On Monday, Twitter (TWTR, Financial) announced financial results for the quarter ended September 30, 2014.
Financial Highlights of the Quarter:
- Q3 revenue of $361 million, up 114% year-over-year
- Q3 net loss of $175 million and non-GAAP net income of $7 million
- Q3 GAAP EPS of ($0.29) and non-GAAP EPS of $0.01
- Q3 adjusted EBITDA of $68 million, representing an adjusted EBITDA margin of 19%
"We had another very strong financial quarter" said Dick Costolo, CEO of Twitter. "I'm confident in our ability to build the largest daily audience in the world, over time, by strengthening the core, reducing barriers to consumption and building new apps and services."
Third Quarter 2014 Operational Highlights:
- Average Monthly Active Users (MAUs) were 284 million for the third quarter, an increase of 23% year-over-year.
- Average Mobile MAUs represented around 80% of total MAUs.
- Timeline views reached 181 billion for the third quarter of 2014, an increase of 14% year-over-year.
- Advertising revenue per thousand timeline views reached $1.77 in the third quarter of 2014, an increase of 83% year-over-year.
Performance of the products:
- Users: Twitter launched its biggest update to the profile experience on the iPhone with an increased focus on bios, tweets and photos, making it easy for users to get a glimpse into the people they care most about on Twitter, resulting in an 83% increase in profile impressions on iOS. Twitter also launched new consumer experiences around the NFL, making it easy to stay up to date and keep up with the latest action. In the #NFL Timeline, users can see NFL-related Tweets from people in their network, along with relevant Tweets from teams, players, coaches, press, fans and celebrities. Finally, Twitter released a new camera for the Vine app with powerful new ways to edit videos as well as the ability to import existing videos and turn them into Vines.
- Advertisers: Twitter launched a number of new advertiser tools, including: a Promoted Video beta, which streamlines video playback and brings a one-tap viewing experience to users' timelines; a test of the "Buy" button, allowing users to complete an entire purchase directly from a tweet; objective-based campaigns, reports and pricing, which make it easier for advertisers to create and optimize successful marketing campaigns and pay only for the actions that are aligned with their marketing objectives; and new tools to make it even easier to create, manage and activate tailored audiences on Twitter. The new tailored audience features include audience list upload capability, better audience management tools, new supported ID types for creating audiences - specifically, mobile advertising IDs and mobile phone numbers - and improved targeting options to help advertisers reach additional users similar to their existing audiences.
- International Expansion: Twitter continued the international expansion of Twitter Ads to 12 additional markets in Central, Continental and Eastern Europe. In addition, Twitter entered 12 new countries with its self-service ad products for small- and medium-sized businesses (SMBs): Argentina, Chile, Colombia, Ecuador, Guatemala, Mexico and Peru in Latin America, and Belgium, France, Italy, Luxembourg and the Netherlands in Europe. Twitter's self serve ad products now serve marketers in 20 countries that, in aggregate, account for more than 45% of its global monthly active user base.
- Developers: Twitter announced its first mobile developer conference, Flight, where it subsequently unveiled Fabric, a modular, integrated SDK that combines the functionality of Crashlytics, the MoPub ad serving platform, and a new Twitter SDK to help developers build and deliver scalable, stable apps with state of the art app monitoring, mobile identity and monetization services.
- Acquired Companies: Finally, Twitter closed the acquisitions of CardSpring, a payments infrastructure company, TapCommerce, a leader in mobile retargeting and re-engagement advertising, and SnappyTV, a platform for video editing and distribution.
Third Quarter 2014:
Revenue - Revenue for the third quarter of 2014 totaled $361 million, an increase of 114% compared to $169 million in the same period last year.
- Advertising revenue totaled $320 million, an increase of 109% year-over-year.
- Mobile advertising revenue was 85% of total advertising revenue.
- Data licensing and other revenue totaled $41 million, an increase of 171% year-over-year.
- International revenue totaled $121 million, an increase of 176% year-over-year.
- International revenue was 34% of total revenue.
Net loss - GAAP net loss was $175 million for the third quarter of 2014 compared to a GAAP net loss of $65 million in the same period last year. GAAP net loss for the third quarter of 2014 included $170 million of stock-based compensation expense.
Adjusted EBITDA - Adjusted EBITDA was $68 million for the third quarter of 2014, an increase of 635% compared to $9 million in the same period last year.
Non-GAAP net income / loss - Non-GAAP net income was $7 million for the third quarter of 2014 compared to a non-GAAP net loss of $17 million in the same period last year. Non-GAAP net income was negatively impacted by $8 million in non-cash foreign exchange adjustments resulting from currency fluctuations, as reported in other expense. In addition, non-GAAP net income was negatively impacted by $0.6 million in higher interest expense due to the completion of the company's convertible note offering in the third quarter, as reported in interest expense. Without these items, non-GAAP net income would have been $15.4 million.
EPS - Basic and diluted GAAP EPS was ($0.29) for the third quarter of 2014 compared to ($0.48) in the same period last year.
Non-GAAP EPS - Non-GAAP EPS was $0.01 for the third quarter of 2014 compared to ($0.13) in the same period last year. Non-GAAP EPS was negatively impacted by $8 million in non-cash foreign exchange adjustments resulting from currency fluctuations, as reported in other expense. In addition, non-GAAP EPS was negatively impacted by $0.6 million in higher interest expense due to the completion of the company's convertible note offering in the third quarter, as reported in interest expense. Without these items, using non-GAAP diluted shares of 683 million, non-GAAP EPS would have been $0.02.
Capital expenditures - Purchases of property and equipment for the third quarter of 2014 were $39 million. Additionally, $62 million of equipment was financed through capital leases during the third quarter of 2014.
Cash, cash equivalents and marketable securities - As of September 30, 2014, cash, cash equivalents and marketable securities were approximately $3.6 billion, compared to $2.1 billion as of June 30, 2014, reflecting the successful completion of the company's convertible note offering.
