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 Inc. 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 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.
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 few years. Instead, management focused on attracting more users and making the service more reliable.
Twitter’s patient approach is paying off. Since former Google executive Dick Costolo became Twitter’s CEO in 2010, the company’s annual revenue has soared from $28 million to $317 million 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. More than three-quarters of those users, or 169 million people, are located outside the U.S. Twitter is growing fastest in Argentina, France, Japan, Russia, Saudi Arabia and South Africa.
It takes more than cultural heft to build a business, as Twitter is learning. The company has suffered uninterrupted losses of $419 million since its inception. Twitter can afford the losses because it has raised $759 million from investors. The company still had $375 million in the bank at the end of June and hopes to raise at least $1 billion more in its IPO.
But Wall Street won’t tolerate losses for long, and it may be a while before Twitter turns a profit.
Twitter’s losses widened during the first half of this year to $69 million, up from $49 million in the same period last year. In contrast, both Facebook and LinkedIn were profitable when they went public.
To make money, Twitter will likely 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, while LinkedIn posted revenue of $364 million, or an average of $1.53 per user.