Twitter on Thursday publicly filed documents to raise up to $1 billion through an initial public offering, revealing that while the social company has been growing rapidly it remains unprofitable.
In the S-1 filing, Twitter said it had 218.3 million average monthly average users for the three months ended June 30, up 44% from a year prior. The social service said its users create approximately 500 million tweets every day.
For 2012, Twitter had $316.9 million in revenue with a net loss of $79.4 million. During the first six months of 2013, the company generated $253.6 million in revenue — more than double the year-earlier period — while its losses also mounted, to $69.3 million (versus a net loss of $49.1 million for the first half of 2012).
“(W)e expect that our revenue growth rate will slow in the future as a result of a variety of factors, including the gradual slowdown in the growth rate of our user base,” the San Francisco-based company said in the filing.
Twitter did not announce where it would list its stock, but said it intends to trade under the symbol “TWTR.”
While the company did not indicate an expected valuation, Twitter’s pricing of shares grants for employees in August and September implied that it valued itself at $9.7 billion.
The Twitter IPO is the most anticipated public offering in the Internet sector since rival Facebook went public in May 2012 — after which Facebook’s stock lost half its value in three months, before rebounding in late July of this year on strong mobile growth.
While Twitter touts its openness relative to Facebook, Twitter is smaller — about one-fifth the size of Facebook’s 1.1 billion active users worldwide. Another stark contrast: Facebook was already quite profitable when it filed for its IPO, earning $1 billion in net income on $3.71 billion in revenue for 2011.
As of June 30, 2013, Twitter said it had about 2,000 employees, hiring more than 1,800 of them in the previous two and a half years.
Among risk factors, Twitter said the biggest is that users will lose interest in the 140-character service that introduced the world to the “hashtag” and other textual shorthands. “If people do not perceive our products and services to be useful, reliable and trustworthy, we may not be able to attract users or increase the frequency of their engagement with our platform and the ads that we display,” it said.
Twitter’s S-1 disclosed terms of several recent acquisitions. In February 2013, it bought Bluefin Labs, a social TV analytics startup, for $67.3 million in stock (with $60 million of that recorded as goodwill). In January 2013, the Company acquired Crashlytics, Inc. (“Crashlytics”), a privately-held company based in Cambridge, Massachusetts, which developed mobile application crash reporting and analysis solutions for mobile application developers. The acquisition of Crashlytics has been accounted for as a business combination. The purchase price of $38.2 million paid in the Company’s common stock.
On Sept. 9, Twitter entered into an agreement to acquire mobile ad exchange MoPub for 14.79 million shares of Twitter common stock; Twitter’s recent internal stock valuation suggests that deal is worth around $300 million.
Last month Twitter announced (in a tweet) that it had filed an S-1 registration statement confidentially with the Securities and Exchange Commission under the provisions of the Jumpstart Our Business Startups (JOBS) Act. The 2012 law, which applies to businesses with less than $1 billion in annual revenue, is aimed at encouraging smaller companies to go public. Under the JOBS Act, qualifying companies do not have to make their IPO filing public until 21 days prior to the “roadshow” for prospective investors.
Goldman Sachs is leading the Twitter offering, along with Morgan Stanley and J.P. Morgan. Also underwriting the IPO are BofA Merrill Lynch, Deutsche Bank, Allen & Co. and CODE Advisors.