Twitter Files First Earning Statement Since Going Public, Posts $500 Million Loss
posted Sunday Feb 9, 2014 by Nicholas DiMeo
As popular as Twitter may be, if it doesn't make money, it's not going to be here forever. This week Twitter had to finally post its earnings, after going public last quarter amidst filing deceptions and SEC investigations. So how much money did Twitter make? It should be no surprise here that the company lost money in its first quarter. And a lot of it.
To start, Twitter's revenue for Q4 was up 116 percent to $243 million. You can attribute that gain to whatever reason you'd like, but one could guess that going public would cause money to come in a bit quicker than before. It apparently also causes money to fly out the door. It has to be that, or Twitter has been burning money like this since the beginning of forever, and it's now finally on record. The company posted a net loss for Q4 of $511 million and a full year net loss of $645 million. So Twitter lost half a billion dollars in one quarter. Well done.
So what does Twitter's fearless leader, Dick Costolo have to say about all of this? "Successes all around!" Of course, I'm paraphrasing.
Twitter finished a great year with our strongest financial quarter to date. We are the only platform that is public, real-time, conversational and widely distributed and I'm excited by the number of initiatives we have underway to further build upon the Twitter experience.
So his insane opening statement means one of two things. It could mean that Dick can't read or see color, because a big red "$511 million" on a piece of paper would sure cause most people to react with something more along the lines of, "well, this didn't go as expected." Or it could mean that Twitter has actually lost more than $511 million in a quarter before, so this blunder isn't too terrible in the grand scheme of things. Either way, a loss is a loss and should not be buried under touting your platform as a real-time, conversational and widely distributed money pit platform.
To be fair, in the SEC filing, Twitter does explain the loss.
GAAP net loss was $511 million for the fourth quarter of 2013 compared to a net loss of $9 million in the same period last year. The company's Q4 GAAP net loss included $521 million of stock-based compensation expense, of which $406 million was for restricted stock units previously granted to employees, for which no expense had been recognized, until the effective date of our initial public offering in accordance with GAAP.
So stock expenses make up most of the loss, with an ever-growing revenue. If this doesn't sound like 1999 all over again, I don't know what does. Because of Twitter's decision to not need a business model, we've been covering the company's disasters and predicting its downfall for a while now. This is despite investors throwing piles of money at Twitter for the past five years, like we were about to bust open some more dot coms or something. And until now, anyone questioning Twitter's decline was shot down with facts highlighting growth and popularity. Now that it's on record, perhaps the tide will finally shift and investors will begin to realize that history is merely repeating itself.
As a side note, since the filing was issued, Twitter's stock has gone down over ten points, or about 15 percent.
