Twitter has filed to go public, saying it will sell shares under the name TWTR. The IPO will initially seek to raise up to $1 billion.
In its first public disclosure of financial performance, Twitter revealed it is growing revenue fast but losing money. In a registration filing with the Securities and Exchange Commission, known as a "form S-1," Twitter says its revenue increased to $316.9 million in 2012, from $106 million in 2011. Its net loss for 2012 was $79 million.
In the first six months of this year, according to the filing, it pulled in $253.7 million in revenue, up from $122 million in the first six months of 2012. But its losses appear to be widening. The company lost $69 million in the first six months of this year, not far from its total loss for all of last year.
The company said it had 218.3 million users per month, on average, for the three-month period ended in June. That's up from 85 million users per month in the same period last year.
Before going public, the company must first wait through a three-week quiet period. After a "road show" that markets shares, Twitter and its underwriters, led by Goldman Sachs, will set a price for them. Twitter stock won’t be available to the public, then, until November.
Twitter had reportedly been planning to raise $1.5 billion with an offering of 50 million to 55 million shares priced at $28 to $30 each. Its 2013 revenue had been estimated at $545 million by eMarketer, set to rise to $807 million in 2014.
Twitter said more than 65 percent of its advertising revenue came from mobile devices like tablets and smartphones. Because mobile advertising revenue is growing much more quickly than desktop advertising revenue in developed markets like the U.S., some believe Twitter has as a significant advantage over rivals like Facebook, which gleaned just 41 percent of ad revenue from mobile in its most recent quarter.
Twitter’s IPO filing marks its first release of revenue and profit figures, providing an unprecedented glimpse into the company’s financial health and growth prospects.
More broadly, the filing sets the tone for one of the most anticipated IPOs in the current tech boom, matched only by the likes of Facebook and LinkedIn. Enthusiasm for Twitter shares could encourage more tech companies to go public rather than wait or sell themselves to larger competitors. Among the companies rumored to be weighing an IPO this year are enterprise storage firm Box; big data outfit Palantir; payment provider Square, which shares co-founder Jack Dorsey with Twitter; marketing software company HubSpot; and discount retailer Gilt.
Launched in 2006 as a way to circulate text messages among groups, Twitter quickly expanded beyond the California tech cognoscenti to become a global phenomenon, with everyone from Hollywood celebrities to world political leaders to political dissidents trading messages via the web, smartphone apps, and SMS messages. But Twitter repeatedly hit scaling and stability problems and was slow to monetize its popularity.
That helps explain why Twitter’s IPO will be much smaller than Facebook’s $16 billion offering in May 2012.
Twitter’s lower revenue did help it in one regard: Since the company’s annual sales are below $1 billion, it was able to submit a draft version of its S-1 to federal regulators back in July and was then presumably able to incorporate the feds’ confidential feedback into the final S-1 filed today. Typically, draft filings and SEC feedback are submitted in full public view, but under the recently-enacted JOBS Act smaller companies like Twitter may keep the process private.
