Twitter IPO: Breaking Down the New S-1 Filing

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Oct. 3 (Bloomberg) -- Bloomberg's Jon Erlichman and Cory Johnson take a look at Twitter's S-1 IPO filing. They speak with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

This the way we look at earnings reports, you might say that twitter's sales fell short of what people expected.

A little more difficult in the case of twitter since they have never shared any financials with us.

You have nothing to use as greater context.

There were some estimates that this was a company that would generate closer to $600 million in revenue this year.

For example, ima return was estimating that in 2013, this company would generate 582.8 million dollars, which would represent more than 100% growth based on their estimates.

Those were the estimates from e- marketer.

What we were told today, in the first half of the year, as you highlighted, the company generated roughly $253 million.

You crunch the numbers on that, and you say, maybe the sales and revenue is a little shy.

There is more of the year to come, for sure.

You did highlight that the bulk of the revenue does come from advertising, touches not a surprise.

Something in the root -- the range of 87%. of the 250 million -- and the 200 million active monthly users, those are generating revenue for twitter with the ads you see or engage with.

They highlighted three areas in particular.

Promoted tweets and promoted trends and promoted accounts.

Promoted tweets are really interesting and an obvious one to understand if you use twitter.

These tweets come into your twitter feed, and you see them there, and they are very easy to engage with.

There are other parts of the business where you are basically taking over the homepage, kind of like with yahoo!. we will continue to go through the filing to sort of look at the growth for other parts of the business, like how much they can generate longer-term from licensing the data stream that is twitter, but certainly here is a company that is generating a lot of year-over-year revenue, maybe not as much as what some would have thought, but additionally, is spending a lot to grow the business.

We are getting more numbers as you speak.

I want to bring cory johnson, our editor at large, in.

You have been combing through the numbers as well.

I want to get to the question of risk factors.

Twitter has warned that its revenue growth may slow down.

What do you see as a major risk factor?

I have been going through some of the user numbers.

I promise i will get to the risk factors section.

The numbers are pretty interesting.

Among the interesting user numbers, 218 million users total, but most of its users are overseas.

Only 49 million in the u.s. 169 million internationally.

As i started to punch these numbers into the model, what we see is that the user growth is actually slowing precipitously.

Users should be compared not year-over-year but sequentially.

The sequential user growth over the course of the last three years has gone from as high as 33% sequential user growth to 18% a year ago or a year and a half ago, to 11% a year ago.

Now 6%. user growth worldwide is dramatically slowing in this business.

That is not to say it cannot re- accelerate.

We saw that happen with facebook.

In the case of twitter, the user growth numbers are slowing down.

That is a risk when you are try to get a growth stock valuation.

All right, cory.

This text has been automatically generated. It may not be 100% accurate.


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