
Twitter Reports Second Quarter 2014 Results - antr
https://investor.twitterinc.com/releasedetail.cfm?ReleaseID=862505
======
pptr1
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
Aftermarket activity is not a great indicator or what will happen the next
day. I doubt it'll be up that much tomorrow

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

~~~
jonknee
Usually, but not always with fast moving momentum stocks like TWTR. The
initial movement is triggered by algorithms that try and figure out if the
earnings report was good or not. I remember an absolutely wild Facebook swing
after an earnings statement that went from huge up to down the next day (once
it was mentioned on the conference call that teen usage was down).

There are going to be a ton of sellers tomorrow (if I had any shares I sure
would), it will be interesting to watch. You know that some of the bears who
got squeezed this afternoon are going to double down and be back on the hunt
tomorrow.

------
epa
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.

~~~
jonknee
> 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.

------
discardorama
"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?

~~~
siculars
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.)

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

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

~~~
adventured
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).

~~~
jonknee
> 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).

I'm not sure I would say immense, but they are certainly making profit.
Facebook makes a little more than half the profit of HP (which many HN users
may have forgotten still exists).

What is immense is its valuation of 80 times earnings even while the product
is literally running out of humans left to be new users (let alone humans who
have money).

~~~
danieltillett
> What is immense is its valuation of 80 times earnings even while the product
> is literally running out of humans left to be new users (let alone humans
> who have money).

This is what amazes me. The last few humans left without a facebook account
are those earning $2 day. What possible business model can sustainably boost
earnings 10x from here?

~~~
orbifold
Also those that made a few fake facebook accounts to stalk people in
highschool, but never had an actual account because they had not more than a
handful of friends and did not want to give an american coorporation all their
personal details. Oh, also countless variations Jesus and Mohammed accounts
giving spiritual advice to strangers.

------
austenallred
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
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
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.

------
rubyn00bie
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.

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

~~~
kmfrk
For the very reason you suggest:
[http://www.bloombergview.com/articles/2013-10-04/an-
accounti...](http://www.bloombergview.com/articles/2013-10-04/an-accounting-
lesson-for-twitter-).

------
taylorbuley
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...](http://adage.com/article/digital/twitter-facebook-rate-telecom-
deals-abroad/293741/)

------
olivermarks
[http://adage.com/article/digital/twitter-facebook-rate-
telec...](http://adage.com/article/digital/twitter-facebook-rate-telecom-
deals-abroad/293741/)

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
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.

------
markdown
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.

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

------
jcampbell1
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.

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

------
thegenius
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

~~~
vikramhaer
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.

~~~
thegenius
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.

~~~
vikramhaer
Not saying I disagree. I don't think people should be looking at GAAP vs. Non-
GAAP if they don't understand that one vs. the other doesn't make the company
more or less profitable. My point is it helps better understand the company
from an operational perspective when very high SBC or D&A can significantly
distort actual expenses.

~~~
thegenius
My point to you is that SBC and D&A _are_ actual expenses in every way
imaginable. Just because Twitter says not doesn't make it so.

