SAN FRANCISCO, Oct. 26, 2017 /PRNewswire/ -- Twitter, Inc.
(NYSE: TWTR) today announced financial results for its third
quarter 2017.
"This quarter we made progress in three key areas of our
business: we grew our audience and engagement, made progress on a
return to revenue growth, and achieved record profitability," said
Jack Dorsey, Twitter's CEO. "We're
proud that the improvements we're making to the product continue to
bring people back to Twitter on a daily basis. It's our job to help
people stay informed about what's happening in the world and what
people are talking about, and we're focused on making our service
faster, easier to use, and more relevant to more people every
day."
"We're pleased with the improvements made toward a return to
revenue growth this quarter," said Ned
Segal, Twitter's CFO. "Our momentum was driven by improved
execution from our sales team, strength in video and direct
response ad formats, as well as in our data business, where we saw
our third consecutive quarter of accelerating year-over-year
growth. We also achieved record profitability in Q3, with a
sequential improvement in our GAAP net margin and record adjusted
EBITDA margins, reflecting improved prioritization and disciplined
execution across our strategic priorities."
Third Quarter 2017 Operational and Financial
Highlights
The company posted third quarter revenue of $590 million, a decrease of 4% year-over-year.
Quarterly GAAP net loss was $21
million, representing a GAAP net margin of (4%) and GAAP
diluted EPS of ($0.03). This compares
with a quarterly GAAP net loss of $103
million, representing a GAAP net margin of (17%) and GAAP
diluted EPS of ($0.15) in the same
period last year.
Quarterly non-GAAP net income was $78
million, or $0.10 per diluted
share. This compares with a quarterly non-GAAP net income of
$61 million, or $0.09 per diluted share in the same period last
year.
Adjusted EBITDA was $207 million
or 35% of total revenue, compared to $181
million or 29% of total revenue in the same period last
year.
Average MAU1 was 330 million for the quarter, up 4%
year-over-year and compared to 326 million in the previous quarter.
Average DAU grew 14% year-over-year, an increase from 12%
year-over-year growth in the prior quarter and marking the fourth
consecutive quarter of double-digit growth.
Outlook
For the fourth quarter, we expect:
- Adjusted EBITDA to be between $220
million and $240 million
- Adjusted EBITDA margin to be between 35% and 36%
- Capital expenditures to be no more than $110 million
- Stock-based compensation expense to be in the range of
$90 to $100 million
We also expect that at the high end of our adjusted EBITDA
range, we will likely be GAAP profitable.
Note that the company's outlook for the fourth quarter reflects
foreign exchange rates as of October 16,
2017.
For more information regarding the non-GAAP financial measures
discussed in this press release, please see "Non-GAAP Financial
Measures" and "Reconciliation of GAAP to Non-GAAP Financial
Measures" below. Guidance for Adjusted EBITDA and Adjusted
EBITDA margin excludes stock-based compensation expense,
depreciation and amortization expense, interest and other expense,
net, provision (benefit) for income taxes, restructuring charges
and one-time nonrecurring gain. The company has not reconciled
Adjusted EBITDA guidance to GAAP net loss because it does not
provide guidance on GAAP net loss or the reconciling items between
Adjusted EBITDA and GAAP net loss, other than stock-based
compensation expense, as a result of the uncertainty regarding, and
the potential variability of, these items. The actual amount of net
loss and such reconciling items will have a significant impact on
its Adjusted EBITDA and Adjusted EBITDA margin. Accordingly, a
reconciliation of the non-GAAP financial measure guidance to the
corresponding GAAP measure is not available without unreasonable
effort.
Twitter's complete third quarter 2017 financial results can
be found by accessing the company's Shareholder Letter at:
https://investor.twitterinc.com/releases.cfm
Webcast and Conference Call Details
Twitter will host
a conference call today, Thursday, October
26, 2017, at 5:00 a.m. Pacific
Time (8:00 a.m. Eastern Time)
to discuss financial results. The company will be following the
conversation about the earnings announcement on Twitter. To have
your questions considered during the Q&A, Tweet your question
to @TwitterIR using #TWTR. To listen to a live audio webcast,
please visit the company's Investor Relations page at
investor.twitterinc.com. Twitter has used, and intends to continue
to use, its Investor Relations website and the Twitter accounts of
@jack, @Twitter, and @TwitterIR as means of disclosing material
nonpublic information and for complying with its disclosure
obligations under Regulation FD.
About Twitter
Twitter is what's happening in the
world and what people are talking about right now. From breaking
news and entertainment to sports, politics, and everyday interests,
see every side of the story. Join the open conversation. Watch live
streaming events. Available in more than 40 languages around the
world, the service can be accessed via twitter.com, an array of
mobile devices, and SMS. For more information, please visit
about.twitter.com, follow @Twitter, and download both the Twitter
and Periscope apps at twitter.com/download and periscope.tv.
Note About Our MAU Adjustment
We discovered that since
the fourth quarter of 2014 we had included users of certain
third-party applications as Twitter MAUs that should not have been
considered MAUs. These third-party applications used Digits, a
software development kit of our now-divested Fabric platform, that
allowed third-party applications to send authentication messages
via SMS through our systems, which did not relate to activity on
the Twitter platform. The table below presents the impact for the
periods beginning in the fourth quarter of 2016. Due to our data
retention policies, we do not have data to reconcile periods prior
to the fourth quarter of 2016, but our estimates suggest the prior
period adjustments are smaller than those in the fourth quarter of
2016.
Total MAU Adjustment
in
Millions
|
Q4'16
|
Q1'17
|
Q2'17
|
Q3'17
|
Previously
Reported MAU
|
319
|
328
|
328
|
N/A
|
Adjustment
|
-1
|
-2*
|
-2
|
N/A
|
Adjusted
MAU
|
318
|
327
|
326
|
330
|
|
|
|
|
|
Previously
Reported Quarter-over-Quarter Growth Rate
|
0.8%
|
2.8%
|
-0.1%
|
N/A
|
Adjusted
Quarter-over-Quarter Growth Rate
|
0.3%**
|
2.8%
|
-0.2%
|
1.2%
|
|
|
|
|
|
Previously
Reported Year-over-Year Growth Rate
|
4.5%
|
5.8%
|
4.8%
|
N/A
|
Adjusted
Year-over-Year Growth Rate**
|
4.0%
|
5.2%
|
4.1%
|
4.1%
|
The reported MAU figures in this press release and accompanying
materials reflects an adjustment for the users of certain
third-party applications included in prior periods. Please note
that reported DAU metrics were not impacted as DAU do not include
users from third-party applications.
United States MAU Adjustment
in
Millions
|
Q4'16
|
Q1'17
|
Q2'17
|
Q3'17
|
US Previously
Reported MAU
|
67
|
70
|
68
|
N/A
|
Adjustment
|
0
|
-1
|
0
|
N/A
|
US Adjusted
MAU
|
67
|
69
|
68
|
69
|
|
|
|
|
|
US Previously
Reported Quarter-over-Quarter Growth Rate
|
0.3%
|
4.2%
|
-2.0%
|
N/A
|
US Adjusted
Quarter-over-Quarter Growth Rate
|
-0.1%**
|
4.1%
|
-2.2%
|
2.3%
|
|
|
|
|
|
US Previously
Reported Year-over-Year Growth Rate
|
2.9%
|
6.7%
|
3.9%
|
N/A
|
US Adjusted
Year-over-Year Growth Rate**
|
2.4%
|
6.1%
|
3.2%
|
4.1%
|
* The difference between Adjusted MAU and Previously Reported
MAU does not correspond to the amount of the Adjustment due to
rounding.
** Due to our data retention policies, we do not have data to
reconcile periods prior to the fourth quarter of 2016. As a result,
we did not adjust MAUs for such periods and year-over-year and
quarter-over-quarter growth rates compare unadjusted MAUs for
periods prior to the fourth quarter of 2016 to adjusted MAUs for
periods after the fourth quarter of 2016. We believe that had they
been adjusted, the growth rates for the adjusted year-over-year and
quarter-over-quarter periods would have been higher than those
presented.
International MAU Adjustment
in
Millions
|
Q4'16
|
Q1'17
|
Q2'17
|
Q3'17
|
International
Previously Reported MAU
|
252
|
259
|
260
|
N/A
|
Adjustment
|
-1
|
-1*
|
-2
|
N/A
|
International
Adjusted MAU
|
251
|
257
|
258
|
261
|
|
|
|
|
|
International
Previously Reported Quarter-over-Quarter Growth Rate
|
0.9%
|
2.5%
|
0.5%
|
N/A
|
International
Adjusted Quarter-over-Quarter Growth Rate
|
0.4%**
|
2.4%
|
0.3%
|
0.9%
|
|
|
|
|
|
International
Previously Reported Year-over-Year Growth Rate
|
4.9%
|
5.5%
|
5.1%
|
N/A
|
International
Adjusted Year-over-Year Growth Rate**
|
4.5%
|
5.0%
|
4.4%
|
4.1%
|
* The difference between Adjusted MAU and Previously Reported
MAU does not correspond to the amount of the Adjustment due to
rounding.
** Due to our data retention policies, we do not have data to
reconcile periods prior to the fourth quarter of 2016. As a result,
we did not adjust MAUs for such periods and year-over-year and
quarter-over-quarter growth rates compare unadjusted MAUs for
periods prior to the fourth quarter of 2016 to adjusted MAUs for
periods after the fourth quarter of 2016. We believe that had they
been adjusted, the growth rates for the adjusted year-over-year and
quarter-over-quarter periods would have been higher than those
presented.
Forward-Looking Statements
This release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements generally relate to future
events or Twitter's future financial or operating performance. In
some cases, you can identify forward-looking statements because
they contain words such as "may," "will," "should," "expects,"
"plans," "anticipates," "going to," "could," "intends," "target,"
"projects," "contemplates," "believes," "estimates," "predicts,"
"potential," or "continue," or the negative of these words or other
similar terms or expressions that concern Twitter's expectations,
strategy, priorities, plans, or intentions. Forward-looking
statements in this release include, but are not limited to,
statements regarding Twitter's trends in engagement and audience
growth, future financial and operating performance, including its
outlook and guidance, Twitter's expectations regarding its
strategies, product and business plans, including the development
of, investment in and demand for content, its products, product
features and services, including video and its impact on bringing
people back to Twitter on a daily basis, Twitter's beliefs
regarding its execution, Twitter's expectations regarding the
growth of its revenue, profitability, engagement, and allocation of
resources. Twitter's expectations and beliefs regarding these
matters may not materialize, and actual results in future periods
are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. These risks
include the possibility that: Twitter's user base and engagement do
not grow or decline; Twitter's strategies, priorities, or plans
take longer to execute than anticipated; Twitter's new products and
product features do not meet expectations; advertisers reduce or
discontinue their spending on Twitter; data partners reduce or
discontinue their purchases of data licenses from Twitter; and
Twitter experiences expenses that exceed its expectations. The
forward-looking statements contained in this release are also
subject to other risks and uncertainties, including those more
fully described in Twitter's Annual Report on Form 10-K for the
fiscal year ended December 31, 2016
and Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 2017, each filed with the Securities and
Exchange Commission. Additional information will also be set forth
in Twitter's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017. The
forward-looking statements in this release are based on information
available to Twitter as of the date hereof, and Twitter disclaims
any obligation to update any forward-looking statements, except as
required by law.
A Note About Metrics
Twitter defines monthly active
users (MAUs) as Twitter users who logged in or were otherwise
authenticated and accessed Twitter through its website, mobile
website, desktop or mobile applications, SMS or registered
third-party applications or websites in the 30-day period ending on
the date of measurement. Average MAUs for a period represent the
average of the MAUs at the end of each month during the period.
Twitter defines daily active users or daily active usage (DAU) as
Twitter users who logged in or were otherwise authenticated and
accessed Twitter through our website, mobile website or mobile
applications on any given day. Average DAU for a period represents
the number of DAUs on each day of such period divided by the number
of days for such period. To calculate the year-over-year change in
DAUs, the average DAU for the three months ended in the previous
year is subtracted from the average DAU for the same three months
ended in the current year and the result is divided by the average
DAU in the previous year. Prior to Q3 2016, Twitter has discussed
DAUs and the ratio of MAUs to DAUs. In those instances, for
comparability and consistency with MAUs, DAUs also included users
who accessed Twitter through its desktop applications and
third-party properties.
Non-GAAP Financial Measures
To supplement Twitter's
financial information presented in accordance with generally
accepted accounting principles in the
United States of America, or GAAP, Twitter considers certain
financial measures that are not prepared in accordance with GAAP,
including Adjusted EBITDA, non-GAAP net income, non-GAAP income
before income taxes, non-GAAP provision for income taxes, Adjusted
EBITDA margin, and non-GAAP diluted EPS. Twitter defines Adjusted
EBITDA as net loss adjusted to exclude stock-based compensation
expense, depreciation and amortization expense, interest and other
expenses, net, provision (benefit) for income taxes, restructuring
charges and one-time nonrecurring gain; Twitter defines non-GAAP
net income as net loss adjusted to exclude stock-based compensation
expense, amortization of acquired intangible assets, non-cash
interest expense related to convertible notes, non-cash expense
related to acquisitions, cost-method investment impairment charges,
restructuring charges and one-time nonrecurring gain; and
adjustment to income tax expense based on the non-GAAP measure of
profitability using Twitter's blended U.S. statutory tax rate
(which was 37%). Twitter defines non-GAAP income before income
taxes as loss before income taxes adjusted to exclude stock-based
compensation expense, amortization of acquired intangible assets,
non-cash interest expense related to convertible notes, non-cash
expense related to acquisitions, cost-method investment impairment
charges, restructuring charges and one-time nonrecurring gain; and
Twitter defines non-GAAP provision for income taxes as the current
and deferred income tax expense commensurate with the non-GAAP
measure of profitability using Twitter's blended U.S. statutory tax
rate. Adjusted EBITDA margin is calculated by dividing Adjusted
EBITDA by revenue. Non-GAAP diluted EPS is calculated by dividing
non-GAAP net income by non-GAAP share count. Non-GAAP share count
is GAAP share count plus potential common stock instruments such as
stock options, RSUs, shares to be purchased under employee stock
purchase plan, unvested restricted stock, the conversion feature of
convertible senior notes and warrants. Twitter is presenting these
non-GAAP financial measures to assist investors in seeing Twitter's
operating results through the eyes of management, and because it
believes that these measures provide an additional tool for
investors to use in comparing Twitter's core business operating
results over multiple periods with other companies in its
industry.
Twitter uses the non-GAAP financial measures of Adjusted EBITDA,
non-GAAP net income, non-GAAP income before income taxes, non-GAAP
provision for income taxes, Adjusted EBITDA margin and non-GAAP
diluted EPS in evaluating its operating results and for financial
and operational decision-making purposes. Twitter believes that
Adjusted EBITDA, non-GAAP net income, Adjusted EBITDA margin and
non-GAAP diluted EPS help identify underlying trends in its
business that could otherwise be masked by the effect of the
expenses and one-time gains or charges that it excludes in Adjusted
EBITDA, non-GAAP net income, Adjusted EBITDA margin, and non-GAAP
diluted EPS. Twitter also believes that Adjusted EBITDA, non-GAAP
net income, Adjusted EBITDA margin, and non-GAAP diluted EPS
provide useful information about its operating results, enhance the
overall understanding of Twitter's past performance and future
prospects, and allow for greater transparency with respect to key
metrics used by Twitter's management in its financial and
operational decision-making. Twitter uses these measures to
establish budgets and operational goals for managing its business
and evaluating its performance.
These non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. These non-GAAP financial measures
are not based on any standardized methodology prescribed by GAAP
and are not necessarily comparable to similarly titled measures
presented by other companies.
Contacts
|
|
Investors:
|
Press:
|
Cherryl
Valenzuela
|
Kristin
Binns
|
ir@twitter.com
|
press@twitter.com
|
TWITTER,
INC.
|
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
(In thousands,
except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
September
30,
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Non-GAAP net
income and net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(21,095)
|
|
|
$
|
(102,871)
|
|
|
$
|
(199,142)
|
|
|
$
|
(289,819)
|
|
Exclude: Provision
for income taxes
|
|
3,564
|
|
|
|
6,562
|
|
|
|
10,171
|
|
|
|
11,231
|
|
Loss before
income taxes
|
|
(17,531)
|
|
|
|
(96,309)
|
|
|
|
(188,971)
|
|
|
|
(278,588)
|
|
Stock-based compensation
expense
|
|
100,959
|
|
|
|
158,527
|
|
|
|
331,352
|
|
|
|
477,138
|
|
Amortization of acquired intangible
assets
|
|
11,077
|
|
|
|
16,572
|
|
|
|
41,608
|
|
|
|
42,118
|
|
Non-cash
interest expense related to convertible notes
|
|
20,355
|
|
|
|
18,650
|
|
|
|
59,644
|
|
|
|
55,590
|
|
Impairment
of investments in privately-held companies
|
|
7,439
|
|
|
|
—
|
|
|
|
62,439
|
|
|
|
—
|
|
Restructuring charges and one-time
nonrecurring gain
|
|
1,269
|
|
|
|
—
|
|
|
|
(8,529)
|
|
|
|
47
|
|
Non-GAAP income before
income taxes
|
|
123,568
|
|
|
|
97,440
|
|
|
|
297,543
|
|
|
|
296,305
|
|
Non-GAAP provision for
income taxes
|
|
45,720
|
|
|
|
36,053
|
|
|
|
110,091
|
|
|
|
109,633
|
|
Non-GAAP net
income
|
$
|
77,848
|
|
|
$
|
61,387
|
|
|
$
|
187,452
|
|
|
$
|
186,672
|
|
GAAP diluted
shares
|
|
736,515
|
|
|
|
704,359
|
|
|
|
729,626
|
|
|
|
698,104
|
|
Dilutive equity awards
(1)
|
|
8,388
|
|
|
|
16,492
|
|
|
|
8,426
|
|
|
|
12,559
|
|
Non-GAAP diluted
shares
|
|
744,903
|
|
|
|
720,851
|
|
|
|
738,052
|
|
|
|
710,663
|
|
Non-GAAP diluted net
income per share
|
$
|
0.10
|
|
|
$
|
0.09
|
|
|
$
|
0.25
|
|
|
$
|
0.26
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(21,095)
|
|
|
$
|
(102,871)
|
|
|
$
|
(199,142)
|
|
|
$
|
(289,819)
|
|
Stock-based
compensation expense
|
|
100,959
|
|
|
|
158,527
|
|
|
|
331,352
|
|
|
|
477,138
|
|
Depreciation and
amortization expense
|
|
97,492
|
|
|
|
100,878
|
|
|
|
303,347
|
|
|
|
282,782
|
|
Interest and other
expense, net
|
|
24,810
|
|
|
|
18,220
|
|
|
|
117,613
|
|
|
|
55,007
|
|
Provision for income
taxes
|
|
3,564
|
|
|
|
6,562
|
|
|
|
10,171
|
|
|
|
11,231
|
|
Restructuring charges
and one-time nonrecurring gain
|
|
1,269
|
|
|
|
—
|
|
|
|
(8,529)
|
|
|
|
47
|
|
Adjusted
EBITDA
|
$
|
206,999
|
|
|
$
|
181,316
|
|
|
$
|
554,812
|
|
|
$
|
536,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Gives
effect to potential common stock instruments such as stock options,
RSUs, shares to be issued under ESPP, unvested restricted stock
and warrant. There is no dilutive effect of the notes nor the
related hedge and warrant transactions.
|
|
1 Reported average MAU reflects adjustments for
approximately 1-2 million users per quarter of certain third-party
applications that were included as Twitter MAUs that should not
have been considered MAUs in certain prior periods. DAU were not
affected. Further details regarding the adjustment can be found in
the section of this press release titled "Note About Our MAU
Adjustment."
View original
content:http://www.prnewswire.com/news-releases/twitter-announces-third-quarter-2017-results-300543850.html
SOURCE Twitter, Inc.