After filing a confidential IPO with the US Securities and Exchange Commission last month, Twitter has finally made its IPO filing public and intends to raise $1 billion.
It has not revealed a starting price yet. Goldman Sachs will be the lead underwriter and other underwriters are Morgan Stanley, JP Morgan, Bank Of America (BofA) Merrill Lynch, Deutsche Bank Securities, Allen & Company LLC, CODE Advisors. The company’s stock symbol would be ‘TWTR’.
Notes from the S-1 filing:
– Not Profitable Yet: Twitter reported revenues of $253.6 million for the six month ended June 30, 2013, up from $122.4 million revenue for the six month ended June 30, 2012. The company is however not profitable yet: a net loss of $69.3 million for the six months ended June 30, 2013, a increase from $49.1 million loss in the six month ended June 30, 2012.
For the year ended December 31, 2012, Twitter generated revenues of $316.9 million, a significant increase from $106.3 revenue in 2011 and $28.3 million revenue in 2010. The net loss was at $79.4 million for 2012, an improvement from $128.3 million loss in 2011, but an increase from $67.3 million loss in 2010.
– Monthly and daily active users: Twitter has more than 218.3 million monthly active users (MAUs) for the quarter ended June 30, 2013, a 7% increase from 204 million MAUs for the quarter ended March 31, 2013 and a 44% increase from 151 million MAUs for the quarter ended June 30, 2012. It has more than 100 million daily active users. Twitter defines a MAU as a registered Twitter user who logged in and accessed Twitter through its website, mobile site, desktop or mobile apps, SMS or registered third-party apps or websites in the last 30 days as of the date of measurement.
– Contribution of Mobile: 75% of its average MAUs accessed Twitter from a mobile device (mobile phones & tablets) for the three month ended June 30, 2013, which translates to around 164 million mobile MAUs. Over 65% of Twitter’s advertising revenue was also generated from mobile devices. The company however noted that it does not separately track whether an MAU has used Twitter only a desktop or on a mobile device.
– International users & revenue: 77% of its average MAUs are from outside the United States for the quarter ended June 30, 2013, which translates to around 168.1 million International MAUs. The international revenue was however at $62.8 million for the quarter ended June 30, 2013, representing only 25% of its consolidated revenue for the quarter.
In the future, Twitter expects its user growth rate in Argentina, France, Japan, Russia, Saudi Arabia and South Africa to be higher than its user growth rate in the United States.
– Timeline Views: Twitter had 150.9 billion timeline views for the quarter ending June 30, 2013, up 69% year-on-year (YoY) and 287.2 billion timeline views for the six months ending June 30, 2013, up 79% YoY. The timeline per MAU was at 691 for the quarter, up 17% YoY. Twitter defines timeline views as the total number of timelines requested when registered users visit Twitter, refresh a timeline or view search results while logged in on their website, mobile website or desktop or mobile applications (excluding its TweetDeck and Mac clients, since they do not fully track this data yet).
The global ad revenue per timeline view was at $0.8 for the quarter, up 26% YoY. The ad revenue per timeline view was at $2.17 in the US, up 26% YoY and $0.30 in the rest of the world, up 111% YoY. Ad revenue per timeline view is defined as the advertising revenue per 1,000 timeline views during the applicable period.
– Tweets per day & Partners: More than 6 million websites are currently using Twitter for Websites. These include media outlets like BBC, CNN and Times of India. Around 3 million Twitter apps have been registered by developers until now.
The company also mentioned that users create around 500 million Tweets on a daily basis and have created more than 300 billion tweets until now. Tweets have appeared on over 1 million third party websites and it has generated 30 billion impressions on Twitter properties in Q2 2013.
– On India: While Twitter hasn’t disclosed any specific information on its India user base, it mentioned that many users access their products and services through feature phones with limited functionality rather than through smartphones, website or desktop applications. It added that this limits the company’s ability to deliver certain features to users in these markets and also limit the ability of advertisers to deliver compelling advertisements to these users.
– Revenue from Advertising: Twitter reported ad revenues of $221.4 million for the six months ended June 30, 2013, up from $101.3 million for the quarter ended June 30, 2012. Advertising accounted for 87% of Twitter’s revenues for the six month ended June 30, 2013, as compared to 83% in the same quarter last year.
For the year 2012, Twitter generated ad revenues of $269.4 million, up from $77.7 million in 2011 and $7.3 million in 2010. Advertising accounted for 85% of Twitter’s revenues in 2012, up from 73.1% in 2011.
The number of ad engagements (Promoted trends) increased 124% for the quarter ended June 30, 2013, as compared to 15% increase in the previous quarter and 55% increase in the same quarter last year. The average cost per ad engagement decreased 46% for the quarter, as compared to 12% decrease in the previous quarter and 18% decrease in the same quarter last year.
Twitter currently earns almost all of its advertising revenue through the sale of its three Promoted Products – Promoted Tweets, Promoted Accounts and Promoted Trends. It currently offers Promoted Products to advertisers in over 20 countries besides US. In India, Komli Media has the mandate for selling Promoted Products (Read: Twitter’s Ad Rates In India: Rs 5.5 Lakh Per Promoted Trend)
– Revenue from Data Licensing: Twitter reported data licensing revenues of $32.2 million for the six months ended June 30, 2013, up 53% from $21.1 million for the quarter ended June 30, 2012. For the year 2012, Twitter generated data licensing revenues of $47.5 million, up 66% from $28.6 million in 2011 and $21 million in 2010.
– Competition: Twitter says it competes with larger companies like Facebook (including Instagram), Google, LinkedIn, Microsoft, Yahoo and smaller Asian companies like Sina Weibo, LINE and Kakao. Twitter specifically mentions Facebook and says it has significantly more users and has been introducing features similar to those of Twitter.
It also cites Instagram’s acquisition to mention that its competitors may acquire companies which may result in the reduced functionality of Twitter’s products and services. For instance, Facebook disabled Instagram’s photo integration with Twitter, following which Instagram photos were no longer viewable within Tweets and users are now redirected to Instagram website to view the photos.
Twitter also mentions Google and says the company may use its strong position in one or more markets to gain a competitive advantage over Twitter by integrating competing features into products or services they control.
– False or spam accounts: Twitter currently estimates that less than 5% of its MAUs are false or spam accounts, which translates to around 10.9 million MAUs.
– Risk Of International Expansion: Twitter says the differences in the competitive landscape in international markets may affect the company’s ability to monetize its products and services. For instance, Twitter says it faces intense competition from Kakao in South Korea which offers some of the same features as Twitter and the existence of an established player may affect the company’s ability to increase its user base, attract advertisers and monetize its products in such markets.
– Risk from Government Regulations: Twitter says governments have previously sought and may seek to censor content available through its products and services, restrict access to Twitter from their country entirely or impose other restrictions that may affect the accessibility of Twitter in their country for an extended period of time or indefinitely. It cites instances of domestic ISPs in China blocking access to Twitter and other countries like Iran, Libya, Pakistan and Syria have intermittently restricted access to Twitter, which the company believes is primarily due to political reasons.
India is not named, although the government has previously issued orders to block specific Twitter accounts. It had also requested Twitter to block 28 Twitter accounts but Twitter hadn’t complied with the request.
– Shareholding: Twitter co-founder Evan Williams owns 12% stake in the company, while another co-founder Jack Dorsey owns 4.9% stake, Benchmark’s Peter Fenton owns 6.7% stake and Twitter CEO Richard (Dick) Costolo owns 1.6% stake. Its also worth noting that Dorsey has given a proxy to Williams to vote for the shares held by him.
Other shareholders that own at least 5% stake include Rizvi Traverse, Spark Capital, Benchmark Capital Partners VI, Union Square Ventures and DST Global.
– Acquisitions: In January 2013, Twitter acquired Crashlytics for $38.2 million in common stock and in February 2013, it acquired Bluefin Labs for $67.3 million in common stock. It also completed the acquisition of a unnamed privately held company for $2.5 million and three other companies for a total purchase price of $4.5 million.
In 2012, Twitter acquired Dasient for $19.1 million in January 2012. It also acquired nine other companies for a total price of $33.1 million during the year.
In 2011, Twitter acquired TweetDeck for $20.4 million ($17.1 million in cash and $3.3 million in common stock) in May 2011. It also acquired five additional companies for a total price of $18.5 million during the year.
– Employee Count: Twitter has around 2,000 employees as of June 30, 2013, up from 200 employees as of January 1, 2010.