SAN FRANCISCO, Oct. 25, 2018 /PRNewswire/ -- Twitter, Inc.
(NYSE: TWTR) today announced financial results for its third
quarter 2018.
"We're achieving meaningful progress in our efforts to make
Twitter a healthier and valuable everyday service," said
Jack Dorsey, Twitter's CEO. "We're
doing a better job detecting and removing spammy and suspicious
accounts at sign-up. We're also continuing to introduce
improvements that make it easier for people to follow events,
topics and interests on Twitter, like adding support for U.S. TV
shows in our new event infrastructure. This quarter's strong
results prove we can prioritize the long-term health of Twitter
while growing the number of people who participate in public
conversation."
"Our third quarter results reflect our success with advertisers,
delivering revenue growth of 29 percent and better than expected
growth across most products and geographies," said Ned Segal, Twitter's CFO. "We are demonstrating
Twitter's unique value proposition for advertisers through
innovative ad formats, better relevance and continued improvement
in ROI. Advertisers are choosing Twitter to reach the most valuable
audience when they are most receptive."
Third Quarter 2018 Operational and Financial
Highlights
- Q3 revenue totaled $758 million,
an increase of 29% year-over-year, or an increase of 30%
year-over-year when excluding the approximately $7 million of revenue in Q3'17 (its final quarter
with reported revenue) from our fully-deprecated TellApart
product.
-
- Advertising revenue totaled $650
million, an increase of 29% year-over-year.
-
- Total ad engagements increased 50% year-over-year.
- Cost per engagement (CPE) decreased 14% year-over-year.
- Data licensing and other revenue totaled $108 million, an increase of 25%
year-over-year.
- US revenue totaled $423 million,
an increase of 28% year-over-year.
- International revenue totaled $335
million, an increase of 30% year-over-year.
- Q3 GAAP costs and expenses totaled $666
million, an increase of 14% year-over-year.
-
- Q3 non-GAAP costs and expenses totaled $570 million, an increase of 22%
year-over-year.
- Q3 GAAP net income was $789
million, compared to a net loss of $21 million in the previous year, representing a
GAAP net margin of 104% and GAAP diluted EPS of $1.02. Excluding the release of deferred tax
asset valuation allowances of $683
million, we generated Q3 net income of $106 million, net margin of 14%, and diluted EPS
of $0.14.
-
- Q3 non-GAAP net income was $163
million compared to $78
million in the same period of the previous year,
representing a non-GAAP net margin of 21% and non-GAAP diluted EPS
of $0.21.
- Q3 adjusted EBITDA was $295
million compared to $207
million in the same period of the previous year,
representing an adjusted EBITDA margin of 39%.
- Average daily active users (DAU) increased 9% year-over-year,
compared to 14% in the same period of the previous year and
compared to 11% in the previous quarter.
- Average monthly active users (MAU) were 326 million for Q3,
compared to 330 million in the same period of the previous year and
compared to 335 million in the previous quarter, impacted by a
number of factors including: GDPR, decisions we have made to
prioritize the health of the platform and not move to paid SMS
carrier relationships in certain markets, as well as a product
change that reduced automated usage and a technical issue that
temporarily reduced the number of notifications sent.
-
- Average US MAUs were 67 million for Q3, compared to 69 million
in the same period of the previous year and compared to 68 million
in the previous quarter.
- Average international MAUs were 259 million for Q3, compared to
260 million in the same period of the previous year and compared to
267 million in the previous quarter.
Outlook
For Q4, we expect:
- Adjusted EBITDA to be between $320
million and $340 million
- Adjusted EBITDA margin to be between 39% and 40%
- Capital expenditures to be between $60
million and $85 million
- Stock-based compensation expense to be in the range of
$85 million to $90 million
Note that our outlook for Q4 reflects foreign exchange rates as
of October 15, 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.
Appendix
Third Quarter Webcast and Conference Call
Details
Twitter will host a conference call today,
Thursday, October 25, 2018, at
5am Pacific Time (8am Eastern Time) to discuss financial results
for the third 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.
Fourth Quarter and Full Year 2018 Earnings Release
Details
Twitter will release financial results for the
fourth quarter and full year of 2018 on February 7, 2019, before the market opens at
approximately 4am Pacific Time
(7am Eastern Time). On the same day,
Twitter will host a conference call to discuss those financial
results at 5am Pacific Time
(8am 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. 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 Reports on Form 10-Q for the quarters ended
March 31, 2018 and June 30, 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
September 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
costs and 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. Twitter defines non-GAAP
costs and 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 costs and 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 costs and 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
costs and 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 costs and 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, as well as net income, net margin and
diluted EPS without the effect of the release of a deferred tax
asset valuation allowance as such amount is non-operating.
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
|
|
|
Nine Months
Ended
|
|
|
September 30,
|
|
|
September 30,
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Non-GAAP net
income and net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
789,179
|
|
|
$
|
(21,095)
|
|
|
$
|
950,293
|
|
|
$
|
(199,142)
|
|
Exclude: Provision
(benefit) for income taxes
|
|
(701,921)
|
|
|
|
3,564
|
|
|
|
(733,286)
|
|
|
|
10,171
|
|
Income (loss) before
income taxes
|
|
87,258
|
|
|
|
(17,531)
|
|
|
|
217,007
|
|
|
|
(188,971)
|
|
Stock-based
compensation expense
|
|
91,606
|
|
|
|
100,959
|
|
|
|
244,341
|
|
|
|
331,352
|
|
Amortization of
acquired intangible assets
|
|
4,380
|
|
|
|
11,077
|
|
|
|
14,198
|
|
|
|
41,608
|
|
Non-cash interest
expense related to convertible notes
|
|
30,878
|
|
|
|
20,355
|
|
|
|
74,909
|
|
|
|
59,644
|
|
Impairment of
investments in privately-held companies
|
|
—
|
|
|
|
7,439
|
|
|
|
3,000
|
|
|
|
62,439
|
|
Restructuring charges
and one-time nonrecurring gain
|
|
(18)
|
|
|
|
1,269
|
|
|
|
(1,266)
|
|
|
|
(8,529)
|
|
Non-GAAP income before
income taxes
|
|
214,104
|
|
|
|
123,568
|
|
|
|
552,189
|
|
|
|
297,543
|
|
Non-GAAP provision for
income taxes (1)
|
|
51,386
|
|
|
|
45,720
|
|
|
|
132,526
|
|
|
|
110,091
|
|
Non-GAAP net
income
|
$
|
162,718
|
|
|
$
|
77,848
|
|
|
$
|
419,663
|
|
|
$
|
187,452
|
|
GAAP basic
shares
|
|
756,537
|
|
|
|
736,515
|
|
|
|
752,233
|
|
|
|
729,626
|
|
Dilutive equity awards
(2)
|
|
19,465
|
|
|
|
8,388
|
|
|
|
19,278
|
|
|
|
8,426
|
|
Non-GAAP diluted
shares (3)
|
|
776,002
|
|
|
|
744,903
|
|
|
|
771,511
|
|
|
|
738,052
|
|
Non-GAAP diluted net
income per share
|
$
|
0.21
|
|
|
$
|
0.10
|
|
|
$
|
0.54
|
|
|
$
|
0.25
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
789,179
|
|
|
$
|
(21,095)
|
|
|
$
|
950,293
|
|
|
$
|
(199,142)
|
|
Stock-based
compensation expense
|
|
91,606
|
|
|
|
100,959
|
|
|
|
244,341
|
|
|
|
331,352
|
|
Depreciation and
amortization expense
|
|
111,947
|
|
|
|
97,492
|
|
|
|
314,775
|
|
|
|
303,347
|
|
Interest and other
expense, net
|
|
4,610
|
|
|
|
24,810
|
|
|
|
29,410
|
|
|
|
117,613
|
|
Provision (benefit)
for income taxes
|
|
(701,921)
|
|
|
|
3,564
|
|
|
|
(733,286)
|
|
|
|
10,171
|
|
Restructuring charges
and one-time nonrecurring gain
|
|
(18)
|
|
|
|
1,269
|
|
|
|
(1,266)
|
|
|
|
(8,529)
|
|
Adjusted
EBITDA
|
$
|
295,403
|
|
|
$
|
206,999
|
|
|
$
|
804,267
|
|
|
$
|
554,812
|
|
Non-GAAP costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses
|
$
|
666,243
|
|
|
$
|
582,354
|
|
|
$
|
1,887,106
|
|
|
$
|
1,783,097
|
|
Less: stock-based
compensation expense
|
|
(91,606)
|
|
|
|
(100,959)
|
|
|
|
(244,341)
|
|
|
|
(331,352)
|
|
Less: amortization of
acquired intangible assets
|
|
(4,380)
|
|
|
|
(11,077)
|
|
|
|
(14,198)
|
|
|
|
(41,608)
|
|
Less: restructuring
charges and one-time nonrecurring gain
|
|
18
|
|
|
|
(1,269)
|
|
|
|
1,266
|
|
|
|
8,529
|
|
Total non-GAAP costs
and expenses
|
$
|
570,275
|
|
|
$
|
469,049
|
|
|
$
|
1,629,833
|
|
|
$
|
1,418,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) As a result of the Tax 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 or the
related hedge and warrant transactions.
|
|
(3) GAAP
dilutive shares are the same as non-GAAP dilutive shares for the
three and nine months ended September 30, 2018.
|
|
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SOURCE Twitter, Inc.