Published Nov. 7, 2013

Where Twitter Spends and Makes its Money

As Twitter prepares to go public under the stock symbol TWTR, losses at the social-networking giant continue to widen as it contends with slowing user growth. The company lost $79.4 million in 2012 and $133.9 million through the first three quarters of 2013. Below, where Twitter spends its money, and how it tries to earn it back:

Twitter’s 2012 Expenses:

Cost of Revenue

Nearly a third of Twitter’s
costs are tied to running
its data centers, including
leasing, maintenance,
energy and bandwidth
costs, and compensation
for operations staff.

Research & Development

Mostly compensation for
engineers creating new products
and services. R&D costs more
than doubled through the first six
months of 2013, compared to
the same period last year.

Sales & Marketing

Compensation for employees in
sales, commissions, business
development and media,
marketing, communications
and customer service roles.

General & Admin.

Compensation for Twitter
executives and employees
in finance, legal, IT, HR and
other administrative roles,
as well as its consulting
and accounting costs.

Twitter’s 2012 Revenue:

Advertising Services

Twitter sells advertisers a platform for global ad campaigns as well as the ability to send highly-targeted ads based on user data they’ve collected.

Data Licensing

Twitter sells data licenses to allow customers to search and analyze historical and real-time data on the 350 billion Tweets created by its users since 2006.

Net Loss

After interest income expenses, other income and interest tax costs, Twitter lost $79,399,000 in 2012.

Contending with Slower Growth

The number of active users of Twitter continues to climb, but the company has been contending with slowing user growth. The most recent quarter marked the third consecutive period of declining monthly active user growth on Twitter, with a 6.4 percent increase from the previous quarter.

Sources: Twitter Inc., Bloomberg reporting