With investors expecting some nice returns from the recent Twitter IPO, the updated S1 filing from the company revealing Q3 results for the year does not seem much appealing. As disclosed, the microblogging site has accrued losses of approx. USD 133.8 Mn till date this year, which is just double as compared to USD 70.7 Mn in 2012.
Recently, at the time of announcing its IPO, the company disclosed financial results publically for the first time. The new SEC filing further disclosed the results of the first 9 months of the calendar year for the years 2012 and 2013 both.
Despite of getting a good revenue figure of USD 422.2 Mn for the 9 months ended period (USD 168.6 Mn for the Q3), the loss graph for Twitter is on a continuous rise and that too in much larger multiples. For instance, in the previous filing, the loss reported for the first half of the year was USD 69.3 Mn. This means, the company suffered from USD 64.5 Mn loss in Q3 (July-September) alone. Thus, at first where the company’s estimate to reach USD 600 Mn revenue was looking promising, these results have seriously put in some question marks on the expectations.
Now, the point to look forward is what exactly are the reasons for these losses? As per the balance sheet, a large sum has been spent on Research and development, which costs a total USD 199.1 Mn to date this year. That means, Twitter spent USD 87.3 Mn in the third quarter on R&D only compared to USD 111.8 Mn for quarters one and two both. Also, the company is quite on its aggressive acquisition strategy (although much lesser than Marissa Mayer), which includes a major acquisition i.e. acquiring MoPub for USD 350 Mn.
On a positive side, the last quarter saw an increase in the monthly active users to 232 Mn from previous 218.3 Mn till June 30, 2013. For Q3, the total timeline views were recorded as 168, 768 Mn, a 8078 Mn high from previous 160,690 Mn in Q1 and Q2 2013.
With Twitter ready to go for its public filing soon, its Q3 results might have an impact on the IPO results. Also, the company will be opting to get listed on the NYSE, instead of the most preferred NASDAQ, looking forward to raise USD 1 Bn.
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