
Twitter files S-1 with the SEC - hornokplease
http://www.sec.gov/Archives/edgar/data/1418091/000119312513390321/d564001ds1.htm
======
robszumski
I'm mostly interested in the non-financials in the document. On the top of the
list is this:

"We have implemented a disaster recovery program, which allows us to move
production to a back-up data center in the event of a catastrophe. Although
this program is functional, we do not currently serve network traffic equally
from each data center, so if our primary data center shuts down, there will be
a period of time that our products or services, or certain of our products or
services, will remain inaccessible to our users or our users may experience
severe issues accessing our products and services."

One of the most technically advanced software companies is still operating a
_single_ critical datacenter instead of many at once?

~~~
richardwhiuk
You'd be surprised how many large organizations don't have fully functioning
disaster recovery scenarios.

Operating active/active is really hard for lots of applications, and having a
spare data centre is hugely capital intensive, for little headline benefit.

------
tcoppi
Loss of almost $80 million on $316 million in revenue, and they're offering
$1b... seems like they're asking for a lot when they have very little.

~~~
7Figures2Commas
Salesforce is worth $30 billion and has no earnings. Amazon is worth $143
billion and has no earnings. Facebook, with a ~$120 market cap, is valued at
more than 200 times earnings. Tesla's market cap is roughly a third of Ford's.

As long as the Fed is easing, fundamentals don't matter. The mispricing in
equities is particularly pronounced in prominent technology companies, but
there is clear excess throughout the market.

The name of the game is momentum. This game will end, and badly, but
questioning the market and fighting the Fed has not been the path to profit so
keep in mind that, right now, Twitter's bottom line is practically irrelevant.

~~~
3am
Come on, don't lump those together.

* 75% of CRM's float is sold short, market clearly agrees with you * AMZN has big FCF numbers, 2012 being an anomaly because of the big fixed capex expenditures. They grow the business without regard to engineering their GAAP earnings, which is admirable, and means the EV/FCF is probably a big, though somewhat reasonable 25-50. * FB analysis requires a DCF because they're growing earnings so fast. They're only 40 x estimated 2014 earnings * TSLA is not the same business model as F or GM, though they all nominally sell cars. Look at the leverage around licensing revenue that ARMH or QCOM showed.

I haven't read Twitter's S-1 and can't comment on it (50 x revenue makes it
feel closer to CRM than any of the others), but I generally agree with your
opinion that equities are near a peak because it is literally impossible for
fixed income to be less attractive as an alternative and the Fed is clearly
letting us know it's closer to the end of QE than the beginning. (disclaimer:
nobody should make investment decisions based on my advice, I'm not a
professional and you could lose all your money if you do, etc)

EDIT: after perusing the S-1 the revenue growth rate is incredible, so it may
end up more like FB (which has only surpassed it's ipo price in the last month
or so...)

EDIT 2: Yahoo!'s short data was laughably wrong, CRM's percent of float sold
short is 10%

~~~
lifeisstillgood
would you mind walking back through that and explaining the acronyms and the
meanings. I can google things like FCF is Free cash flow, but understanding
that? much harder

~~~
tvladeck
Free Cash Flow, conceptually, is the total amount of cash you would have from
the company's operations as a single owner of the company in a given year.

The importance of free cash flow lies in how capital investment (buying
buildings, factories, or other companies, among other things) is treated.

When a company invests money, it doesn't count against the company's profit.
It is just treated as one asset turning into another asset.

/BUT/, if a company is essentially /required/ to invest money in new capital
to keep the business going (think capital intensive businesses like oil
exploration), as an owner you have to budget that you'll need cash to invest
in new things, reducing the amount that actually comes to you.

That hit doesn't show up in profit or revenue, but it does show up in free
cash flow.

~~~
lifeisstillgood
thanks to all replies

------
capex
Somewhat tangentially, I feel Twitter sort of stopped innovating after they
got big. If Google as a search engine can do Gmail, Glass and driverless cars,
why has Twitter made tweeting the only business they do?

~~~
rgbrenner
Might want to click on the link and scroll down to the financial statements.
Twitter lost $70 million during the first half of this year. In fact, they
didn't make a dime in 2010, 2011, or 2012 either.

I don't think I need to post Google's profits for comparison.

One is a vibrant growing company. The other is struggling to stay alive. One
has billions to invest in new ideas. The other needs to raise money before
they burn through it all just doing what they already do.

Twitter doesn't have a dime to invest in new ideas, unless that idea solves
the profitability problem they already have.

And btw, for all that google has invested in, they are still an advertising
company - 98% of their revenue. They make a bit off gmail from ads (I assume),
but they haven't made anything from glass or driverless cars. This is hardly
the type of innovation that Twitter needs.. where is the money going to come
from for what are essentially research projects.

~~~
jusben1369
There's too much of this ignorance being couched as sound financial analysis
here time and time again. Twitter's revenue's are exploding: $28,278,000:
revenue generated in 2010, $106,313,000: revenue generated in 2011,
$316,933,000: revenue generated in 2012 $253,635,000: revenue generated in the
first half of 2013. They could _easily_ be profitable if they cared to. They
don't. They shouldn't. They have this fantastic opportunity to build a
platform that touches everyone's lives. They have easy access to capital.
Seize the day! They don't need to run Twitter like you run a corner store.

~~~
brymaster
> They could easily be profitable if they cared to. They don't. They
> shouldn't.

And herein lies the problem with tech stock IPOs of this generation and this
kind of thinking.

Investors are supposed to sleep easy that they've bought stock in an
unprofitable company? Pretty sure the business model of "touching lives" isn't
going to sit well.

Twitter is just another useless "tech" startup powered by bullshit but soon
any sucker will be able to buy in on the dream. This sort of practice should
be illegal. What the hell are they selling? Tweets?

~~~
Zombieball
Amazon often operates at a break-even or loss yet investors sleep quite easy
putting their money into AMZN stock.

~~~
brymaster
Not really.
[http://ycharts.com/companies/AMZN/net_income](http://ycharts.com/companies/AMZN/net_income)

Amazon actually sells and produces things.

~~~
Zombieball
Yeah they also invest heavily in infrastructure. I am not sure if the same can
be said of Twitter...

------
peterjs
I can't help myself, but Twitter seems to me like a subset of Facebook.
Something like ICQ, AIM, or Yahoo Messenger is to Facebook Chat or Skype.

It came at the right time in the US, but it takes some time for these things
to get abroad. While it arrived to Central Europe, Facebook had enough users
and introduced features like Followers etc. Today, Twitter is solely used by a
marginal tech/hip/geek community here.

And advertising goes where people go. The question is, whether this evidence
suggests that the Twitter of today can't compete directly with Facebook, and
it's success is based on acquiring users before FB matched it in
functionality. How stable this user base is? Is it a similar case as with the
chat applications?

Anecdotal evidence - a friend of mine just asked, whether one should invest in
Twitter... on Facebook.

~~~
radical_vamsi
Fair question to ask! Although would agree with 'subset of Facebook' argument
but therein also lies its beauty. If we look at Facebook today and filter
marginal things away its used primarily to 1) Share updates and 2) Share pics.
Twitter took the first point and made it better. Instagram took 2nd point and
made it better. Both did well. So sometimes (in fact most of the times) its
about taking only one feature and doing it extremely well and I will give
credit to Twitter for this. As for the question related to a stable user base
is concerned it feels people will find usage for both kind of platforms,
general ones and very specific ones!

------
negrit
Jack Dorsey only own 4.9% and Christopher Isaac "Biz" Stone own less than 1%,
they got diluted pretty bad.

~~~
colmvp
Naive question, but how is such a large disparity between the number of shares
that Williams has over Dorsey considering they're both Co-Founders?

~~~
mbell
The founding of Twitter was a bit of a mess.

This is just my understanding of it, is most likely at least partially wrong
and is certainly missing details:

Williams and Noah Glass founded Odeo which did podcasting, Williams was the
CEO and the initial $. Dorsey / Stone worked for Odeo. When iTunes added
podcasting, the writing was on the wall for Odeo. A small group inside Odeo
started working on other ideas, one of which was twitter. This group was
(depending on who you ask) Glass, Dorsey and a contractor, Florian Weber.
After getting the soft public release up, Glass wanted to spin out twitter as
a separate company. Then some unknown stuff happened, Williams fired Glass,
founded a new company called Obvious Corp with Dorsey, Stone and some others.
Obvious Corp (Williams' $) bought out the investors of Odeo, thus acquiring
all it's assets, including twitter then spun out twitter and sold off the
assets of Odeo to a third party.

Interesting interview with Noah Glass here:
[http://www.businessinsider.com/twitter-cofounder-noah-
glass-...](http://www.businessinsider.com/twitter-cofounder-noah-glass-2011-4)

------
kilroy123
I find it interesting how low their revenue is. With Twitter being so popular,
you'd think they'd be above 1 billion in revenue.

Goes to show you how hard it is to monetize some products.

~~~
dcpdx
They've only just started ramping their monetization engine as they've only
been offering paid solutions for a few years now. They get all their revenue
from essentially two products: promoted tweets and promoted accounts, so I see
their revenue as pretty impressive given their simplistic offerings. They're
now trying to get a piece of the $85B/year TV ad industry in the US too, so
expect to see revenue start to come in from a variety of sources. For those
criticizing Twitter because the majority of its users are a passive audience,
remember that TV is in the same boat and commands the lionshare of ad spend
globally. There's a lot of potential here, and they are just scratching the
surface with what's possible.

~~~
kilroy123
That's what I was thinking. If a tv network had as many views as twitter, it
would be doing _very_ well. I'm assuming, no tv network gets as many eye balls
per year?

------
saym
For those of us with limited IPO watching experience, what other companies
have gone public with a negative bottom line?

Another question: will the infusion of capital from going public drive them
towards profitability? What is there plan to become profitable?

~~~
apaprocki
> what other companies have gone public with a negative bottom line?

I just casually checked on the Bloomberg and it seems fairly common. Just in
the US and just in the past 12 months I see hundreds.

~~~
minimax
Hundreds of IPOs in the past 12 months?

~~~
etrain
This is incorrect.

~~~
apaprocki
2013 YTD there have been 886 "equity offerings" on US markets, which includes
all types. If I narrow it down to Initial Public Offerings there are 233. If I
narrow it down further to only Common Stock, there are 186. If I narrow it
down further to those with negative net income, there are 83. So I wasn't
being very precise originally by narrowing it down to IPO of Common Stock, but
there are still a lot with negative income.

~~~
minimax
Thanks for following up!

------
aaronbrethorst

        We anticipate making capital expenditures
        in 2013 of approximately $225 million to
        $275 million
    
        Our users create approximately 500 million
        Tweets every day
    
        Over 65% of our advertising revenue was
        generated from mobile devices in the
        three months ended June 30, 2013
    
        our advertising revenue per timeline view
        was $0.80
    
        As of June 30, 2013, we had approximately
        2,000 full-time employees.
    

Conspicuously absent in the list of acquisitions is Atebits, Loren Brichter's
company, from which Twitter for iPhone was derived.

~~~
nknighthb
I'm guessing they're listing acquisitions in the previous 3 years (3 years
tends to be a magic number in finance, securities, and tax lookback periods;
don't ask me why, probably hysterical reasons). The atebits acquisition was
>36 months ago.

~~~
aaronbrethorst
Interesting, thanks for the data point.

------
AznHisoka
"According to the filing, Twitter has 250 million monthly active users, 100
million of those are daily active users."

I'm not a Twitter insider, but I've been crawling Twitter users for a service
I'm building. Based on my experience I think the number is closer to 25
million, not 100 million, and even that is pretty generous if we're talking
about DAILY active users.

~~~
harryh
Your crawls probably only surface people who create tweets. Lots of people
read twitter on any given day without creating anything.

------
atwebb
8 points in 9 minutes...

I guess some folks are happy to be cashing out.

------
akanet
It appears that the offering price has been censored from this document:

    
    
      To the extent that the underwriters sell more than              shares 
      of common stock, the underwriters have the option to purchase up 
      to an additional              shares from Twitter at the initial public 
      offering price less the underwriting discount.
    

probably due to whatever act allowed Twitter to file without public scrutiny
up-front.

~~~
matthewmcg
Actually, this is because the underwriters are still pricing the deal by
assessing potential market interest. Companies have always been able to amend
their registration statements to fill in pricing details. See
[http://en.wikipedia.org/wiki/Red_herring_prospectus](http://en.wikipedia.org/wiki/Red_herring_prospectus)

~~~
akanet
Ah, noted, thank you. I hear the whispers among institutional investors is
11bn

------
sharkweek
I find $1BN to be kind of low? I guess they know better than I, but that seems
quite a bit undervalued compared to other companies in tech?

~~~
jcdavis
$1B is the value of shares being offered to the public, not their market cap.

~~~
sharkweek
noted, thanks, makes more sense

------
resu
It's interested that they chose NYSE of NASDARK(DAQ).

Facebook IPO trauma?

~~~
pbreit
NASDAQ no longer "owns" the tech world. I'd say it still has the edge but it's
much more balanced now than it used to be. Some notable recent tech IPOs on
NYSE: LinkedIn, Pandora, Trulia, RingCentral, Violin Memory, Fusion IO.

~~~
tanzam75
Pandora and Zillow just wanted the ego boost from having a single-letter
ticker symbol.

~~~
pbreit
Zillow is on NASDAQ. The symbol customs have changed as well. NYSE symbols
were typically 1-3 characters while NASDAQ were 4. But of course we know FB
and Z are now on NASDAQ (and LNKD on NYSE).

~~~
tanzam75
Thanks for the correction.

So I'm curious -- do NYSE and NASDAQ have an agreement not to assign the same
ticker?

------
dm8
Letter from founders/company seems to be really short and to the point, just
like Twitter itself. No grandiose words but simple mission - "..to give
everyone the power to create and share ideas and information instantly without
barriers"

[http://www.sec.gov/Archives/edgar/data/1418091/0001193125133...](http://www.sec.gov/Archives/edgar/data/1418091/000119312513390321/d564001ds1.htm#toc564001_12a)

Key numbers:

Revenue for first 6 months till June 2013 - $253.6 million with net loss as
$69.3 million

------
cantbecool
What's the average time between filing the S-1 with the SEC and then being
listed on the stock market?

------
rdl
Wow, they fall below what I thought the required threshold for going public
now was ($500mm/yr revenue). I guess the assumption is they could scale their
revenue fairly comfortably.

~~~
rgbrenner
It looks like they are at $450m for the past 12 months (ending june 30), and
are on track to pass $500m this year, even assuming no further revenue growth
for the rest of the year.

------
tareqak
Is the SEC open in the midst of the shutdown?

------
nashequilibrium
Why does Jack Dorsey only own 4.9%?

~~~
chollida1
Probably due to this...

[http://venturebeat.com/2011/09/08/twitter-400-million-
round/](http://venturebeat.com/2011/09/08/twitter-400-million-round/)

[http://venturebeat.com/2011/09/08/twitter-400-million-
round/](http://venturebeat.com/2011/09/08/twitter-400-million-round/)

> Sources cited by the Financial Times claim DST has invested $400m for a 5%
> stake in the company, with US mutual fund T Rowe Price and an internet fund
> managed by JPMorgan leading a group of other investors.

I doubt Jack put in an equivalent amount to ensure he didn't get diluted:)

~~~
muzz
An investor buying 5% of the company doesn't cause a lot of dilution. Earlier
rounds were certainly more dilutive.

