Twitter welcomes more users but finds it harder to make money

Twitter today announced its results for the second quarter of 2022, stating that the number of regular users has risen sharply. Over the past three months, the number of monetizable daily active users (mDAU) has increased from 39.6 million to 41.5 million, while global reach has increased from 189.4 million in April to 196.3 million today. Unfortunately, those increases in user numbers didn’t translate into an increase in the company’s bottom line, and revenue was $1.18 billion, down slightly both year-on-year and quarter-on-quarter.

Even worse for a company with so much revenue, costs and expenses for the period totaled $1.52 billion, with additional pain from both the cost of Elon Musk’s purchase of Twitter and the payment of severance payments for all laid-off employees as part of its cost-cutting initiative. All told, the company posted a $270 million net loss, much of which it attributes to both the looming recession and uncertainty surrounding the proposed acquisition.

Back in April, as part of its first-quarter financial release, Twitter disclosed that it had miscounted its user counts in the past. Between 2019 and 2021, the company had counted users with multiple accounts as multiple people, resulting in the counts of up to two million users. While this isn’t a disastrous admission, it served to highlight that Twitter’s slow growth was even slower than people believed. At the time, the company also said it had generated $1.20 billion in revenue, of which $1.11 billion was generated from advertising, while the average monetizable daily user count was 39.6 million in the US and Reached 189.4 million in the rest of the world.

Meanwhile, Twitter had also been targeted as an acquisition vehicle for Elon Musk, and the deal has dominated much of the news cycle since. The Tesla and SpaceX CEO vowed to buy the company at a very high valuation and signed a binding agreement that chose to forego much of the due diligence that such deals often require. Not long after, however, Musk decided — either on his own initiative or influenced by Tesla’s falling stock price — to try to go out of business, claiming that Twitter misrepresented how many automated accounts existed on the platform.

Unfortunately for Musk, contract law is often funny when it comes to letting people walk away from contracts they’ve signed and promising to waive necessary due diligence. Twitter has since sued the character, either forcing him to buy it or paying a sizable sum to have the whole thing go away. The Delaware Court of Chancery denied Musk’s request for a trial in 2023 and accepted Twitter’s request to expedite the matter. As a result, the pair will face off in a five-day courtroom showdown in October.

Twitter has again said that it believes Musk’s “alleged termination is invalid and unlawful” and that the proposed merger agreement “remains in effect.”

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