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Twitter has reported a surge in first-quarter net income to $513.3 million, compared to $68m in the same period in 2021, days after it agreed to be sold to billionaire Elon Musk for $44 billion.
The company’s March quarter net income also included a pre-tax gain of $970m from the sale of MoPub — a platform for promoting and monetising apps — for $1.05bn and income taxes related to the gain of $331m, Twitter said on Thursday.
On January 1, Twitter closed the sale of its MoPub business to AppLovin. The sale of MoPub enables it to concentrate more on performance-based advertising, SMB offerings and other commerce initiatives, Twitter said.
The San Francisco-based microblogging site’s total revenue surged almost 16 per cent year-on-year to about $1.2bn in the three months to March 31, missing analysts' estimate of $1.23bn as compiled by Refinitiv. Twitter said its revenue reflected “headwinds associated with the war in Ukraine” but did not divulge further details.
Following the earnings announcement, Twitter was slightly up at $48.71 a share at 7.40pm UAE time.
Advertising sales contributed more than 92 per cent to the company’s total revenue, surging 23 per cent on an annual basis to more than $1.1bn in the quarter.
Meanwhile, revenue from subscriptions and other streams dropped 31 per cent yearly to $94m.
The company also reported a 16 per cent increase in daily active users to 229 million. The US users were up 6.4 per cent yearly to 39.6 million at the end of the first quarter, while international users surged 18.1 per cent to 189.4 million.
Twitter spent more than $371.6m on research and development, nearly 30.9 per cent of its total sales in the first quarter. It was 48 per cent more than the R&D expenditure of the same period in 2021.
The company’s first-quarter capital expenditures totalled $161m, an annual drop of more than 10 per cent.
Its total costs and expenses rose almost 35 per cent to more than $1.3bn in the quarter. This resulted in an operating loss of $128m, compared to an operating income of $52m in the same period last year.
Net cash provided by operating activities in the three-month period stood at $126m, compared to $390m in the same period last year.
The company’s stock-based compensation grew 60 per cent year-on-year to $177m and was nearly 15 per cent of the total revenue.
Earlier this week, Twitter entered a definitive agreement to be acquired by an entity wholly-owned by Mr Musk, 50, founder and chief executive of Tesla and rocket company SpaceX, for $54.20 per share in cash. Upon completion of the transaction, Twitter will become a privately held company.
The transaction, which is subject to customary closing conditions, regulatory review and Twitter’s stockholder approval, is expected to be closed later this year.
However, in light of the proposed transaction, Twitter said it will not host a conference call, issue a shareholder letter and provide the financial guidance that the company usually did every quarter.
The brand value of Twitter increased by 85 per cent to $5.7bn this year, before the takeover attempt by Mr Musk, according to consultancy Brand Finance, which reviews the world's biggest brands annually.
“The big increase in Twitter’s brand valuation was correlated with its extremely valuable brand among its biggest users … highly-educated opinion leaders and provides strong underlying support for Musk’s apparent investment thesis that significant improvements to revenue are possible,” Brand Finance said in its latest report.