Twitter has filed to go public and by doing so the company has filed certain documents that haven't been open to public view in the past. The company unsealed certain sensitive documents which will now give potential investors and users a look at the inside of the company. This information comes three weeks after Twitter filled confidential papers to start the IPO process.
The new information has provided some valuable financial and statistical information on the micro blogging network, whose upcoming IPO is the most awaited stock market debut since Facebook went public. The documents reveal a lot about the company, talking about its revenues, debts, active users, revenue break ups and much more.
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During April 2010, the company announced that it would begin to offer advertising opportunities to sponsors to generate revenues. Its move was in line with Internet giants like Google and Facebook who rely on advertising for a large chunk of their income.
Twitter began offering advertisers an opportunity to publish "promoted tweets" to appear in selective search results on the Twitter website, similar to Google's Adwords advertising model. And during March this year, Twitter brought its "promoted tweets" to the mobile platform as well.
While no one expects the Twitter's IPO to be as big as the $100 billion capitalization Facebook had, there's a serious amount of anticipation that this might just become a blockbuster IPO.
After Facebook's IPO, investors have become rather skeptical about buying into Internet companies. The world's largest social network saw its stock value shrink through an entire year since it wasn't able to deliver the required revenue. However, the company has now stabilized itself, meeting market expectations quarter after quarter. After fifteen months, its stock price has climbed past its initial offering value.
Here are the most vital facts that you need to know about Twitter.
Even though there is no official information yet, based on the company's finances, analysts believe that Twitter will value itself at about $15 billion or more. Given the company's size and user base, this number is safe and should keep the company just outside dangerous territory.
According to documents that Twitter filed with the Securities and Exchange Commission, Twitter has a daily active user base of over 100 million. It has about 218.3 million monthly users. It is worth noting that Twitter gained over 85 million of those users over the last year. Compare those numbers with Facebook and you'll see that the world's largest social network has about 1.15 billion users in total.
Despite boasting strong financial growth year over year, Twitter has never been able to register a profit.
For instance, during the first half of 2013, the company raked in $253.7 million in revenue. However, owing to increased employee costs and over spending, the company has reported a loss of $69 million for hat financial period. So even though the company has 107% growth in revenue, its expenses are far too great to allow it to be profitable. So bottom line, Twitter is not profitable.
Where does Twitter make its money from? During the first six months of 2013, the company got 87 percent of its revenue from advertising. As mentioned before, advertisers pay Twitter to insert their tweets into accounts, topics or user feeds of relevance. The remainder of its revenue comes from data licensing.
Platform Wise Break Up
So where does the bulk of Twitter's revenue come from? Mobile or Web users? According the the company, about 65 percent of its advertising revenue comes from mobile devices like tablets and smartphones. It has also added that its mobile advertising business is growing at a much faster pace than web advertising, adding to the universal trend of people preferring mobile devices over personal computers. Here's the best part, Twitter has a huge advantage in terms of mobile ad revenue when compared to rivals like Facebook, who've only been able to milk 41 percent of their revenue from mobile. In fact, Facebook has been some what slow in building its mobile advertising business over the last year.
Twitter has a massive army of employees, about 2000 of them, another reason for its increased expenses and spending. A large portion of its spending goes towards R&D. Analysts believe that 2000 employee is way too much for a company with such a simple service offering. So yes, getting its employee-costs down will be one of Twitter's long-time priorities.
This is one's the biggest warning signals that investors will spot. Over the last few months, Twitter's user growth has slowed down in the US, allowing us to believe that it might be close to hitting a saturation point in the country. This is a contrast to Facebook, despite having a billion plus users, is still seeing significant growth in the US.
How much money does Twitter make off you?
Here's an important figure. This is the amount of revenue that a social media company earns for each user it has. Facebook makes about $1.60 for each user on its network. An analysis of Twitter's figures suggests revenue per user of 64 cents.
Spread Over The Internet
Twitter's impact and presence on the Internet has grown significantly over the last few years. Currently, people have tweeted over 300 billion tweets. Around 3 million websites are integrated with Twitter in one way or another. Twitter has made about 30 billion significant online impressions as of this month. There are about 6 million registered Twitter apps.
Twitter's Short And Sweet Mission Statement for Its IPO
Twitter was born on March 21, 2006 with just 24 characters:
We started with a simple idea: share what you're doing, 140 characters at a time. People took that idea and strengthened it by using @names to have public conversations, #hashtags to organize movements, and Retweets to spread news around the world. Twitter represents a service shaped by the people, for the people.
The mission we serve as Twitter, Inc. is to give everyone the power to create and share ideas and information instantly without barriers. Our business and revenue will always follow that mission in ways that improve-and do not detract from-a free and global conversation.
Thank you for supporting us through your Tweets, your business, and now, your potential ownership of this service we continue to build with you.