Twitter Inc. is officially under the Wall Street microscope.
The registration statement for the company’s initial public offering was made public Thursday, unveiling the Internet darling’s vital statistics. The company, which has built an empire 140 characters at a time, has seen revenues skyrocket, but has yet to figure out the profit side of its business.
This story first appeared in the October 4, 2013 issue of WWD. Subscribe Today.
Revenues jumped nearly threefold in 2012 to $316.9 million. But the firm has yet to turn a profit, registering net losses of $79.4 million last year — an improvement from red ink of $164.1 million in 2011. Twitter logged adjusted earnings before interest, taxes, depreciation and amortization of $21.2 million for 2012.
The company has more than 215 million monthly active users and more than 100 million daily active users spanning the globe.
By comparison, Facebook has more than one billion active users a month.
Twitter said usage on mobile devices was the “primary driver” of its business. Seventy-five percent of Twitter’s average monthly users logged onto the platform on the go during the second quarter. And more than 65 percent of the firm’s advertising revenue was generated from mobile devices over the same period.
Advertisers are able to target an audience based on a host of factors, including a user’s Interest Graph — a tool provided by Twitter that helps brands figure out what the company’s users are interested in based on how they use the site.
Twitter noted that advertisers use its “promoted products,” such as tweets that brands pay to distribute to certain users, to “amplify their visibility and reach, and complement and extend the conversation around their advertising campaigns.”
Although it is still not clear just how successfully Twitter can transform its revenue growth into profits, the company has set its broader goal very high.
“We aim to become an indispensable daily companion to live human experiences,” the company said.
Twitter tried hard in the filing to burnish its credentials as a vital pathway to a very broad audience.
Tweets echo in the larger digital realm, repeated on Web sites and news outlets. The company said tweets received about 30 billion impressions outside the confines of Twitter.
The exact timing of the hotly anticipated offering is still not clear, although it’s expected to come this fall. The filing suggests Twitter could raise as much as $1 billion in the offering, although that figure is a placeholder for the paperwork. Goldman Sachs & Co., Morgan Stanley, J.P. Morgan, Bank of America Merrill Lynch and Deutsche Bank Securities are underwriting the offering.
Evan Williams, cofounder and director, is the company’s biggest shareholder. He owns 56.9 million shares, or 12 percent of the company, and stands to gain the most in the offering.
Director Peter Fenton has a 6.7 percent stake with 31.6 million shares; chairman and cofounder Jack Dorsey has a 4.9 percent stake with 23.4 million shares, and chief executive officer Richard Costolo has a 1.6 percent stake with 7.6 million shares. Costolo’s pay totaled $11.5 million last year.
Twitter isn’t the only social media phenom thinking hard about how it will start to make money.
Although the news was overshadowed by the Twitter registration, photo and video sharing platform Instagram said it would start to feature advertising.
The company said in a blog post Thursday that, over the next several months, users in the U.S. will see an “occasional ad” in their feeds. The blog cautioned that it will “start slow,” illustrating that the company’s mission is to make ads feel “as natural to Instagram as the photos and videos many of you already enjoy from your favorite brands.”