Friday, May 25, 2018
Business

Twitter dishes tantalizing tidbits in IPO treatise

SAN FRANCISCO — Twitter, a privately held company built on blurbs, has finally laid itself bare in documents that read more like a treatise than a tweet. • The roughly 800-page filing Twitter released late Thursday on its way to an eagerly anticipated IPO contains tantalizing tidbits about its growth and its attempts to make money from its influential short-messaging service. • The suspense surrounding Twitter's IPO was heightened by the company's decision to take advantage of a law passed last year that allows companies with less than $1 billion in annual revenue to keep their IPO documents under seal until management is ready to make formal presentations to investors. • With Thursday's lifting of the veil, Twitter can start pitching to investors during a so-called "road show" as early as Oct. 24. The San Francisco company's stock could begin trading under the ticker symbol "TWTR" before Thanksgiving. • Here are five key details revealed in Twitter's tome:

Twitter's got growth to get excited about: After Twitter co-founder Jack Dorsey sent out the first tweet in March 2006, the company didn't even try to make money for its first few years. Instead, management focused on attracting more users and making the service reliable.

Twitter's patient approach is paying off. Since former Google executive Dick Costolo became Twitter's chief executive officer in 2010, the company's annual revenue has soared from $28 million to $317 million last year. Through the first half of this year, Twitter's revenue totaled $254 million, more than doubling from last year.

Twitter gets 87 percent of its revenue from advertising. The rest comes from licensing agreements that give other companies better access to the flow of activity on its service.

Meanwhile, Twitter ended June with 218 million users, up from 30 million in early 2010. Twitter is growing fastest in Argentina, France, Japan, Russia, Saudi Arabia and South Africa.

But the company isn't profitable: Twitter has suffered uninterrupted losses of $419 million since its inception. The company can afford the losses because it has raised $759 million from investors. Twitter still had $375 million in the bank at the end of June and hopes to raise at least $1 billion more in its IPO.

Its losses grew in the first half of this year to $69 million, up from $49 million in the same period in 2012. In contrast, Facebook and LinkedIn were profitable when they went public.

Coming up … more ads: To make money, Twitter will probably get more aggressive about showing ads. In the three months ending in June, Twitter generated revenue of $139 million, or an average of just 64 cents per user. In contrast, Facebook generated second-quarter revenue of nearly $1.2 billion, or an average of $1.58 per user.

But as Twitter cranks up its marketing machine, it runs the risk of alienating an audience accustomed to seeing relatively few ads in its news feeds.

Twitter's more "mobile than Facebook: Twitter appears tailor-made for an age of increasing reliance on smartphones and tablet computers. Three-fourths of Twitter's users already use the service on mobile gadgets. Perhaps more important to investors, it sells 65 percent of its ads on smartphones and tablets. Facebook gets 41 percent of its ad revenue from mobile devices.

Its market value could be as high as $20 billion: Some analysts predict that Twitter will seek $28 to $30 per share in its IPO. If so, Twitter will have a market value of $17 billion to $20 billion, including stock options and restricted stock likely to be converted into common shares after the IPO.

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