SAN FRANCISCO, July 27, 2018 /PRNewswire/ -- Twitter, Inc.
(NYSE: TWTR) today announced financial results for its second
quarter 2018.
"Our second quarter results reflect the work we're doing to
ensure more people get value from Twitter every day," said
Jack Dorsey, Twitter's CEO. "We want
people to feel safe freely expressing themselves and have launched
new tools to address problem behaviors that distort and distract
from the public conversation. We're also continuing to make it
easier for people to find and follow breaking news and events, and
have introduced machine learning algorithms that organize the
conversation around events, beginning with the World Cup. These
efforts contributed to healthy year-over-year daily active usage
growth of 11 percent and demonstrate why we're investing in the
long-term health of Twitter."
"We are pleased with our performance in the second quarter in
DAU growth and delivering for advertisers," said Ned Segal, Twitter's CFO. "We're maintaining
profitability while we make investments in the business, achieving
strong revenue growth and introducing product updates that make
Twitter both healthier and easier to use. Looking ahead, we remain
optimistic about our ability to execute on our priorities and
deliver value for advertisers and shareholders."
Second Quarter 2018 Operational and Financial
Highlights
- Q2 revenue totaled $711 million,
an increase of 24% year-over-year, or an increase of 27%
year-over-year when excluding the approximately $14 million of revenue in Q2'17 from our
fully-deprecated TellApart product (which did not have any
contribution to revenue this quarter).
-
- Advertising revenue totaled $601
million, an increase of 23% year-over-year.
-
- Total ad engagements increased 81% year-over-year.
- Cost per engagement (CPE) decreased 32% year-over-year.
- Data licensing and other revenue totaled $109 million, an increase of 29%
year-over-year.
- US revenue totaled $367 million,
an increase of 10% year-over-year.
- International revenue totaled $344
million, an increase of 44% year-over-year.
- Q2 GAAP expenses totaled $631
million, an increase of 3% year-over-year. Q2 non-GAAP
expenses totaled $547 million, an
increase of 13% year-over-year.
- Q2 GAAP net income of $100
million, including $42 million
net tax benefit primarily driven by the release of a valuation
allowance for Brazil, compared to
a net loss of $116 million in the
previous year, representing a GAAP net margin of 14% and GAAP
diluted EPS of $0.13. Q2 non-GAAP net
income of $134 million compared to
$56 million in the same period of the
previous year, representing a non-GAAP net margin of 19% and
non-GAAP diluted EPS of $0.17.
- Q2 adjusted EBITDA of $265
million compared to $178
million in the same period of the previous year,
representing an adjusted EBITDA margin of 37%.
- Average monthly active users (MAU) were 335 million for Q2,
compared to 326 million in the same period of the previous year and
compared to 336 million in the previous quarter, reflecting impact
from decisions we have made to not move to paid SMS carrier
relationships, prioritizing the health of the platform, and, to a
lesser extent, GDPR.
-
- Average US MAUs were 68 million for Q2, compared to 68 million
in the same period of the previous year and compared to 69 million
in the previous quarter.
- Average international MAUs were 267 million for Q2, compared to
258 million in the same period of the previous year and compared to
267 million in the previous quarter.
- Average daily active users (DAU) increased 11% year-over-year,
compared to 10% year-over-year growth in Q1, marking another
quarter of double-digit year-over-year growth.
Outlook
For Q3, we expect:
- Adjusted EBITDA to be between $215
million and $235 million
- Adjusted EBITDA margin to be between 33% and 34%
- Stock-based compensation expense to be in the range of
$85 million to $90 million
For FY 2018, we expect:
- Stock-based compensation expense to be in the range of
$300 million to $350 million
- Capital expenditures to be between $450
million and $500 million
Note that our outlook for Q3 and the full year 2018 reflects
foreign exchange rates as of July 16,
2018.
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. We have not reconciled adjusted
EBITDA guidance to projected 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 second quarter 2018 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, Friday, July 27, 2018, at 5:00 a.m. Pacific Time (8:00 a.m. Eastern Time) to discuss financial
results for the second quarter of 2018. 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, @nedsegal, @Twitter, and @TwitterIR as means of
disclosing material nonpublic information and for complying with
its disclosure obligations under Regulation FD.
Twitter will release financial results for the third quarter of
2018 on October 25, 2018, before the
market opens at approximately 4:00 a.m.
Pacific Time (7:00 a.m. Eastern
Time). On the same day, Twitter will host a conference call
to discuss those financial results at 5:00
a.m. Pacific Time (8:00 a.m. Eastern
Time).
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,
including strategies to improve the health of the platform and
Twitter's beliefs regarding its ability to execute and deliver.
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, 2017,
and Quarterly Report on Form 10-Q for the quarter ended
March 31, 2018, 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 June 30, 2018. 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.
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, non-GAAP
expenses, adjusted EBITDA margin, non-GAAP net margin, and non-GAAP
diluted EPS. 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; 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
federal and state statutory tax rate and Twitter defines non-GAAP
expenses as total costs and expenses adjusted to exclude
stock-based compensation expense, amortization of acquired
intangible assets, non-cash expense related to acquisitions,
restructuring charges, and one-time nonrecurring gain. 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
federal and state statutory tax rate. Adjusted EBITDA margin is
calculated by dividing adjusted EBITDA by revenue. Non-GAAP net
margin is calculated by dividing non-GAAP net income 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, non-GAAP expenses, non-GAAP net margin,
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, non-GAAP expenses, non-GAAP net margin, 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, non-GAAP expenses, non-GAAP net
margin, adjusted EBITDA margin and non-GAAP diluted EPS. Twitter
also believes that adjusted EBITDA, non-GAAP net income, non-GAAP
expenses, non-GAAP net margin, 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. Twitter also presents revenue
without the effects of TellApart, which has been fully deprecated
and no longer contributes to revenue.
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
|
Brandon
Borrman
|
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
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
June
30,
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Non-GAAP net
income and net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
100,117
|
|
|
$
|
(116,488)
|
|
|
$
|
161,114
|
|
|
$
|
(178,047)
|
|
Exclude: Provision
(benefit) for income taxes
|
|
(34,250)
|
|
|
|
3,413
|
|
|
|
(31,365)
|
|
|
|
6,607
|
|
Income (loss) before
income taxes
|
|
65,867
|
|
|
|
(113,075)
|
|
|
|
129,749
|
|
|
|
(171,440)
|
|
Stock-based compensation expense
|
|
79,469
|
|
|
|
113,396
|
|
|
|
152,735
|
|
|
|
230,393
|
|
Amortization of acquired intangible assets
|
|
4,876
|
|
|
|
14,340
|
|
|
|
9,818
|
|
|
|
30,531
|
|
Non-cash
interest expense related to convertible notes
|
|
23,309
|
|
|
|
20,041
|
|
|
|
44,031
|
|
|
|
39,289
|
|
Impairment of investments in privately-held companies
|
|
3,000
|
|
|
|
55,000
|
|
|
|
3,000
|
|
|
|
55,000
|
|
Restructuring charges and one-time nonrecurring gain
|
|
(265)
|
|
|
|
(226)
|
|
|
|
(1,248)
|
|
|
|
(9,798)
|
|
Non-GAAP income before
income taxes
|
|
176,256
|
|
|
|
89,476
|
|
|
|
338,085
|
|
|
|
173,975
|
|
Non-GAAP provision for
income taxes (1)
|
|
42,301
|
|
|
|
33,106
|
|
|
|
81,140
|
|
|
|
64,371
|
|
Non-GAAP net
income
|
$
|
133,955
|
|
|
$
|
56,370
|
|
|
$
|
256,945
|
|
|
$
|
109,604
|
|
GAAP basic
shares
|
|
752,351
|
|
|
|
730,069
|
|
|
|
750,037
|
|
|
|
726,083
|
|
Dilutive
equity awards (2)
|
|
20,205
|
|
|
|
8,214
|
|
|
|
19,185
|
|
|
|
8,444
|
|
Non-GAAP diluted
shares (3)
|
|
772,556
|
|
|
|
738,283
|
|
|
|
769,222
|
|
|
|
734,527
|
|
Non-GAAP diluted net
income per share
|
$
|
0.17
|
|
|
$
|
0.08
|
|
|
$
|
0.33
|
|
|
$
|
0.15
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
100,117
|
|
|
$
|
(116,488)
|
|
|
$
|
161,114
|
|
|
$
|
(178,047)
|
|
Stock-based compensation expense
|
|
79,469
|
|
|
|
113,396
|
|
|
|
152,735
|
|
|
|
230,393
|
|
Depreciation and amortization expense
|
|
105,982
|
|
|
|
103,063
|
|
|
|
202,828
|
|
|
|
205,855
|
|
Interest
and other expense, net
|
|
13,757
|
|
|
|
74,716
|
|
|
|
24,800
|
|
|
|
92,803
|
|
Provision
(benefit) for income taxes
|
|
(34,250)
|
|
|
|
3,413
|
|
|
|
(31,365)
|
|
|
|
6,607
|
|
Restructuring charges and one-time nonrecurring gain
|
|
(265)
|
|
|
|
(226)
|
|
|
|
(1,248)
|
|
|
|
(9,798)
|
|
Adjusted
EBITDA
|
$
|
264,810
|
|
|
$
|
177,874
|
|
|
$
|
508,864
|
|
|
$
|
347,813
|
|
Non-GAAP costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses
|
$
|
630,917
|
|
|
$
|
612,214
|
|
|
$
|
1,220,863
|
|
|
$
|
1,200,743
|
|
Less:
stock-based compensation expense
|
|
(79,469)
|
|
|
|
(113,396)
|
|
|
|
(152,735)
|
|
|
|
(230,393)
|
|
Less:
amortization of acquired intangible assets
|
|
(4,876)
|
|
|
|
(14,340)
|
|
|
|
(9,818)
|
|
|
|
(30,531)
|
|
Less:
restructuring charges and one-time nonrecurring gain
|
|
265
|
|
|
|
226
|
|
|
|
1,248
|
|
|
|
9,798
|
|
Total non-GAAP costs
and expenses
|
$
|
546,837
|
|
|
$
|
484,704
|
|
|
$
|
1,059,558
|
|
|
$
|
949,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) As a
result of the 2017 Tax Cuts and Jobs Act, the blended US federal
and state statutory tax rate used to calculate our reported
non-GAAP
provisions for income taxes decreased from 37% to 24% beginning in
the first quarter of 2018.
|
|
(2) Gives
effect to potential common stock instruments such as stock options,
RSUs, shares to be issued under ESPP, unvested restricted stocks
and
warrants. There is no dilutive effect of the notes nor the related
hedge and warrant transactions.
|
|
(3) GAAP
dilutive shares are the same as Non-GAAP dilutive shares for the
three and six months ended June 30, 2018.
|
|
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SOURCE Twitter, Inc.