Twitter reports net loss of $162 million, but Q1 revenue climbs 74%
Investors punish stock when report leaks (on Twitter) before end of trading day, take stock down nearly 10 percent
SAN FRANCISCO, Calif. – April 28, 2015 – Twitter, Inc. (NYSE: TWTR) today announced financial results for the quarter ended March 31, 2015, and outlined lower 2015 expectations.
- Q1 revenue of $436 million, up 74% year-over-year, slightly below the previously forecast range of $440 million to $450 million. Excluding the impact of year-over-year changes in foreign exchange rates, total revenue would have increased 80%.
- Q1 net loss of $162 million and non-GAAP net income of $47 million
- Q1 GAAP EPS of ($0.25) and non-GAAP EPS of $0.07
- Q1 adjusted EBITDA of $104 million, above the previously forecast range of $89 million to $94 million, representing an adjusted EBITDA margin of 24%
Twitter’s first quarter revenues were affected by a lower-than-expected contribution from its newer direct response products. The Company expects this revenue impact to continue for the remainder of the fiscal year as outlined in the outlook section below.
“While we exceeded our EBITDA target for the first quarter, revenue growth fell slightly short of our expectations due to lower-than-expected contribution from some of our newer direct response products,” said Dick Costolo, CEO of Twitter. “It is still early days for these products, and we have a strong pipeline that we believe will drive increased value for direct response advertisers in the future. We remain confident in our strategy and in Twitter’s long-term opportunity, and our focus remains on creating sustainable shareholder value by executing against our three priorities: strengthening the core, reducing barriers to consumption and delivering new apps and services.”
In addition, Twitter made two announcements today aimed at strengthening its direct response capabilities:
- Twitter announced that it has entered into a definitive agreement to acquire TellApart, Inc., a leading marketing technology company providing retailers and e-commerce advertisers with unique cross-device retargeting capabilities through dynamic product ads and email marketing.
- Twitter also announced a partnership with Google’s DoubleClick platform to improve advertising performance measurement and attribution for Twitter direct response marketers. As part of the partnership, Twitter will also make its inventory available through the DoubleClick Bid Manager, making it easier for clients who prefer to centralize their buying through DBM to create and manage campaigns on Twitter.
First Quarter 2015 Operational and Product Highlights
Monthly Active Users – Average Monthly Active Users (MAUs) were 302 million for the first quarter, up 18% year-over-year and compared to 288 million in the previous quarter. Average Mobile MAUs represented approximately 80% of total MAUs.
Consumer Products – Twitter launched new native video functionality that allows people to capture, edit and share videos right from within the Twitter app. Other consumer product releases included a recap feature, marked with a “While you were away” heading, that surfaces at the top of the Timeline with some of the best Tweets people may have missed from accounts they follow; Instant Timelines, which provide new users with a personalized timeline of Tweets right from sign-up; and group Direct Messaging, which lets people expand private conversations from one other participant to as many as 30.
Advertising Products -Twitter added a new analytics homepage and a quick promote feature to make it easier for small and medium-sized businesses (SMBs) to get their best content in front of more potential customers. Other new advertising products included targeting through more than 1,000 partner audiences and enhanced conversion tracking for performance marketers on web.
Partnerships – Twitter announced ad syndication deals with Flipboard and Yahoo Japan to extend the reach of Promoted Tweets to a larger audience on these third-party properties. Twitter also announced a partnership with Google to make Twitter content easier to find through real-time searches.
Developers – Twitter’s mobile developer conference, Flight, kicked off its world tour with events held in 17 cities across the U.S. and Europe. In addition, Twitter introduced several updates to the Digits module within its world-class Fabric software developer kit, which include a sign-up for web, friend-finding features, and 2-step verification to give users added security when logging in.
Acquired Companies – Twitter acquired Periscope, a new app that lets users stream and experience live video from their mobile phones, and Niche, a provider of software, community and monetization services for creative content creators. Twitter also announced it agreed to acquire ZipDial, a mobile platform that combines SMS, voice, mobile web and access to mobile apps to bridge users from offline to online.
First Quarter 2015 Financial Highlights
Revenue – Revenue for the first quarter of 2015 totaled $436 million, an increase of 74% compared to $250 million in the same period in 2014. Excluding the impact of year-over-year changes in foreign exchange rates, total revenue would have increased 80%.
- Advertising revenue totaled $388 million, an increase of 72% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased 78%.
- Mobile advertising revenue was 89% of total advertising revenue.
- Data licensing and other revenue totaled $48 million, an increase of 95% year-over-year.
- International revenue totaled $147 million, an increase of 109% year-over-year.
- International revenue was 34% of total revenue.
Net loss – GAAP net loss was $162 million for the first quarter of 2015 compared to $132 million in the same period in 2014. GAAP net loss for the first quarter of 2015 included $183 million of stock-based compensation expense.
Adjusted EBITDA – Adjusted EBITDA was $104 million for the first quarter of 2015, an increase of 182% compared to $37 million in the same period in 2014.
Non-GAAP net income – Non-GAAP net income was $47 million for the first quarter of 2015 compared to $0.2 million in the same period in 2014.
EPS – Basic and diluted GAAP EPS was ($0.25) for the first quarter of 2015 compared to ($0.23) in the same period in 2014.
Non-GAAP diluted EPS – Non-GAAP diluted EPS was $0.07 for the first quarter of 2015 compared to $0.00 in the same period in 2014.
Capital expenditures – Purchases of property and equipment for the first quarter of 2015 were $68 million. Additionally, $5 million of equipment purchases were financed through capital leases during the first quarter of 2015.
Cash, cash equivalents and marketable securities – As of March 31, 2015, cash, cash equivalents, and marketable securities were approximately $3.6 billion, compared to $3.6 billion as of December 31, 2014.
Twitter’s outlook for the second quarter of 2015 is as follows:
- Revenue is projected to be in the range of $470 million to $485 million.
- Adjusted EBITDA is projected to be in the range of $97 million to $102 million.
- Stock-based compensation expense is projected to be in the range of $190 million to $200 million, excluding the impact of equity awards that may be granted in connection with potential future acquisitions.
Twitter’s outlook for the full year of 2015 is as follows:
- Revenue is projected to be in the range of $2.170 billion to $2.270 billion.
- Adjusted EBITDA is projected to be in the range of $510 million to $535 million.
- Capital expenditures are projected to be in the range of $500 million to $650 million.
- Stock-based compensation expense is projected to be in the range of $750 million to $790 million, excluding the impact of equity awards that may be granted in connection with potential future acquisitions.