Twitter May Be Global, but Most of Its Revenue Isn't

Photographer: Niall Carson/Press Association via AP Image

The Managing Director of Twitter in Ireland announces 100 new jobs at the company's European headquarters in Dublin on Sept. 25, 2013. Close

The Managing Director of Twitter in Ireland announces 100 new jobs at the company's... Read More

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Photographer: Niall Carson/Press Association via AP Image

The Managing Director of Twitter in Ireland announces 100 new jobs at the company's European headquarters in Dublin on Sept. 25, 2013.

With more than three-quarters of Twitter's 218 million active users coming from outside the U.S., the social network truly is home to a "global conversation," as the San Francisco-based company wrote in its filing for an initial public offering. However, Twitter is having trouble making money from all the chatter happening around the world.

Twitter generated $53 million in international revenue last year, making up about 17 percent of its total revenue, according to the prospectus. Compare that with Facebook, which had international revenue last year of at least $2.5 billion, or about half of all its revenue.

"Twitter has been much slower to build monetization from its international users than its U.S. users and clearly will have to work on monetizing its international audience going forward," Zachary Reiss-Davis, an analyst at Forrester Research in San Francisco, said in an interview.

With a public-market debut imminent, Twitter makes just $0.30 from an international user viewing his Twitter feed versus $2.17 per view in the U.S., as of the quarter ending in June. Jim Prosser, a spokesman for Twitter, declined to comment.

Encouragingly, that international stat has improved substantially, 111 percent, compared with the same period in 2012. And the share of Twitter's revenue that came from outside the U.S. increased in the first six months of this year to 25 percent, or $62.8 million. The company's overall revenue is more than doubling annually, even as it remains unprofitable.

Twitter said in the filing that it's prioritizing international growth by adding languages, introducing advertising products in more countries and opening additional offices. The company currently has outposts in more than 15 cities around the world, including sales and marketing teams in Australia, Brazil, Canada, Japan and the U.K.

"This is still a young company," Clark Fredricksen, a vice president at research firm EMarketer in New York, said in an interview. "Facebook, by comparison, was a much more mature business at this point, with more ad products overseas."

That's true, but Google's business wasn't as well developed when it went public in 2004, either. Even still, Google was making 34 percent of its revenue that year from outside the U.S. International revenue has increased over the years to 53 percent in 2012.

Twitter's IPO document gave several excuses for why it's behind in making money overseas: competition from Sina Weibo in China, Line in Japan and Kakao in South Korea; difficulties complying with local laws and regulations; and global advertisers' lack of familiarity with digital ads.

But one big business risk is largely out of Twitter's control. Because its service works on feature phones via text message, it can reach an audience that most Internet companies don't. Twitter has long considered this a virtue. But supporting those users, many of whom are in India and other emerging markets, costs the company money. And it has few ways to monetize those users.

There are a lot of companies rooting for the smartphone revolution to take hold everywhere, and you can count Twitter among them.

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