SAN FRANCISCO, Feb. 8, 2018 /PRNewswire/ -- Twitter, Inc.
(NYSE: TWTR) today announced financial results for its fourth
quarter and fiscal year 2017.
"Q4 was a strong finish to the year," said Jack Dorsey, Twitter CEO. "We returned to
revenue growth, achieved our goal of GAAP profitability, increased
our shipping cadence, and reached five consecutive quarters of
double digit DAU growth. I'm proud of the steady progress we made
in 2017, and confident in our path ahead."
Fourth Quarter 2017 Operational and Financial
Highlights
The company reported fourth quarter revenue of $732 million, an increase of 2% year-over-year.
Quarterly GAAP net income was $91
million, representing a GAAP net margin of 12% and GAAP
diluted EPS of $0.12. This compares
with a quarterly GAAP net loss of $167
million, a GAAP net margin of (23%) and GAAP diluted EPS of
($0.23) for the same period last
year.
Quarterly non-GAAP net income was $141
million, or $0.19 per diluted
share. This compares with a quarterly non-GAAP net income of
$78 million, or $0.11 per diluted share for the same period last
year.
Adjusted EBITDA was $308 million
or 42% of total revenue, compared to $215
million or 30% of total revenue for the same period last
year.
Average MAU was 330 million for the quarter, flat
quarter-over-quarter and up 4% year-over-year. Average DAU grew 12%
year-over-year, marking the fifth consecutive quarter of
double-digit growth.
Fiscal Year 2017 Financial Highlights
Total annual revenue was $2.4
billion, a decrease of 3% year-over-year. GAAP net loss
narrowed to $108 million and a net
margin of (4%) in 2017, compared to $457
million and a net margin of (18%) in 2016. Adjusted EBITDA
for the full year was $863 million
with a 35% margin compared to $751
million and 30% margin for the previous year.
Annual stock-based compensation expense decreased 29%
year-over-year to $434 million, or
18% of total revenue, down from $615
million, or 24% of total revenue in 2016.
GAAP net cash provided by operating activities in the period was
$831 million, an increase from
$763 million in the previous year.
Annual capital expenditures were approximately $281 million, a decrease of 12% from 2016. The
company generated $550 million in
annual adjusted free cash flow compared to $444 million in 2016, and ended the year with
$4.4 billion in cash, cash
equivalents, and marketable securities.
"We're pleased with our performance in 2017 and our return to
revenue growth in the fourth quarter," said Ned Segal, Twitter CFO. "Total revenue in the
fourth quarter increased 2% year-over-year, and owned-and-operated
advertising revenue increased 7% year-over-year, driven by
continued strong engagement growth, improvements in our revenue
products, improved return for advertisers, and better sales
execution. We achieved record GAAP net margins and our long-term
target adjusted EBITDA margin range in the quarter, reflecting our
continued prioritization and disciplined execution."
Outlook
For Q1, we expect:
- Adjusted EBITDA to be between $185
million and $205 million
- Adjusted EBITDA margin to be between 33% and 34%
- Stock-based compensation expense to be in the range of
$100 million to $110 million
For FY 2018, we expect:
- Stock-based compensation expense to be in the range of
$350 million to $450 million
- Capital expenditures to be between $375
million and $450 million
Note that our outlook for Q1 and the full year 2018 reflects
foreign exchange rates as of January 22,
2018.
For more information regarding the non-GAAP financial measures
discussed in this 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. We have not reconciled adjusted EBITDA guidance
to GAAP net income (loss) because we do not provide guidance on
GAAP net income (loss) or the reconciling items between adjusted
EBITDA and GAAP net income (loss), other than stock-based
compensation expense, as a result of the uncertainty regarding, and
the potential variability of, certain of these items. Accordingly,
a reconciliation of the non-GAAP financial measure guidance to the
corresponding GAAP measure is not available without unreasonable
effort.
Twitter's complete fourth quarter and fiscal year 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, February
8, 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 questions
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
non-public information and for complying with its disclosure
obligations under Regulation FD.
About Twitter, Inc. (NYSE: TWTR)
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.
Forward Looking Statements
This press 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 future financial and
operating performance, including its outlook and guidance,
Twitter's strategies, priorities, product and business plans, sales
execution, and Twitter's expectations regarding its ability to
increase return for advertisers. 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, 2017, June 30, 2017 and September 30, 2017 filed with the Securities and
Exchange Commission. Additional information will also be set forth
in Twitter's Annual Report on Form 10-K for the fiscal year ended
December 31, 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 our 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 usage or users (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 DAUs for a period represent the average of the
DAUs at the end of such period. 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 our 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, non-GAAP diluted EPS and adjusted free cash flow.
Twitter defines adjusted EBITDA as net income (loss) adjusted to
exclude stock-based compensation expense, depreciation and
amortization expense, interest and other expense, net, provision
(benefit) for income taxes, and restructuring charges and one-time
nonrecurring gain; and Twitter defines non-GAAP net income as net
income (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, impairment of investments in privately-held
companies, 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 US statutory tax rate
(which was 37% for Q4 and FY2017). Twitter defines non-GAAP income
before income taxes as income (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,
impairment of investments in privately held companies,
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 US 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. Adjusted free cash flow is
GAAP net cash provided by operating activities less capital
expenditures (i.e., purchases of property and equipment including
equipment purchases that were financed through capital leases, less
proceeds received from disposition of property and equipment).
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. In addition, Twitter believes that adjusted free cash
flow provides useful information to management and investors about
the amount of cash from operations and that it is typically a more
conservative measure of cash flows. However, adjusted free cash
flow does not necessarily represent funds available for
discretionary use and is not necessarily a measure of its ability
to fund its cash needs.
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
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ir@twitter.com
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press@twitter.com
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TWITTER,
INC.
|
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
(In thousands,
except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
December
31,
|
|
|
December
31,
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Non-GAAP net
income and net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
91,079
|
|
|
$
|
(167,054)
|
|
|
$
|
(108,063)
|
|
|
$
|
(456,873)
|
|
Exclude: Provision
for income taxes
|
|
2,474
|
|
|
|
4,808
|
|
|
|
12,645
|
|
|
|
16,039
|
|
Income (loss) before
income taxes
|
|
93,553
|
|
|
|
(162,246)
|
|
|
|
(95,418)
|
|
|
|
(440,834)
|
|
Stock-based
compensation expense
|
|
102,454
|
|
|
|
138,095
|
|
|
|
433,806
|
|
|
|
615,233
|
|
Amortization of
acquired intangible assets
|
|
4,929
|
|
|
|
27,220
|
|
|
|
46,537
|
|
|
|
69,338
|
|
Non-cash interest
expense related to convertible notes
|
|
20,417
|
|
|
|
19,070
|
|
|
|
80,061
|
|
|
|
74,660
|
|
Impairment of
investments in privately-held companies
|
|
—
|
|
|
|
—
|
|
|
|
62,439
|
|
|
|
—
|
|
Restructuring charges
and one-time nonrecurring gain
|
|
3,102
|
|
|
|
101,249
|
|
|
|
(5,427)
|
|
|
|
101,296
|
|
Non-GAAP income before
income taxes
|
|
224,455
|
|
|
|
123,388
|
|
|
|
521,998
|
|
|
|
419,693
|
|
Non-GAAP provision for
income taxes
|
|
83,048
|
|
|
|
45,654
|
|
|
|
193,139
|
|
|
|
155,287
|
|
Non-GAAP net
income
|
$
|
141,407
|
|
|
$
|
77,734
|
|
|
$
|
328,859
|
|
|
$
|
264,406
|
|
GAAP basic
shares
|
|
741,822
|
|
|
|
713,618
|
|
|
|
732,702
|
|
|
|
702,135
|
|
Dilutive equity awards
(1)
|
|
12,809
|
|
|
|
14,357
|
|
|
|
9,521
|
|
|
|
13,009
|
|
Non-GAAP diluted
shares (2)
|
|
754,631
|
|
|
|
727,975
|
|
|
|
742,223
|
|
|
|
715,144
|
|
Non-GAAP diluted net
income per share
|
$
|
0.19
|
|
|
$
|
0.11
|
|
|
$
|
0.44
|
|
|
$
|
0.37
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
91,079
|
|
|
$
|
(167,054)
|
|
|
$
|
(108,063)
|
|
|
$
|
(456,873)
|
|
Stock-based
compensation expense
|
|
102,454
|
|
|
|
138,095
|
|
|
|
433,806
|
|
|
|
615,233
|
|
Depreciation and
amortization expense
|
|
92,520
|
|
|
|
119,390
|
|
|
|
395,867
|
|
|
|
402,172
|
|
Interest and other
expense, net
|
|
16,545
|
|
|
|
18,619
|
|
|
|
134,158
|
|
|
|
73,626
|
|
Provision for income
taxes
|
|
2,474
|
|
|
|
4,808
|
|
|
|
12,645
|
|
|
|
16,039
|
|
Restructuring charges
and one-time nonrecurring gain
|
|
3,102
|
|
|
|
101,249
|
|
|
|
(5,427)
|
|
|
|
101,296
|
|
Adjusted
EBITDA
|
$
|
308,174
|
|
|
$
|
215,107
|
|
|
$
|
862,986
|
|
|
$
|
751,493
|
|
Adjusted free cash
flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
198,107
|
|
|
$
|
196,543
|
|
|
$
|
831,209
|
|
|
$
|
763,055
|
|
Less: purchases of
property and equipment
|
|
(40,159)
|
|
|
|
(48,105)
|
|
|
|
(160,742)
|
|
|
|
(218,657)
|
|
Plus: proceeds from
sales of property and equipment
|
|
—
|
|
|
|
—
|
|
|
|
2,783
|
|
|
|
—
|
|
Less: equipment
purchases under capital leases
|
|
(22,602)
|
|
|
|
(37,259)
|
|
|
|
(123,235)
|
|
|
|
(100,281)
|
|
Adjusted free cash
flow
|
$
|
135,346
|
|
|
$
|
111,179
|
|
|
$
|
550,015
|
|
|
$
|
444,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
(2) GAAP
dilutive shares are the same as Non-GAAP dilutive shares for the
three months ended December 31, 2017.
|
|
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SOURCE Twitter, Inc.