing to its work on interests, topics and lists. "To me, this is the biggest unlock for what makes someone really see the potential of Twitter," he said.

Dorsey also called out Twitter's experiment with "fleets" -- tweets that disappear in 24 hours, without the option for likes, retweets or replies, to be something that's more of the moment. They've been available in Brazil, where people have been "telling us how much they like it," he said, adding that Twitter hopes to roll them out as quickly as possible around the world.

Combating coronavirus misinformation

The pandemic has forced Twitter, like other social networks, to focus on misinformation that could harm people's health and safety, such as dangerous claims that drinking bleach will cure the coronavirus. 

Unlike rival Facebook, which partners with third-party fact checkers, Twitter doesn't have as large a team dedicated to moderating the site. Instead, it has relied on automated technology to deal with misinformation. On Wednesday, Facebook reported that its first-quarter revenue and user numbers beat Wall Street expectations.

In March, Twitter said it would require users to pull down tweets that contradict the recommendations of local and global health authorities or encourage the use of ineffective or harmful treatments. That includes tweets that state "social distancing is not effective" and "if you can hold your breath for 10 seconds, you do not have coronavirus," Twitter said. 

Twitter has warned that harmful coronavirus misinformation might still slip through the cracks because it's prioritizing information that has the most potential of directly causing harm. The company has left up racist tweets directed at Asians.

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Twitter's rules also apply to politicians. The company pulled down two tweets by Brazil President Jair Bolsonaro that reportedly included videos of the politician questioning social distancing and quarantine measures. The company deleted a tweet by Venezuelan dictator Nicolás Maduro for recommending the use of a "natural brew" as a potential cure for the coronavirus. 

And Twitter removed a tweet from Rudy Giuliani, President Donald Trump's personal attorney, that quoted a conservative activist falsely claiming that a drug called hydroxychloroquine has been found "100% effective" in treating COVID-19. There have been anecdotal reports it could have some benefit, according to the US Department of Health and Human Services, but clinical trials haven't yet shown whether the drug is effective.

Still, Twitter has left up controversial tweets by high-profile figures. CEO Elon Musk , for example, tweeted that "kids are essentially immune" from COVID-19. And Trump called for the "liberation" of three states in which people protested coronavirus lockdowns, a message Twitter said it allowed because the remarks were vague.

At the start of April, Twitter said it had removed more than 1,100 misleading and potentially harmful tweets since March 18 when it released new guidance about what's considered harmful on the site.

As for what lies ahead in terms of the economy and how it affects Twitter, Segal cautioned on Thursday's call that uncertainty abounds.

"It's hard right now to really, in such a dynamic environment, assess exactly how things will play out over the rest of the year," he said.