Anyone suggesting that Spotify’s lack of profitability will be a barrier to any IPO should take a look at Twitter’s latest financial results: the social network’s net losses grew from $42.2m in the second quarter of 2013 to $144.6m in the same quarter this year.
This, despite revenues increasing sharply from $139.3m to $312.2m in the same period – a year-on-year rise of 124%. Although CEO Dick Costolo pitched the figures thus: “Our strong financial and operating results for the second quarter show the continued momentum of our business.”
Note, the net losses are under the Generally Accepted Accounting Principles (GAAP) framework. Twitter also declared non-GAAP figures: a net profit of $14.6m, which is the figure that analysts and investors appeared more concerned with.
Twitter’s latest financials did at least scotch suggestions that its user growth is flattening out – at least for now. The company averaged 271m monthly active users (MAUs) in Q2, up 24% year-on-year, with timeline views up 15% to 173bn.
This, of course, had a lot to do with the World Cup, during which Twitter put a lot of effort into showing live scores, match timelines and using push notifications to encourage people to log in during games. Whether that leads to more growth in Q3 remains to be seen.
Like Facebook – albeit without the profits – Twitter’s business is heavily mobile. $277m of the company’s Q2 revenues came from advertising, with mobile ads accounting for 81% of that total. That said, Twitter nearly doubled its income from data licensing and other revenue streams year-on-year to $35m.
The company expects its full-year revenues for 2014 to reach between $1.31bn and $1.33bn, suggesting that mobile ads could be nearly a $1bn business for Twitter this year. Twitter’s share price rocketed nearly 30% after the earnings were announced, with investors bullish about its performance.
One final point: there may be trouble ahead for some of the marketers – music included – who take the real-time, unfiltered nature of Twitter’s stream for granted. In the company’s earnings call, Costolo was asked whether his company is exploring Facebook-style algorithmic timeline filters.
“I think it’s fair to say that we are not ruling out any kinds of changes that we might deliver in the product in service to bridging that gap between signing up for Twitter and receiving immediate value,” he said. “You will see a number of kinds of experiments that we produce there.”
Let’s see how those experiments go down with people already worried about declining organic reach on Facebook.