Twitter Inc (TWTR) Unprofitable For At Least The Past 3 Years

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Twitter Inc (TWTR) Unprofitable For At Least The Past 3 Years
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Twitter, which recently revealed its first public financial statement, has not recorded a profit for at least in the past three years. The micro blogging site stated in its financial statement that it posted a loss of $79.4 million on about $317 million in sales in 2012.

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Twitter Inc (TWTR) Unprofitable For At Least The Past 3 Years

Twitter may post even bigger losses for 2013

Further, the company said that it may post even greater losses in 2013. Twitter is already sitting on losses of $69 million during the first six months of this year. However, sales are also surging for twitter, recording revenue of $254 million during the same period.

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Twitter so far has disclosed the financials of only the past three years, which is required as a part of the IPO process. For 2010, the company posted a loss of $67 million and $164 million in 2011.

 Mobile segment impressive

There were also some positive points in the IPO (Initial Public Offer) filing recently by Twitter; for example, the mobile segment of Twitter is showing impressive potential.

Mobile ads contributed for 65 percent of revenue last quarter, and mobile device users accounted for three quarters of Twitter’s 218 million monthly active users (MAUs). Furthermore, the number of monthly active users surged 44 percent from last year.

Twitter, like other social media sites, draws a chunk of its revenue from advertisements. For first six months of 2013, advertisement accounted for 87 percent of total revenue, and, in 2012, it contributed 85 percent to the revenues.

 Twitter displays ads for corporate accounts, specific tweets and topics, and sponsored content is shown in user’s feeds. Suggested accounts are shown in the who to Follow box in the top slot. Additionally, trends like the name of a TV show premiering tonight can also be displayed on Twitter.

78 percent of Twitter’s users are outside the United States, but revenue from around the world contributed to just a quarter of the company’s total sales, for the first six months of 2013.

Other details regarding Twitter’s IPO

TWTR filed for IPO Paperwork under the JOBS Act, which allows the company with a valuation of less than $1 billion to file the paperwork confidentially.

Twitter will trade under the ticker symbol of TWTR, but the exchange has not been revealed yet. Lead Underwriter of the IPO process is JPMorgan Chase & Co (NYSE:JPM) and second lead is Morgan Stanley (NYSE:MS).

Information regarding the price and volume of shares has not been made public, as companies do not reveal it in their initial IPO filings. Such information will not be revealed until the IPO hits the market. However, Twitter is estimated to be valued at around $10 billion.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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