It seems like every day there’s a new piece of data regarding Twitter’s (NYSE:TWTR) highly anticipated initial public offering leaked to the public. Some of it is useful — like speculation about when the company will begin to roadshow its financials with prospective investors (the last week of October, if unnamed sources who spoke to Bloomberg are correct) — while other information is more superficial, but interesting.
The latest bit ostensibly falls into the first bucket: people familiar with the company’s plans tell the Wall Street Journal that Twitter could set a price range for its IPO within the next day or two, laying to rest weeks of speculation on the issue. Twitter is reportedly set to raise $1 billion with its IPO, with a November 6 target target date, according to the New York Post.
Twitter has exercised extreme caution during the buildup to its IPO. In the eyes of many potential investors, the company falls into the same nebulous category of technology and Internet startups that Facebook (NASDAQ:FB) does, and as a result, carries some of the same dubious baggage. The platform is popular, but is it profitable? Revenues are increasing, but are they growing sustainably? Can mobile be monetized?
Like Facebook, Twitter’s success will largely hinge on its ability to attract and retain advertising dollars. According to Twitter’s S-1 filing, the company generated 87 percent of its revenue from advertising in the first half of 2013. Twitter’s major advertising products are its three “promoted” products: Promoted Tweets, Promoted Accounts, and Promoted Trends.
Twitter reports that it grew revenue between 2011 and 2012 by 198 percent to $316.9 million, which is fairly consistent with analyst expectations. For the six months ended June 30, the company reported revenues of $253.6 million, up 107 percent on the year, and a net loss of $69.3 million, up 41 percent on the year. Adjusted EBITDA increased from nearly nothing to $21.4 million.
Twitter reported 218 million monthly active users in in June, up from 151 million a year ago. Timeline views — a measure of engagement, or use of the platform — increased nearly 62 percent over the same period, to about 160 billion. Twitter described its value proposition to advertisers in the context of what makes Twitter unique as a social platform. For example, Twitter offers “ad formats native to the user experience” — promoted Tweets — that fall more or less seamlessly into a user’s timeline, and achieve a natural feel that Facebook has spent years trying to pin down
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