Twitter shares fell sharply during trading early Friday morning, after the social media company warned that the number of monthly active users (MAUs) would decline amid efforts to purge dormant accounts, improve the health of the platform and comply with new privacy regulations.
In a letter to shareholders, Twitter executives said that the platform had average MAUs of 335 million during the second quarter, an increase from the 326 million reported at the same time last year, but one million fewer than the 336 million users during the first quarter.
Shares of Twitter were down almost 20 percent, to $34.50, during early afternoon trading.
In total, the changes cost Twitter about 3 million MAUs during the quarter, but were considered necessary. Twitter, in order to better comply with GDPR and privacy regulations, needed to deal with the above mentioned issues, as well as combat abuse and clean bad accounts out of the system.
“We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviors that distort and distract from the public conversation,” CEO Jack Dorsey said in a statement.
For example as of May 2018, the company challenged up to 9 million accounts per week — up from 6.4 million in December 2017 — that were identified as either spammy or automated. As part of that effort, Twitter acquired Smyte, a San Francisco-based firm that offers tools to combat online harassment, at the end of June.
Average daily active users (DAUs) rose 11 percent during this quarter, compared with the year-ago period, however Twitter did not release any actual numbers on DAUs.
Twitter also announced the launch of a new scalable infrastructure that focuses on creating engagement around events, citing the World Cup as one major example of an event that generated new traffic, a move that garnered a lot of strategic interest from analysts. Its “Happening Now” feature was expanded beyond sports to include tweets and videos about breaking news at the top of user timelines. When asked about what future events might generate engagement, Twitter cited the U.S. midterm elections in November, among others.
Additionally, Twitter signed 50 new agreements for live streaming, Amplify, video-on-demand and highlights. Some of these include ESPN, NBCUniversal and Viacom.
Twitter reported earnings of $134 million, or 17 cents a share, compared to $56 million a year ago, and also reported a 24 percent revenue increase to $711 million in the quarter — a 27 percent increase when excluding the $14 million revenue contribution of its fully depreciated TellApart product from the year-ago quarter.
Advertising revenue rose 23 percent to $601 million, while total ad engagements increased 81 percent over year-ago figures, while data licensing and other revenues rose 29 percent to $109 million. Twitter said that international business provided the strongest revenue growth, as international revenue grew 44 percent to $344 million, while U.S. revenue grew only 10 percent to $367 million.