A Mixed First Earnings Day for Twitter
Let's hope you're not operating your business like Twitter.
The micro-blogging site released its first earnings as a public company, for the fourth quarter, after the end of trading on Wednesday. It shows ever-increasing losses, though its monthly users are steadily growing too.
"Our goal is to reach every person on the planet," Twitter's chief executive Dick Costolo said during an evening earnings call.
Revenue for the quarter was $243 million, a 115 percent increase compared to the fourth quarter 2012. For the full year, revenue also more than doubled to $665 million
Still, Twitter is not profitable. For the fourth quarter, it posted a loss of $511 million, compared to a loss of $8.7 million for the same quarter a year earlier. For the full year, it logged a $645 million loss, a more than 700% increase compared to the full year 2012, when it showed a loss of $79 million. Michael Gupta, Twitter's chief financial officer, said the losses were related to stock-based compensation not accounted for until the IPO.
The stock market so far has been giving Twitter the benefit of the doubt, and in fact has viewed it as a tech darling until recently. Its share price has soared about 150 percent since going public in November with an offering price of $26. Increasing share price has also fattened the company's value to about $36 billion. In recent weeks, however, its stock has been trending downward, decreasing more than half-a-percent to $65.97 by the end of day Wednesday.
On the bright side, Twitter notched fair user growth of 30 percent to 241 million monthly active users for the full-year 2013, but only a 4 percent increase compared to the third quarter of 2013, when the company reported 232 million monthly users. User growth is an important marker for both analysts and the company, who see such growth as the key to increasing the company's advertising revenue.
Advertising revenue, which makes up the majority of Twitter's sales, rose 121 percent to $220 million year over year.
International revenue, where Twitter has said it expects to derive most of its future growth, increased 200 percent to $66 million, although that makes up less than one quarter of Twitter's total revenue.
Twitter, which books advertising sales per 1000 timeline views, said revenue increased 76 percent to an average $1.49. In the U.S., however, ad revenue was $3.80 per 1000 views, compared to 80 cents internationally.
For 2014, Twitter estimates first quarter revenue to be between $230 million and $240 million. It forecasts revenue between $1.1 billion and $1.2 billion for the full-year 2014.
"We have only scratched the surface of what we believe Twitter can become," Costolo said.