|Twitter losses pile up at US$419m, but targets US$1b in public stock offering
Social media site Twitter says it hopes to raise up to US$1 billion in one of the year's most eagerly awaited stock market debuts.
Initial public offering revealed for the first time how much money the company makes. Founded in 2006, Twitter has never turned a profit and has an uninterrupted history of losses totaling US$419 million since its inception. But its revenue is growing.
The company was taking advantage of federal legislation passed last year that allows companies with less than US$1 billion in revenue in its previous fiscal year to avoid submitting public IPO documents, AP reports.
Thursday, Twitter Inc. unsealed the papers with the Securities and Exchange Commission, giving potential investors and its users a look inside its business. Twitter was required to unseal its documents at least three weeks before it starts holding events around the US to woo potential investors.
According to the IPO filings, Twitter generated US$317 million in revenue in 2012 and had more than 218 million active users in the second quarter, up 44 percent from a year earlier. That compares with nearly 1.2 billion for Facebook and 240 million for LinkedIn.
Three-quarters of Twitter users accessed the service from a mobile device in the second quarter, and 65 percent of its advertising revenue was generated from mobile in the same period. That's more than the 71 percent and the 41 percent, respectively, for Facebook in the same period.
Twitter also said that it lost US$69.3 million in the first six months of 2013, compared with a loss of US$49.1 million in the same period last year. Revenue more than doubled to US$254 million from US$122 million. The revenue figures are largely in line with what analysts have been expecting. Research firm eMarketer had projected ad revenue for all of 2013 at US$583 million.
Gartner analyst Brian Blau said the company's expenditures “seemed to be a little bit higher than what I had imagined,'' but he said it wasn't “totally out of whack'' for a growing company that's investing a lot in its business. Twitter says it expects capital expenditures of US$225 million to US$275 million this year.
During the first six months of 2013, Twitter got nearly all of its revenue _ 87 percent _ from advertising. Advertisers pay Twitter to insert their tweets, accounts or topics into users' feeds. Burger King, for example, recently promoted its new lower-calorie fries, called “statisfries,'' on Twitter.
Twitter has 2,000 employees, up from 200 at the start of 2010.
Twitter did not say which stock exchange it plans to list its shares on, though the company said it intends to use the ticker symbol “TWTR.'' It also doesn't say how many shares it plans to offer, or at what price.
The underwriters of the offering are Goldman Sachs, Morgan Stanley, JP Morgan, BofA Merrill Lynch, Deutsche Bank Securities and CODE Advisors.