TechCrunch
Twitter's Accumulated Deficit Is $418.6 Million And That Figure Is About To Get Much Bigger
It costs a lot of money to build a business of Twitter’s scale. The company raised $1.16 billion prior to its planned initial public offering, which could total $1 billion itself.
Here’s another figure: Twitter’s accumulated deficit to date is $418.6 million, a figure that will race to $748.2 million once it goes public and realizes $329.6 million in costs related to stock-based compensation expenses.
This is not to say that Twitter has spent $418.6 million to date, that figure is far higher. Accumulated deficit can be viewed as the company’s net income, net loss and paid dividends added together as debits and credits. So the formula is net income, minus net loss, minus paid dividends. Twitter pays no dividends, so its accumulated deficit is simply the amount of money that it has spent more than it has brought in as revenue in its life.
In a simple way, it’s the money that Twitter had to raise to keep its lights on during its growth. The company continues to lose money on a GAAP basis, and even on an adjusted net loss scale. So we can expect that Twitter’s accumulated deficit will increase in time. The company doesn’t appear to be operating in a way that would place it on a quick ramp to profitability, its loss rising year over year when the first half of 2013 is compared to the similar period in 2012.
Twitter is not alone in having a large accumulated deficit. In 2005, for example, Amazon reported a $2.2 billion accumulated loss. That was a full decade after its birth and eight years after its initial public offering. Trulia, by way of another comparison, had an accumulated deficit of $44 million before it went public.
If Twitter raised more than $1 billion, but has an accumulated deficit of just $418.6 million, where did the rest of the money go? It still has quite a lot of it left, with cash on hand of $164.5 million and short-term investments of $210.5 million. Twitter is about to become far more cash rich, following its offering, but not profitable.
Top Image Credit: Emmanuel Huybrechts
Twitter's International Revenue Is Skyrocketing, But The Company Is Worried About Sina Weibo And Line
Twitter’s international revenue is up massively year over year, with the company earning more in the first half of 2013 from outside the United States than it did in all of 2012. Twitter’s full-year 2012 international revenue totaled $53 million, while its first two quarters of 2013 saw $62.8 million in international incomes.
According to its S-1 filing, Twitter has sold its “Promoted Products” services in more than 20 countries. That implies that Twitter is able to monetize its service in more than its home market. Users around the world are therefore valuable to the company, and not merely to its usage statistics.
International revenue is a growing percentage of its top line, growing from 17 percent of total incomes in 2012, to 25 percent in the first half of 2013. This is healthy for the firm, underlining that it retain revenue growth potential despite becoming an established company.
Twitter, like Facebook, generates much of its revenue from mobile usage of its social product. The company, however, is direct that while mobile is currently a strength for it, rival services that are also strong on mobile could slow its growth in usage and revenue.
Here’s Twitter’s S-1 name-checking a number of services that could harm its growth:
[I]creased competition from local websites, mobile applications and services that provide real-time communications, such as Sina Weibo in China, LINE in Japan and Kakao in South Korea, which have expanded and may continue to expand their geographic footprint;
If those services were to expand to as many markets as Twitter, they could lower Twitter’s usage, and therefore its ability to sell advertisements. Twitter plans on selling advertisements in more countries in the future it states, but if Line and its ilk slow its rollout, Twitter could find its revenue growth on hold.
Twitter is already a mobile company, and it is quickly becoming an international firm. Given strong smartphone penetration in Asia, this is not surprising. But in the markets where it could see the most potential, Twitter will also face the stiffest winds.
Top Image Credit: Shawn Campbell
The Twitter IPO By The Numbers
Here are some accumulated statistics from our scouring of the Twitter IPO filing for your perusal. The overall numbers show a company with good but slowing growth in users, solid revenue in mobile but no profit yet to show.
Twitter is absolutely a mobile-friendly company, with some 75 percent of its monthly active users coming on portable devices. About 65 percent of its ad revenue comes from there, too, in sharp contrast to Facebook, which had no mobile revenue at the time of its IPO.
- Daily Active Users – Over 100M
- Monthly Active Users - 218.3M
- Revenue 2010 – $28.3M
- Revenue 2012 – $316M
- Revenue 2013 1st half – $253M
- Loss 2012 – $79.4M
- Loss 2013 1st half – $69.3M
- Shares of Stock Issued - 472,613,753
- Accumulated Deficit – $418.5M
- MAUs on mobile – 164M, that’s 75%
- Ad revenue from mobile – 65%
- Tweet impressions – 30B
- Total tweets – 300B
- Spam (Fake) Accounts – 5%
- R&D As Pct of 2012 Revenue – 37.5%
- R&D in 2013 1st half – $111.8M
- Websites Integrating Twitter – 3M
- Registered Twitter Apps – 6M
- Patents – 6
- Liabilities – $255.9M
- International Revenue 2012 – $53M
- International Revenue 2013 1st half – $62.8M
- Employees – 2,000
- Notable Shareholders: Evan Williams 12%, Benchmark/Peter Fenton 6.7%, Jack Dorsey 4.9%, Dick Costolo 1.6%, Rizvi Traverse, Spark Capital, USV and DST
Image Credit: Bruce McKay
Dell May Have A Winner With Its Windows-Powered Venue 8 Pro
The most pleasant surprise to come out of Dell’s press conference the other day wasn’t its line of new laptops or the silly Android tablets it’s trying to foist on weary consumers. To my utter shock it was the Venue 8 Pro, the company’s first pint-sized Windows 8 tablet.
Let’s start with its looks. The lightweight, plastic body screams “generic,” and you’d be hard-pressed to differentiate it from the Android-powered cousins we looked at earlier. That’s not to say it’s completely devoid of nice touches though: the back plate features a pattern of concentric circles that break up the monotony of an otherwise plain soft-touch finish and seems to help with grip. The Venue 8 Pro is unexpectedly light, too, as it weighs in at a relatively scant .87 pounds — that’s well within striking distance of the iPad mini.
That said, the Venue 8 Pro suffers from a distinct lack of style. It’s perhaps to be expected considering that this is Dell’s first attempt at bringing a full-on Windows 8 experience to a device like this, and there’s a lot that could go wrong with this sort of endeavor. Take the screen, for instance. One of my favorite reviews ever written features Paul Thurrott just eviscerating Acer’s Windows 8-powered Iconia W3 tablet for its godawful screen. Some may say he was too heavy-handed in his criticism, but when the primary means of consuming and interacting with your content just sucks, something is very very wrong.
Thankfully, early stinkers like the Acer make Dell’s approach seem all the more palatable. The Pro’s IPS screen — which ran at 1280 x 800 — was bright and well-saturated, and viewing angles seemed more than respectable during the brief moments I spent playing with the thing.
Of course, the screen’s size poses some issues. There’s no denying that parts of Windows 8.1 just aren’t suited for such small displays. The classic desktop mode is cramped and festooned with tiny icons that require a fair amount of dexterity to poke at accurately. Dell plans to downplay some of those issues by selling an active stylus that allows for precise manipulation of screen elements — I took that thing for a spin too and came away impressed. Part of the stylus’s appeal is because Dell fought the urge to make it small enough to slot into the Venue’s chassis. Instead the company opted to make a full-sized pen, which helps dramatically with usability (though you’ll have to tuck it into a case or a pocket).
And then there’s longevity to consider, too. I’m told that the battery is slated to last between 8 and 10 hours of normal use (whatever that is). That wouldn’t amount to much if this thing wound up trading off performance for power, but the whole package seemed suitably snappy thanks to its 1.8GHz quad-core Intel Bay Trail chipset — we’ll see if that remains the case once the final devices start trickling out into the wild.
After being let down in such a big way by Microsoft’s original Surface RT, I thought I’d never splurge on a Windows tablet again. Now, after having played with Dell’s attempt, I find myself rethinking my earlier position. The prospect of running full Windows apps on a device this light and this cheap is a terribly attractive one, and at this moment Dell’s tiny tab seems well-equipped to take on what few Windows competitors are playing at this size. I may even buy this thing over the iPad mini, which is yet another thing I never thought I’d say. Stay tuned for the full review in short order.
After Silk Road
The Internet routes around damage. With the fall of the Silk Road comes the inevitable expectation that the underbelly of the Internet is somehow cut and something important has been removed like a dark organ of indeterminate worth and function. This is not true. As we well know, the Silk Road was not the first nor the last online market – even as the Feds celebrate their victory the Sheep Marketplace and Black Market Reloaded are angling for the crown – but the destruction of the Silk Road and, to a degree, the recent comments by the Lavabit founder, show how deeply we trust the Internet with our secrets and how readily it gives them up.
We know, now, with certainty that nearly nothing is safe. However, we also know that modern encryption techniques can keep prying eyes out of nearly everything we see or do. Sites like the Silk Road are brought down by carelessness and hubris rather than technical know-how and I’m sure the FBI understands as much about the security systems put in place to protect clients as any other educated amateur. It is at the intersection of human frailty and rock-hard encryption that we find ourselves at a crossroads. The great machines can keep enemies at bay as long as the gatekeeper remembers to close the door.
Can we trust the cloud and can we trust anonymous services to truly keep us anonymous? Yes. However, the caveat is that when that trust is broken, it is broken catastrophically, taking down a swathe of the Internet with it. One part of the Silk Road fallout that I found particularly interesting was the site’s seemingly apocryphal ability to jettison deposited Bitcoin back to the owners in the event of a raid. While this behavior hasn’t been documented – it’s all rumor right now – it would be an amazing solution for future systems. By learning from the mistakes of Ulbricht and the like, we can build stronger and better systems for the dissemination of information.
While I don’t support what went on on the Silk Road – the hacking services and illegal gun trading alone made it more like the Wild West than Utopia, not to mention the alleged murder-for-hire plots – I do support its right to exist. No government should be able to shut down a conglomeration of like-minded people who wish to do business anonymously. We cannot judge the pot dealer or the LSD buyer any more than they can judge our habits and predilections. The morality of this can be debated but the right to an anonymous exchange cannot.
The Silk Road isn’t dead. The FBI knows that, Ulbricht knows it, the users know it. Just as the death of Napster didn’t stop the trafficking in downloaded music, this will not stop the trafficking in Bitcoin. Someone with a similar bent will build another Silk Road and another, eventually creating a machine that can bar the door without the gatekeeper’s intervention. Then, it seems, we’ll simply have to deal with a machine that refuses us entry because of our foibles and foolishness. The destruction of the Silk Road will teach the authorities a thing or two about Bitcoin and encryption but it will teach future Dread Pirate Roberts important lessons in evasion and obfuscation.
Rizvi/Sacca, Evan Williams, Spark Capital, USV, Benchmark, DST Among Twitter's Largest Shareholders
As expected Twitter’s S-1 was just released, which states that the company is looking to raises as much as $1 billion in a public offering. As with every S-1 filing, the company reports which individuals/firms hold the most shares in the company. According to this table, founder Evan Williams owns 12 percent of the company before the offering. Benchmark and the firm’s partner and board member Peter Fenton owns 6.7 percent. Fellow founder Jack Dorsey owns 4.9 percent and CEO Dick Costolo owns 1.6 percent.
Other stock holders that own 5 percent or more of the company include Rizvi Traverse (which is reportedly backed by Chris Sacca), Spark Capital, Union Square Ventures and DST. It’s not clear how much each investor owns specifically.
Union Square Ventures and Spark Capital were Twitter’s earliest institutional investors (USV led the company’s first major round, and Spark Capital led Twitter’s second round), as was Charles River Ventures, who is not listed in the table and put in around $250,000 early on. Benchmark came in at Twitter’s Series C funding.
We’re hearing from a source that Rizvi could own as much as 15 percent of the company. We’re hearing that after Rizvi, Williams is the next largest single shareholder followed by Benchmark, Spark, USV and then DST. Spark originally owned around 15 percent as well but sold some of the stake to Rizvi. Other large employee (or former employee) shareholders that were not listed in the table include founder Biz Stone, COO Ali Rowghani, and former General Counsel Alex Macgillivray.
Other things to note from the chart: revenue chief Adam Bain holds less than one percent of the company, as do board members Peter Curie, and David Rosenblatt. It appears that other board member Peter Chernin’s shares have not vested.
In terms of salary, Costolo made $200,000 per year (but this was dropped to $14,000 in August of this year); Bain makes $200,000, and SVP of engineering Christopher Fry earn $145,513 yearly. Including stock, Costolo’s total compensation was around $11.5 million, Fry’s was around $10.3 million, and Bain’s was $6.7 million for the year.
In Twitter's IPO Filing, The Letter To Shareholders Is Fittingly Concise
Everyone’s going crazy as Twitter just made the S-1 filing for its IPO public. One of the standard parts of the S-1 is a letter from the CEO to shareholders, where they lay out their vision for the company.
In Twitter’s filing, however, it’s a letter from “@Twitter”. And whereas the letters from Groupon’s Andrew Mason, Zynga’s Mark Pincus, and Facebook’s Mark Zuckerberg all clocked in at one or two thousand words, Twitter’s letter is just 135, plus an embedded tweet.
That’s probably appropriate for a platform that was initially distinguished by the 140-character limit that it imposed on its users. It may also reflect the fact that Twitter isn’t identified with a single founder or executive the way that, say, Facebook is — none of its founders currently have a full-time role with the company (though apparently co-founders Jack Dorsey, Biz Stone and Ev Williams visited the office today). And hey, it’s not like the rest of the filing is lacking in a rundown of the company’s perspective on the risks and opportunities that it faces.
So here’s the full text:
LETTER FROM @TWITTER
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.
Yours,
This Week On The TechCrunch Droidcast: Dude, No One's Getting A Dell Venue Tablet
Dell had an event this week, which is in itself noteworthy regardless of what they launch, but it turns out there were Android tablets there! We talk about those for a while, as well as the Elliptic Labs ultrasound gesture control SDK, Android in the Car, Amazon’s four-camera phone plans, and briefly the Kindle Fire HDX.
This week on the show prodigal son Chris Velazco returns from his many travels (we held the podcast a whole day to make sure he could come), and we’re joined by Natasha Lomas as well. I nearly forgot to mention that we also chat briefly about BBM for Android, and it must be forgettable because BlackBerry itself seems to have forgotten about it as well.
We invite you to enjoy weekly Android podcasts every Wednesday (or Thursday this week) at 5:30 p.m. Eastern and 2:30 p.m. Pacific, in addition to our weekly Gadgets podcast at 3 p.m. Eastern and noon Pacific on Fridays. Subscribe to the TechCrunch Droidcast in iTunes, too, if that’s your fancy.
Intro music by Kris Keyser.
Direct download available here.
Mobile Twitter: 164M+ (75%) Access From Handheld Devices Monthly, 65% Of Ad Sales Come From Mobile
Twitter started on mobile, and that’s where the service is going. In the S-1 form that the company filed today for its public offering, Twitter called mobile the “primary driver of our business.” It said that 75% of its 218.3 million+ monthly active users are accessing the site from mobile devices — or 161.25 million users. And mobile accounts for 65% of all its ad revenues. All in all, the word “mobile” comes up 130 times in the 160+ page document.
From the intro to the filing:
Mobile has become the primary driver of our business. Our mobile products are critical to the value we create for our users, and they enable our users to create, distribute and discover content in the moment and on-the-go. The 140 character constraint of a Tweet emanates from our origins as an SMS-based messaging system, and we leverage this simplicity to develop products that seamlessly bridge our user experience across all devices. In the three months ended June 30, 2013, 75% of our average MAUs accessed Twitter from a mobile device, including mobile phones and tablets, and over 65% of our advertising revenue was generated from mobile devices. We expect that the proportion of active users on, and advertising revenue generated from, mobile devices, will continue to grow in the near term.
If you recall, when Facebook filed its S-1 before going public, the company had no revenues in mobile and made a big point of spelling that out, with 425 million of its 845 million monthly active users accessing the service from mobile devices (those are from the initial S-1, which got revised up several times before the company finally listed).
Twitter is in a significantly different position. Not only does the company have a majority of its users accessing from mobile devices, but it already make a majority of its ad revenues from these platforms. (The main ad unit currently on Android and iOS, Promoted Products, was introduced in February 2012.)
While there have been a lot of changes to the basic desktop product over the last couple of years, in 2013 you could argue that the biggest product moves that Twitter has made have been in mobile, from the launch of the Vine video app (to follow through on the photo filters that it launched near the end of 2012) through to its experiments with Twitter Music (also a mobile app), and its acquisition of MoPub (a specialist in mobile ad-tech).
Twitter pretty much says it all about mobile and its ambitions to push the envelope in that area, in a bit of very typical S-1 jargon: “If new or enhanced products or services fail to engage users and advertisers, we may fail to attract or retain users or to generate sufficient revenue or operating profit to justify our investments, and our business and operating results could be adversely affected.”
With 130 mentions of mobile in the S-1, here are a couple of the interesting points that jumped out at me in a first reading:
– The big threat in mobile for Twitter is in Asia. Specifically, it pinpoints the rise of multiple local messaging apps. “Increased competition from local websites, mobile applications and services that provide real-time communications, such as Sina Weibo in China, LINE in Japan and Kakao in South Korea, which have expanded and may continue to expand their geographic footprint,” it writes.
– Mobile can be misleading. “Our metrics are also affected by mobile applications that automatically contact our servers for regular updates with no user action involved, and this activity can cause our system to count the user associated with such a device as an active user on the day such contact occurs.”
More to come.
Twitter Files For $1 Billion IPO, Will List As TWTR
Twitter has just filed for its long-anticipated IPO. The company is looking to raise $1 billion in this initial offering, which is set to mint many millionaires among shareholders and founders like Ev Williams, Jack Dorsey and Biz Stone. Currently, the filing does not list a valuation, and sources are saying that’s because they have yet to determine one.
Twitter’s revenues have been revealed for the first time, as well. Revenues for 2012 were $316.9 million, for a loss of $79.4 million and in the first half of 2013 they’ve already earned $253.6 million for a loss of $69.3 million. That’s just above estimates from last year but well below tracking of over $600 million for the year. Overall, Twitter has lost $418.6 million since it began.
Twitter will be offering up 472,613,753 shares of stock in this initial release. Twitter says that it currently has 218.3 million monthly active users, and those users have created over 300 billion tweets. That MAU number is significantly lower than many had expected at this point as they announced that they had 200 million MAUs in December. Twitter says that it delivers over 200 billion tweets per day.
Twitter says that 75 percent of its MAUs access the service from mobile devices (that’s 161.25 million) and that 65 percent of all of its ad revenues come from mobile. This marks a big contrast to Facebook, which had no revenues in mobile at all when it filed for IPO.
Twitter says that in the second quarter of 2013 there were approximately 30 billion ‘online impressions’ of tweets off of its properties. The companies’ current estimates put spam accounts at under 5 percent of MAUs, but says that this may not be accurate.
On the employment front, Twitter says that it has gained over 900 employees in the year since June 2012, an increase of 90 percent. It currently employs over 2,000 people.
Twitter’s IPO has been a hotly anticipated event for some months now, with news of Twitter’s “secret” filing coming via a tweet last month. The stealth filing was made possible by the JOBS (Jumpstart Our Business Startups) act, which allows companies with less than $1 billion in revenue to file for an IPO without exposing the details immediately.
Twitter lists a number of risk factors in the filing, noting that the business could be harmed if “influential users, such as world leaders, government officials, celebrities, athletes, journalists, sports teams, media outlets and brands or certain age demographics” conclude that an alternative product or service is more relevant; they are unable to convince potential new users of the value and usefulness of our products and services; or they are unable to combat spam or other hostile or inappropriate usage on the platform.
Image Credit: Lisa Cee
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