Twitter’s revenue falls as it struggles to draw advertisers.

Twitter, embroiled in a grueling authorized battle with Elon Musk as he tries to again out of a $44 billion acquisition of the corporate, revealed on Friday what may very well be even deeper issues dealing with its enterprise because it struggles to be a vacation spot for advertisers and generate a revenue.

The social media firm reported income of $1.18 billion for the second quarter, down 1 % from a yr earlier. That may be a far cry from the 20 % tempo of development that it as soon as predicted for the yr. As prices and bills grew, the corporate reported a internet lack of $270 million, a significant swing downward in contrast with a revenue of $66 million in the identical quarter final yr.

Monetary analysts had anticipated about $1.3 billion in income.

The corporate mentioned it had 237.8 million every day energetic customers who noticed adverts, up almost 17 % from a yr earlier.

The lackluster earnings report might gasoline Mr. Musk’s need to finish his deal to purchase Twitter. Mr. Musk, who additionally leads the electrical carmaker Tesla, agreed to purchase Twitter in April and mentioned he would take it personal. He privately advised buyers that he might quintuple the corporate’s income by 2028 and develop it to 931 million customers that very same yr.

However because the inventory market teetered, flattening shares of Tesla — which is his primary supply of wealth — Mr. Musk made more and more barbed feedback about Twitter. This month, he moved to terminate the deal. Twitter has since sued him to finish the acquisition, and a five-day trial to adjudicate the matter is scheduled for October in Delaware Chancery Court docket.

“Twitter now has an acquirer who not needs it, it has a C.E.O. and a board who wish to do away with it, and an worker base who’s caught within the center,” mentioned Mike Proulx, a analysis director at Forrester. “None of that is good for Twitter.”

In its earnings assertion, Twitter attributed the disappointing outcomes to “promoting trade headwinds related to the macroenvironment in addition to uncertainty associated to the pending acquisition of Twitter by an affiliate of Elon Musk.”

In current months, Twitter and different social media corporations have confronted a dismal promoting market. Fears about an financial downturn and the conflict in Ukraine have tamped down advert spending, which social media corporations depend on for many of their income. On Thursday, Snap, the maker of Snapchat, reported its slowest-ever price of quarterly development and a wider loss, inflicting its shares to plunge 26 % in after-hours buying and selling.

Twitter faces extra worries from advertisers concerning the potential takeover by Mr. Musk, who has mentioned he hates promoting and desires to loosen up Twitter’s content material moderation insurance policies, which have prevented adverts from showing alongside objectionable content material.

Nonetheless, buyers who imagine a court docket will pressure Mr. Musk to purchase Twitter at his proposed worth of $54.20 per share see little motive to fret about financial headwinds.

“The humorous factor is, earnings kind of don’t matter,” mentioned Wealthy Greenfield, a co-founder of LightShed Companions, a analysis agency. “On the finish of the day, in the event that they promote the corporate at $54.20, it’s Elon’s drawback, not the market’s drawback.”

Buyers will likely be involved about Twitter’s income provided that the deal collapses and the corporate’s enterprise fundamentals regain their significance, Mr. Greenfield added. “If the deal absolutely falls aside, we all know the inventory would go down,” he mentioned. “However the query is, ‘How a lot?’”

Mr. Musk has additionally accused Twitter of deceptive buyers and undercounting the inauthentic accounts on its platform. The corporate has mentioned that these accounts make up fewer than 5 % of the energetic customers on its platform and that it makes use of consultants to audit its depend. Twitter reiterated this determine in Friday’s submitting.

As its battle with Mr. Musk unfolds, Twitter has tried to keep away from the highlight. For the second quarter in a row, the corporate declined to carry an earnings name with Wall Road analysts, dodging the uncomfortable questions on Mr. Musk’s influence on the enterprise which will have been raised.

“The corporate is exceedingly quiet,” Mr. Greenfield mentioned. “It’s been months since any buyers had any conversations with the corporate.”

Mr. Musk additionally faces enterprise considerations at Tesla. The carmaker reported on Wednesday that its quarterly revenue had fallen due to provide chain delays and the value of Bitcoin, which the corporate had invested in.