
Twitter reports $645m loss for 2013 - shasa
http://www.bbc.co.uk/news/business-26059710
======
mbesto
Before we jump the gun on this "loss", read this first:[1]

    
    
      Net loss - GAAP net loss was $511 million for the fourth quarter of 2013 compared to a net loss of $9 million in the same period last year. The company's Q4 GAAP net loss included $521 million of stock-based compensation expense, of which $406 million was for restricted stock units previously granted to employees, for which no expense had been recognized, until the effective date of our initial public offering in accordance with GAAP.
    
      Adjusted EBITDA - Adjusted EBITDA was $45 million for the fourth quarter of 2013 compared to $18 million in the same period last year.
    
      Non-GAAP net income / loss - Non-GAAP net income was $10 million for the fourth quarter of 2013 compared to a Non-GAAP net loss of $0.3 million in the same period last year.
    

Oddly enough the _" The company's Q4 GAAP net loss included $521 million of
stock-based compensation expense, of which $406 million was for restricted
stock units previously granted to employees, for which no expense had been
recognized, until the effective date of our initial public offering in
accordance with GAAP."_ seems be tucked away in "Research and Development"
part of the P&L.

It's worth noting they have $2.2b in cash:

> _Cash, cash equivalents and marketable securities - As of December 31, 2013,
> cash, cash equivalents and marketable securities were approximately $2.2
> billion, compared to $321 million as of September 30, 2013._

TL;DR - This $645m "loss" isn't what you think it is.

[1][https://investor.twitterinc.com/releasedetail.cfm?ReleaseID=...](https://investor.twitterinc.com/releasedetail.cfm?ReleaseID=823321)

~~~
downandout
Stock based compensation still costs investors money. They are effectively
using investors' money to pay their employees, and that should and always will
be priced into the stock.

With its 18% decline in after hours trading today, Twitter's market cap is
still $36.63 billion. Even if you analyze it based on the shell-game of
adjusted EBITDA, and assume that it will stay at $45 million/quarter, you come
out with a P/E ratio of 165.

Twitter is not Facebook. Their growth trajectory isn't remotely close.
Personally, I am staying away. I don't want to party like it's 1999.

~~~
yapcguy
> Stock based compensation still costs investors money.

Hi, could you expand upon this, perhaps with an example? Thanks.

~~~
jussij
When the company floats they release a given amount of stock to the market.

If they then also release stock to pay their employees then the total stock in
the market goes up.

If the total number of stock (i.e. shares) goes up but the company profits go
and the money in the bank (and other assets) also goes down then the value of
each of those individual stock items will also be going down.

Hence the drop in the share price.

------
JumpCrisscross
The stock fell 18% because "monthly active users" grew "less than 4 per
cent...between the third and fourth quarters," with US user growth at just "3
per cent quarter-on-quarter". "Facebook," by comparison, "increased its user
numbers at the same 4 per cent rate from a much larger base in the same
period" [1]. The GAAP loss highlighted is due to one-off accounting charges
related to stock compensation.

Note that revenues came in 4% above expectations and 110% higher than last
year's.

[1]
[http://www.ft.com/cms/s/0/a1ecfc6e-8eab-11e3-b6f1-00144feab7...](http://www.ft.com/cms/s/0/a1ecfc6e-8eab-11e3-b6f1-00144feab7de.html#ixzz2sV3UgwVB)

~~~
minimax
They actually mentioned the stock-based compensation and it's impact on GAAP
profitability in their S-1.

 _Following the completion of this offering, the stock-based compensation
expense related to Pre-2013 RSUs and other outstanding equity awards will have
a significant negative impact on our ability to achieve profitability on a
GAAP basis in 2013 and 2014._

[http://www.sec.gov/Archives/edgar/data/1418091/0001193125134...](http://www.sec.gov/Archives/edgar/data/1418091/000119312513400028/d564001ds1a.htm)

------
MechanicalTwerk
I like how the article introduces Twitter as "Microblogging site Twitter..."
as if you haven't heard of Twitter but are familiar with this thing called
microblogging.

~~~
Jare
I think it's more about making Twitter sound less relevant, as if it is "one
of many".

~~~
dublinben
Isn't it though?

~~~
staunch
Yes, in the same sense that Google is just "one of many" available search
engines.

~~~
sgustard
Photo-sharing site Facebook...

------
capkutay
I'm not of those people who thinks all tech valuations are insane, but I think
it is hard to justify twitter being worth 150x their quarterly revenue (~$36b
valuation/~$240m revenue). I understand twitter's valuation reflects the fact
that it's a growing company, but even a company like facebook is only valued
at 60x their quarterly revenue ($158b/$2.5b quarterly revenue).

But at least the consensus on wall street and the financial press seem to
agree that TWTR is clearly overvalued.

~~~
27182818284
>but I think it is hard to justify twitter being worth 150x their quarterly
revenue (~$36b valuation/~$240m

What do you think is easy to justify for Twitter?

(I'm actually pretty confident in Twitter, I guess. They took ten years-ish to
IPO and not a day goes by where I don't see a hashtag on several products be
it a local political group or a super bowl commercial)

~~~
lubujackson
It used to be AOL keywords. Times change quick.

~~~
27182818284
>It used to be AOL keywords. Times change quick.

Interesting idea. I was around for AOL keywords, they weren't the same nor
were they used the same way by as many different types of people. AOL has a
billion dollar market cap still, despite the times changing quickly. Does it
mean Twitter will be around 100 years from now? Of course that's unlikely.
(Isn't GE the only one left from the original US stock exchanges?) But I think
Twitter has a solid shot for the next several years.
#TwitterCouldLose80PercentOfItsUsersAndStillBeLargerThanAOLAtItsPeak

------
rhizome
I saw a provocative question on Twitter this afternoon:

"What exactly does Twitter need 2300 employees for?"

~~~
Touche
Sales. Being a sales company requires a lot of salespeople. That's frankly a
small number considering the number of companies that advertise.

~~~
alphakappa
But they are also an Internet company where the ad signups are done online, so
it's not immediately obvious why they would have all those salespeople. (Not
saying that they don't need a large number of salespeople, but that it isn't
an immediately obvious need)

~~~
judk
Guess how many salespeople Google has.

~~~
ggreenbe
Any chance you know? Would be interested to know their numbers vs twitter.

~~~
dangrossman
"Several thousand" according to WSJ.

------
TomGullen
18% drop in after hours trading... ouch

[https://www.google.co.uk/finance?q=NYSE%3ATWTR&ei=68TyUrjPF4...](https://www.google.co.uk/finance?q=NYSE%3ATWTR&ei=68TyUrjPF4PCwAOWxwE)

Anyone who knows more about Twitter, how exactly can they make such a big
loss? What exactly are they doing?

~~~
pdq
Tons of employees + tons of machines + tons of bandwidth - very little
advertising revenue = big loss

Have you purchased anything or viewed many ads on Twitter?

~~~
TomGullen
Wikipedia says they have 2,000 employees last year, without meaning to sound
rude what exactly do they need all those employees for?

~~~
adventured
It's an interesting question. By comparison, at the end of 2010 Facebook had
about 2,000 +/\- employees and $2b in sales for that fiscal year. Twitter is
roughly three times overstaffed compared to Facebook.

~~~
mastermojo
Do you happen to know how the active user base compares between 2010 Facebook
and 2013 Twitter?

~~~
ryanmerket
Facebook had ~820M MAU at the end of Q4'2010\. Twitter has ~230M MAU at the
end of Q4'2013.

Sauce: [http://lighthouseinsights.in/wp-
content/uploads/2013/07/face...](http://lighthouseinsights.in/wp-
content/uploads/2013/07/facebook-mobile-q213-mau.png)

------
ahknight
Duh? Who really thought Twitter would suddenly become profitable after the
IPO? The VCs cashed out and walked away laughing at the imploding building.

THERE (STILL) IS NO PROFIT MODEL.

~~~
antics
No profit model? Completely wrong.

According to the IPO docs they make about $2/1000 views in America (which is
good) and were projected to make $1 billion in revenue this year (also good).
This article reports that their first quarter revenue is about $250 million,
more than double the previous year, which makes their prediction definitely
feasible. The remaining question is whether they can turn this revenue into
profit, and my answer is yes, because (1) the growth of their operating costs
is dramatically outpaced by the growth of their revenue, and (2) most of their
losses are due to acquisitions (and they are smart acquisitions). So overall
this is a pretty strong portfolio and I'd say it's a completely reasonable bet
they're going to be significantly profitable soon.

Now. Serious question: did you read this article? If yes you should be
embarrassed at your misapprehension here, because in spite of the title, this
data in this article actually paints a pretty damn rosy picture of Twitter's
future. If no, then _why are you commenting here_? Here I am sounding cranky,
but if you're going to do the ALL INTERNET SHOUTING CAPS thing then you'd
better take care not to say something silly. Just my personal opinion, but
next time I'd start by both reading the article _and_ understanding the
article, and I'd follow that up with taking care to make it sound like I don't
think that everyone who disagrees with me is, blanket statement, stupid.
Because some of us _have_ done our homework and still disagree with you.

~~~
zaidf
If you read the article, you should know the primary concern is not the
profits or revenues but rather the decline in product engagement/growth. What
is your response to that? Your comment doesn't even make a single mention of
the #1 reason to be very concerned about twitter.

~~~
antics
Thanks for the spirited reply, Zaid, but I never said I disagree with any of
these points. I'm responding specifically to the _ridiculous_ notion that
profit could not possibly be in the future of a post-IPO Twitter, not this
stuff about whether Twitter is actually in trouble. If you want to take issue
with my position you should probably respond to something I actually said. It
is less productive to pretend I am debating a different set of issues and then
complain when I don't address these other issues.

(I also don't appreciate your assertion that I didn't read an article from
which I cited specific factual statements. Obviously I did. This is all
particularly annoying, since you seem to believe something that I think is
mostly true, and not on something which I concretely disagree; it makes it
seem like you're hunting for a disagreement and not conducting this
conversation in good faith.)

~~~
zaidf
_Timeline views were down nearly 7%, suggesting users were refreshing their
feeds less often._

(1) Twitter makes most of its revenues from timeline views

(2) Timeline views are declining

(3) When a recently IPO'd company's biggest money making product is on the
decline in terms of usage, that is hardly a rosy picture.

~~~
antics
Sure, it is certainly debatable that "rosy" was the right choice of words here
(it probably was a bit bombastic). But unless your plan is to claim that it is
impossible to be optimistic about this situation (which is more or less the
position I have taken issue with), then I'm not interested in having this
discussion.

I'm open to the possibility is wrong; I'm not open to the idea that this
debate about the semantics of "rosy" is the most interesting thing to be said
here.

Sorry if this is a bit blunt.

------
zaidf
Has a social network at twitter's scale ever been able to undo a growth
plateau? In this business you live and die by organic growth.

I have so many problems with the twitter product I don't even know where to
begin. I am working on writing my own UI to twitter to look more like
facebook. At its essence, I long for a twitter that:

* makes it easier to follow and indulge in conversations(facebook does this)

* filters out noise, such as retweets or same links showing up 5 times from 5 different people

* remove the 140 char limit; we've moved away from 140 chars with sms for a reason and it is time for twitter to do the same

~~~
Greenisus
If you want Twitter to be more like Facebook, why not just use Facebook?

I agree that I'd like for it to be easier to dive into a conversation. It's a
lot better than it was years ago, but I still struggle with the UI for that
sometimes.

As for the 140 char limit, I think that should never change. Removing that
would remove the entire essence of Twitter and turn it into endless drivel.

~~~
zaidf
I do already use facebook pretty much all day. But twitter has a different
audience and has more conversations relevant to work. Except the UI sucks and
makes me work my ass off to engage in those conversations. If facebook or
linkedin ends up eating twitter's lunch at some point, I won't complain.

------
batiudrami
The thing that I don't quite get with Twitter is that I genuinely do not know
anyone in real life who actually uses it.

Some people I know have accounts so they can use it as an aggregator, and the
occasional person tweets a question at a pseudocelebrity who isn't otherwise
accessible, but I do not know anyone who uses it for its intended purpose.

For comparison, all my (24, m, Australia) friends use Facebook, most have
Snapchat, half have Instagram, some have Pinterest, few use G+ or tumblr). No
one uses Twitter.

With that in mind, the kind of valuations Twitter has seem insane to me. It
seems like the only people who like it are celebrities and media companies who
desparately want me to 'join the conversation'. Both of those groups are more
than happy to move onto the next big thing, as we saw with Myspace.

It could be me who is just an outlier (this is, after all, completely
anecdotal), but I have a feeling that the outlier might actually be Silicon
Valley.

~~~
grinich
Do you watch sports?

~~~
batiudrami
Yeah, I'm a season member of two sports - cricket and AFL.

------
goblin89
> Twitter brings in money largely by selling advertising space and data on
> tweeting habits.

It's the first time I hear about Twitter selling "tweeting habits" of their
users. I don't know what that means, does anyone?

~~~
corin_
I don't know much about the specifics of what Twitter are selling, but there's
two possibilities:

1\. They're just selling raw feeds of data that people can pay for and analyse
as they wish. This is something they definitely are doing, it's called the
"Twitter Firehose", and isn't cheap to get access to.

2\. They're selling their own, presumably anonymous, analysis of users for
external advertising purposes. For example if I've tweeted about wanting to
buy a car, maybe some car company's agency wants to buy data that will allow
them to (re)target me outside of Twitter - I put (re) in brackets as it's the
same concept as retargeting, but technically just targeting as I wouldn't
(necessarily) have already visited that car seller's website. I've no idea if
Twitter do anything like this, and I'm not entirely sure how it would work
from a technical point of view, I've done marketing based around very targeted
data, but only ever through companies that specialise on figuring out who to
show adverts to, so I've never had to worry about how they were doing it.

~~~
ivv
An ad deal with Twitter comes with an analytics dashboard and an ability to
run surveys on users targeted across various dimensions.

