For the first
time, Twitter’s financial accounts became public after it filed the S-1 form
with the US Securities and Exchange Commission (SEC) in preparation for its
initial public offering (IPO).
Twitter is
looking to raise $1 billion at the IPO. It is taking a precautionary step
considering how Facebook shares fell by more than 50% after its highly
anticipated IPO in 2012. Twitter’s is perhaps the most anticipated since
Facebook.
That however,
is not the most surprising things from the filing. Contrary to believes that
Twitter is a company that has been making profits and will continue to after
its IPO, you’re right but half-right.
Twitter has
increased its revenues from 2010 but has not made a profit from then too. It
has increased annual revenue of $28 million in 2010 to $317 million at the end
of 2012. It has also made $253.6 million in the first half of this year which
is more than double of revenue for the same period last year.
Last year it
had a loss of $79 million despite its $317 million revenue and has already
racked up it’s a loss of $69 million from $253.6 million revenue for the first
six months this year. Although, considering that Twitter purchased BlueFin Labs, a social television analytics service, for $67.3 million in February, it could have accounted for most of its loss.
Twitter has a
monthly user base of 218.3 million and boast of 500 million tweets per day.
This is still a very long way to go to catch Facebook when you consider that Facebook
has an audience of over a billion. Twitter is more of a competitor with
Instagram which has a monthly user base of 150 million and Twitter rightly
noted Instagram.
One other
fact is that Twitter makes about 75% of its revenues from users in the US
despite their population being 23% of the social networks. Twitter uses the
amount of revenue per thousand timeline view (ARPTV) which is different from
the amount of revenue per user (ARPU) which Facebook employs.
It claims its
ARPTV for users in the US is $2.17 while that of the remaining places in the
world is 30 cents. This makes the worldwide average 80 cents.
One place
twitter may have an advantage is that it has been able to sell its mobile
version to users. It claimed that in the second quarter ended in June, 75% of
Twitter users accessed the social network from a mobile and about 65% of its
revenue was made from mobile device.
This was
Facebook’s Achilles’ heel in 2012 after investors thought Facebook won’t be
able to sell its mobile site to users. This is very important as users are now
moving to mobile devices from PC.
Twitter
co-founders Evan Williams and Jack Dorsey owns 12% and 4.9% respectively of the
company. It is expected that the company will be going public this year if the
US government shutdown doesn’t extend more than necessary. In the case of that,
Twitter’s IPO could be next year.
Twitter is
worth $9.7 billion based on internal valuation of its shares from August 5.
Goldman Sachs has won the bid to lead the company to its IPO and will be
supported by other financial houses like Morgan Stanley and JP Morgan Chase.
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Twitter is not as big and healthy as we thought…