Twitter Inc on Friday blamed its ongoing battle to close its $44-billion acquisition by Elon Musk and a weakening digital advertising market for a surprise fall in quarterly revenue.
The results come as Twitter has sued Musk for dropping his offer to buy the company, and is now preparing for a legal showdown in a trial set to begin in October. The deal uncertainty has worried Twitter’s advertisers and caused chaos inside the company.
Advertising revenue rose just 2% to $1.08 billion, missing Wall Street expectations of $1.22 billion, according to Refinitiv IBES data.
Total second-quarter revenue, which also includes revenue from subscriptions, was $1.18 billion, compared with $1.19 billion a year earlier. Analysts were expecting $1.32 billion.
Twitter shares were down 3% in trading before the bell.
Twitter said its net loss was $270 million, or 35 cents per share, down from a profit of $65.6 million, or 8 cents per share, a year earlier.
Its adjusted 8-cent loss missed expectations for a 14-cent adjusted profit.
On Thursday, Snapchat parent Snap Inc posted weak results and declined to make a forecast, citing “incredibly challenging” conditions as advertisers cut back on spending.
Twitter and its peers, including Snap and Alphabet , saw an uptick in revenue last year as brands spent heavily on advertising online, eyeing a recovery from the pandemic.
But inflation pressures and fears of a recession this year have forced brands to rethink their marketing budgets.
At the same time, Gen-Z favorite TikTok and tech giant Apple Inc, which gives users the choice to opt out of data tracking, are grabbing market share in the digital ad space.