Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) – Twitter Expects Q1 Operating Loss As Pandemic Hurts Ad Sales
Twitter Inc. (NYSE: TWTR) on Monday withdrew its earnings guidance for the first quarter of the financial year 2020 as its business is significantly impacted by the novel coronavirus (COVID-19) outbreak.
Twitter Withdraws Guidance
The social media company said it expects a lower revenue year-on-year and that it is likely to incur GAAP operating losses for the quarter.
Twitter had given a guidance of a Q1 revenue between $825 million to $885 million, and an operating income between zero and $30 million, when it reported its earnings for the fourth quarter last year.
The Jack Dorsey-led company also withdrew its outlook for expenses, stock-based compensation, headcount, and capital expenditures for the full financial year.
Twitter is expected to report the Q1 earnings on April 30.
Seeing Decreased Ad Sales
The downgrade in earnings expectations comes due to reduced advertiser demand, even as the number of total monetizable daily active users has increased by 23% quarter-till-date, according to Twitter.
Chief financial officer Ned Segal noted that the company had a “strong start” to the year until the COVID-19 outbreak spread globally.
“The COVID-19 impact began in Asia, and as it unfolded into a global pandemic, it has impacted Twitter’s advertising revenue globally more significantly in the last few weeks,” Segal said.
COVID-19 has infected 378,601 people globally, and 16,505 people have been reported dead from the virus by press time, according to data from Johns Hopkins University.
As the virus spread fast worldwide, including in the United States, governments have imposed widespread lockdowns, asking all non-essential businesses in the worst-affected areas to remain shut until the pandemic is controlled.
Other companies, including Apple Inc. (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT) have similarly downgraded earnings expectations due to both reduced demands for their products and production hit during the pandemic.
Twitter’s shares closed 3.05% higher at $24.69 on Monday. The shares traded further 0.85% higher at $24.90 in the after-hours session.
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