Twitter Reports Second Quarter 2014 Results

https://investor.twitterinc.com/releasedetail.cfm?ReleaseID=862505

by antr • 12 years ago

70 50 12 years ago

investor.twitterinc.com

That revenue number is an increase of 124% over the $139 million revenues from Twitter’s second quarter last year.

So yes, Twitter still posted a $145 million loss, but if we extrapolate (never good business practice, but an interesting thought experiment) and they do the same next year, they will be profitable by 2015.

It's unlikely that will happen, but there's light at the end of the tunnel.

anu_gupta• 12 years ago

If we extrapolate, we would need to take into account the fact that Twitter's losses tripled as their revenue doubled.

That light might well be a train.

pitnips• 12 years ago

There are a lot of one-time expenses involved with going public, so you'd have to strip those out of any extrapolation. But I'm not going anywhere near TWTR.

silverbax88• 12 years ago

Twitter is an example of a business that has not, at least not as of yet, even come close to showing a justification for their valuation...or really, even being a publicly traded company.

I'm not saying it won't be, but there are companies that have gone public in the past two years with Billions (with a 'B') in revenue and solid profit margins where the stock is half of Twitter's share price, and those are much larger companies, similar share dilution, etc.

I know it's play money on a digital board, but some fundamentals cannot be ignored.

reuven• 12 years ago

Is Twitter really an example of a business?

To be a business, you need to have higher income than expenses. So far, that has eluded Twitter -- and there's no indication that they are going to start spending less than they're making in the near future.

Also, I can see them making money from advertising. And after that... what?

I'm willing to believe and admit that Twitter is a game changer in many ways. But I'm far more skeptical of their ability to make money and survive. Clearly, Twitter's investors are bullish on Twitter's ability to make money. But if their optimism doesn't pan out soon, everyone with Twitter stock is going to be quite upset.

rmrfrmrf• 12 years ago

1999 would like a word with you.

thegenius3• 12 years ago

if you read the 8k, they doubled revenues but more than tripled losses. all this nongaap bullshit. read the footnotes. they removed stock based compensation and depreciation. how in the hell are those non operational charges? stock soars. hrm... lets make it look like were profitable so our lottery tickets are worth more. no thanks

free2rhyme214• 12 years ago

I agree. Small companies can't get away with this. But if you raise over a billion apparently you can for awhile.

vikramhaer2• 12 years ago

Both are non-cash expenses, so makes sense to consider financials without them when looking at GAAP vs. Non-GAAP. They're certainly operational charges, but somewhat distort P&L.

thegenius3• 12 years ago

I'm not even sure what you mean. They come out of shareholder equity, and all public companies use accrual and not cash-basis accounting. It makes zero sense to strip out those operational charges unless you want to appear profitable for some short-term benefit. I realize companies do this kind of crap. It absolutely does not make it right, and the folly of the stock market is just that: believing just because somebody said or did something that it is also correct, or that something is OK because it looks official on a SEC document.

pptr12• 12 years ago

From an investor standpoint I don't get why the stock is up 30%. I could understand if the stock was going to up 1-8%, but 30+%? Is it all the shorts covering? Is it the fact they brought in a wall street insider as CFO (Anthony Noto).

Wall Street was expecting a loss of 1 cent per share, but they surprised on earnings of 2 cents a share. Not a huge surprise.

Other things that irk me about the stock.

Management, I don't feel a warm and fuzzy having a non founder has a CEO. Nothing that Dick Costello has done to show me he has any long term vision. They fired almost everyone is senior management. Which shows signs of instability. *I haven't seen any product innovations come out of twitter from a end user standpoint organically.

jcdavis• 12 years ago

Aftermarket activity is not a great indicator or what will happen the next day. I doubt it'll be up that much tomorrow

arasmussen2• 12 years ago

Actually in the case of earnings reports released after hours, aftermarket activity is an outstanding indicator of what will happen tomorrow.

alexmr• 12 years ago

It may be a little less, but the volume is high enough (35M+) to be fairly indicative of tomorrow's opening price.

minimax• 12 years ago

TWTR traded like 27M shares in the first hour after the close today, which is roughly equivalent to the average _daily_ volume. This was not prices getting pushed around in a thin market.

Kiro• 12 years ago

How do you trade aftermarket?

arasmussen2• 12 years ago

The stock has already been hammered down over the past few months because last earnings report made it look like growth velocity was slowing but this earnings report shows that growth velocity is recovering (growth is accelerating) so a lot of these major concerns have been addressed and the price has now recovered back to where it was before these concerns. That's my analysis at least.

moultano• 12 years ago

That's what happens when you are trading on the nth derivative.

debt• 12 years ago

Might it be that the new crop of greedy MBAs and investors on the Street are colluding, trying to find new and quick ways to extract lots of capital and make themselves wealthy by pumping up tech stocks?

amorphid• 12 years ago

I've never been particularly bullish on Twitter's ability to make money, mostly because their business model isn't obvious to me. That being said, the fact that they are going to exceed $1 billion in revenue is really impressive to me. I've heard various bearish news over the years: Rails doesn't scale, they will never make money, user growth is slowing, etc. For a company with so many people betting against them, they seem to be pretty good at overcoming challenge's! It won't surprise me to see them making the big bucks in a year or two. Good luck Twitter!

hayksaakian• 12 years ago

Their business model is advertising seems pretty obvious. Am I naïve?

adventured2• 12 years ago

No, you're correct. Their business model has to be and is going to be advertising, just as obviously as Facebook and Google's business models are.

Facebook is printing immense profits now. It wasn't that long ago a lot of people were proclaiming that could never happen. That's not to say Twitter will do the same, but it's entirely plausibly they can reach a modestly profitable ad-based business model off a couple billion dollar sales basis (which it seems they will be able to reach).

deancognation• 12 years ago

yeh but is the growth (I mean user growth not advertiser growth) real or fake?

Twitter seems to be doing NOTHING about dealing with DM spam.

http://mytblocker.blogspot.com/2014/07/yo-twitterwhats-with-...

rjurney• 12 years ago

Pretty much all web companies optimize for big user growth numbers, at the expense of ignoring bots. It sounds good.

virtualwhys• 12 years ago

Well Rails doesn't scale, or at least it didn't at the time when Twitter jumped ship a few years ago.

Could argue that for the current earnings report to have even been possible, they had to move away from Rails; otherwise the user base could not have grown to what it is today.

Saying that, Rails' scaling story has likely improved since 2009/2010, I believe Github and other high traffic sites currently use Rails. For Twitter it was too late. Only high profile company I've heard of that left Rails for greener pastures.

discardorama• 12 years ago

"revenue doubled, but losses tripled"..

There's a reason they brought in that Goldman Sachs guy. And it looks like he has delivered, extracting "profit" out of the numbers.

I'd love to short the stock if I had the spare cash. But as they say, the market can stay irrational longer than you can stay solvent. :-(

Also: how much of this jump is due to the World Cup?

pptr12• 12 years ago

Expected 1 cent per share loss vs 2 cents per share earnings. Not a huge surprise.

I think this jump had everything to do with Noto.

jonknee4• 12 years ago

You can always go for some far dated put options... Anything after the next earnings report will work if it's a fluke quarter from the World Cup.

siculars• 12 years ago

The funny thing about World Cup is that it happens every four years. Two for Olympics. World series, Stanley Cup and Super Bowl are every year. The bottom line is that people like twitter once they interact with it for any reason (like any of the above.) Once they are in they find a reason to stay. As more people around the world get mobile devices that can interact with Twitter, more people will start using Twitter (and Google and FB, etc.)

calpaterson• 12 years ago

Can someone who knows more than me explain why tech companies are including non-GAAP figures (that are more flattering)?

kmfrk• 12 years ago

For the very reason you suggest: http://www.bloombergview.com/articles/2013-10-04/an-accounti....

fizx• 12 years ago

You guys are all focusing on the financial numbers. The real news is that TWTR added 16M MAUs, when the bulls forecast 11M, and the bears forecast 6M.

harlanlewis• 12 years ago

Twitter MAU quarterly reporting growth hack: switch from spam account removal to spam account hellban.

taylorbuley• 12 years ago

Perhaps one of the ways Twitter was able to report MAU increases: subsidized data. Note the lack of geographic breakdown of whence these users came.

http://adage.com/article/digital/twitter-facebook-rate-telec...

epa• 12 years ago

The most important figure to look at here is the cash flow statement. Consider that they are actually cash positive from operations, but are spending more than 1.5x the cash they get from operations on buying companies. Consider also that a lot of their staff are cashing out on their stock options which is the big reason for the GAAP to non-GAAP differences in net income.

jonknee4• 12 years ago

Consider also that a lot of their staff are cashing out on their stock options which is the big reason for the GAAP to non-GAAP differences in net income.

They're giving away huge sums of investor equity to employees instead of having to pay them what they're worth, it's fair that this is recorded as an expense.

kbradero• 12 years ago

i keep wondering how they earn money to keep going (honest question)

olivermarks• 12 years ago

http://adage.com/article/digital/twitter-facebook-rate-telec...

Twitter are doing the old Facebook scam of having telco's freebie data use in return for getting people hooked on posturing and heart on sleeve 'sharing'...

walterbell• 12 years ago

Unfortunately, a lot of tweets include links to non-Twitter sites, which would not be included in freebie data. Will be confusing and/or disappointing for users, putting them behind a glass wall of look-but-dont-read.

jcampbell1• 12 years ago

This report is worthless by itself. Who cares about Year-over-Year numbers for a high growth company. The results vs the previous quarter are most relevant. Sure, there is a holiday effect in Q4 for ad businesses, but the QoQ comparison is the only thing worth looking at.

markdown• 12 years ago

Millions of dollars, but try to send a DM with a link and you get "internal server error", just like you got a year ago.

rubyn00bie• 12 years ago

I'd just like to point out, their loss was pretty much solely the result of a $158 million dollar compensation expense.

"Net loss – GAAP net loss was $145 million for the second quarter of 2014 compared to a net loss of $42 million in the same period last year. Twitter's GAAP net loss included $158 million of stock-based compensation expense."

Thats probably why the "loss" is mostly irrelevant to the stock price increasing. Depending of course on what you think that business action means for the company.

As well, growth is accelerating (increasing at the margins [i.e. The derivative of growth is increasing]).

... Make of it what you will, that's the magic (investing) part.

pierre• 12 years ago

What is the Goodwill line for (up from 363M in 2013 to 514M in 2014) under the current asset section? What does it mean?

Twitter Reports Second Quarter 2014 Results

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