SAN FRANCISCO, Oct. 29, 2020 /PRNewswire/ -- Twitter, Inc.
(NYSE: TWTR) today announced financial results for its third
quarter 2020.
"We have grown our daily audience by 42 million in the last year
as people all around the world come to Twitter to find out about
the topics and events they care about most. I'm pleased mDAU grew
29% year over year to 187 million, driven by global conversation
around current events and product improvements," said Jack Dorsey, Twitter's CEO. "We're helping
people find trusted sources of information by better organizing and
surfacing the topics and interests that bring people to
Twitter."
"Advertisers significantly increased their investment on Twitter
in Q3, engaging our larger audience around the return of events as
well as increased and previously delayed product launches, driving
revenue to $936 million, up 14% year
over year," said Ned Segal,
Twitter's CFO. "We also made progress on our brand and direct
response products, with updated ad formats, improved measurement,
and better prediction. We remain confident that our larger
audience, coupled with ongoing revenue product improvements, new
events and product launches, and the positive advertiser response
to the choices we've made as we have grown the service, can drive
great outcomes over time."
Third Quarter 2020 Operational and Financial
Highlights
Except as otherwise stated, all financial results discussed
below are presented in accordance with generally accepted
accounting principles in the United
States of America, or GAAP. As supplemental information, we
have provided certain non-GAAP financial measures in this press
release's supplemental tables, and such supplemental tables include
a reconciliation of these non-GAAP measures to our GAAP results.
The sum of individual metrics may not always equal total amounts
indicated due to rounding.
- Q3 revenue totaled $936 million,
an increase of 14% year over year.
-
- Advertising revenue totaled $808
million, up 15% year over year.
-
- Total ad engagements increased 27% year over year.
- Cost per engagement (CPE) decreased 9% year over year.
- Data licensing and other revenue totaled $128 million, an increase of 5% year over
year.
- US revenue totaled $513 million,
an increase of 10% year over year.
- International revenue totaled $424
million, an increase of 18% year over year.
- Q3 costs and expenses totaled $880
million, an increase of 13% year over year. This resulted in
operating income of $56 million and
6% operating margin, compared to operating income of $44 million or 5% operating margin in the same
period of the previous year.
- Stock-based compensation (SBC) expense grew 18% year over year
to $116 million and was approximately
12% of total revenue compared to 19% in the prior quarter. As a
reminder, stock-based compensation expense is closely tied to
headcount, timing of grants, and vesting.
- Q3 net income was $29 million,
representing a net margin of 3% and diluted EPS of $0.04. This compares to net income of
$37 million, a net margin of 4% and
diluted EPS of $0.05 in the same
period of the previous year.
- Net cash provided by operating activities in the quarter was
$215 million, compared to
$336 million in the same period last
year. Capital expenditures totaled $289
million, compared to $169
million in the same period last year, driven by
infrastructure investments in data center build-outs to support
audience growth and product innovation.
- Average mDAU was 187 million for Q3, compared to 145 million in
the same period of the previous year and compared to 186 million in
the previous quarter.
-
- Average US mDAU was 36 million for Q3, compared to 30 million
in the same period of the previous year and compared to 36 million
in the previous quarter.
- Average international mDAU was 152 million for Q3, compared to
115 million in the same period of the previous year and compared to
150 million in the previous quarter.
Looking Ahead
As we look ahead to Q4, there is a lot to navigate — much of it
unique to 2020. On the positive side, October looks a lot like
September with events and product launches coming back and we are
benefitting from all of the hard work we've done to make Twitter a
must buy for advertisers looking to launch new products and
services and connect with what's happening. The strength and timing
of the holiday shopping season is also likely to play out
differently this year than it has historically, with a buying
season that may be accelerated and even more digital than ever
before.
As we approach the US election, however, it is hard to predict
how advertiser behavior could change. In Q2, many brands slowed or
paused spend in reaction to US civil unrest, only to increase spend
relatively quickly thereafter in an effort to catch up. The period
surrounding the US election is somewhat uncertain, but we have no
reason to believe that September's revenue trends can't continue,
or even improve, outside of the election-related window.
We remain confident that our larger audience coupled with
ongoing revenue product improvements, new events and product
launches, and the tendency of advertisers to respond positively to
the choices we have made as we have grown the service, can drive
great outcomes over time.
Given improving business conditions, we also intend to continue
investing in our most important work and expect total GAAP costs
and expenses to grow closer to 20% year over year in Q4. Remember,
that was our intention for the full year before the pandemic. We
expect SBC expense to be relatively flat sequentially and we expect
capex to remain over $250 million in
Q4 as a result of our ongoing data center build-out.
Appendix
Third Quarter 2020 Webcast and Conference Call
Details
Twitter will host a conference call today, Thursday, October 29, 2020, at 2pm Pacific Time (5pm
Eastern Time) to discuss financial results for the third
quarter of 2020. 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 Earnings Release Details
Twitter expects to release financial results for the fourth quarter
and full year of 2020 on February 9,
2021. Further detail will be provided via press release.
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.
A Note About Metrics
Twitter defines monetizable daily active usage or users (mDAU) as
people, organizations, or other accounts who logged in or were
otherwise authenticated and accessed Twitter on any given day
through twitter.com or Twitter applications that are able to show
ads. Average mDAU for a period represents the number of mDAU on
each day of such period divided by the number of days for such
period. Changes in mDAU are a measure of changes in the size of our
daily logged in or otherwise authenticated active total accounts.
To calculate the year-over-year change in mDAU, we subtract the
average mDAU for the three months ended in the previous year from
the average mDAU for the same three months ended in the current
year and divide the result by the average mDAU for the three months
ended in the previous year. Additionally, our calculation of mDAU
is not based on any standardized industry methodology and is not
necessarily calculated in the same manner or comparable to
similarly titled measures presented by other companies. Similarly,
our measures of mDAU growth and engagement may differ from
estimates published by third parties or from similarly titled
metrics of our competitors due to differences in methodology.
The numbers of mDAU presented in our earnings materials are
based on internal company data. While these numbers are based on
what we believe to be reasonable estimates for the applicable
period of measurement, there are inherent challenges in measuring
usage and engagement across our large number of total accounts
around the world. Furthermore, our metrics may be impacted by our
information quality efforts, which are our overall efforts to
reduce malicious activity on the service, inclusive of spam,
malicious automation, and fake accounts. For example, there are a
number of false or spam accounts in existence on our platform. We
have performed an internal review of a sample of accounts and
estimate that the average of false or spam accounts during the
third quarter of 2020 represented fewer than 5% of our mDAU during
the quarter. The false or spam accounts for a period represents the
average of false or spam accounts in the samples during each
monthly analysis period during the quarter. In making this
determination, we applied significant judgment, so our estimation
of false or spam accounts may not accurately represent the actual
number of such accounts, and the actual number of false or spam
accounts could be higher than we have estimated. We are continually
seeking to improve our ability to estimate the total number of spam
accounts and eliminate them from the calculation of our mDAU, and
have made improvements in our spam detection capabilities that have
resulted in the suspension of a large number of spam, malicious
automation, and fake accounts. We intend to continue to make such
improvements. After we determine an account is spam, malicious
automation, or fake, we stop counting it in our mDAU, or other
related metrics. We also treat multiple accounts held by a single
person or organization as multiple mDAU because we permit people
and organizations to have more than one account. Additionally, some
accounts used by organizations are used by many people within the
organization. As such, the calculations of our mDAU may not
accurately reflect the actual number of people or organizations
using our platform.
In addition, geographic location data collected for purposes of
reporting the geographic location of our mDAU is based on the IP
address or phone number associated with the account when an account
is initially registered on Twitter. The IP address or phone number
may not always accurately reflect a person's actual location at the
time they engaged with our platform. For example, someone accessing
Twitter from the location of the proxy server that the person
connects to rather than from the person's actual location.
We regularly review and may adjust our processes for calculating
our internal metrics to improve their accuracy.
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 press release
include, but are not limited to, statements regarding the impact of
the COVID-19 pandemic and related responses of businesses and
governments to the pandemic, as well as the US election, on
Twitter's operations and operating results, and Twitter's
expectations regarding future capital expenditures and other
expenses, including its SBC expense and the timing of such expense.
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: the COVID-19 pandemic and related impacts will
continue to adversely impact our business, financial condition, and
operating results and the achievement of our strategic objectives
as well as the markets in which we operate and worldwide and
regional economies; Twitter's total accounts 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 and fail to drive mDAU
growth; advertisers continue to 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 press 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, 2019 and Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 2020 and June
30, 2020, 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 fiscal quarter
ended September 30, 2020. The
forward-looking statements in this press 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.
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 revenues excluding foreign exchange effect, which we
refer to as on a constant currency basis, non-GAAP income before
income taxes, non-GAAP provision (benefit) for income taxes,
non-GAAP net income (loss), non-GAAP diluted net income (loss) per
share, adjusted EBITDA, non-GAAP costs and expenses, adjusted net
income (loss), adjusted diluted net income (loss) per share, and
adjusted free cash flow. In order to present revenues on a constant
currency basis for the three and nine months ended September 30, 2020, Twitter translated the
applicable measure using the prior year's monthly exchange rates
for its settlement currencies other than the US dollar. 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 (gain) on investments in privately held
companies, restructuring charges, and one-time nonrecurring gain,
if any; Twitter defines non-GAAP provision (benefit) for income
taxes as the current and deferred income tax expense commensurate
with the non-GAAP measure of profitability using the estimated
annual effective tax rate, which is dependent on the jurisdictional
mix of earnings; and Twitter defines non-GAAP net income (loss) 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 (gain) on investments in
privately held companies, restructuring charges, and one-time
nonrecurring gain, if any, and adjustment to income tax expense
based on the non-GAAP measure of profitability using the estimated
annual effective tax rate, which is dependent on the jurisdictional
mix of earnings. Non-GAAP diluted net income (loss) per share is
calculated by dividing non-GAAP net income (loss) by non-GAAP
diluted share count. Non-GAAP diluted share count is GAAP basic
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 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, restructuring charges, and one-time nonrecurring gain, if
any. 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, if any. We have presented adjusted net income
(loss) solely to exclude the income tax benefit from the
establishment of deferred tax assets related to intra-entity
transfers of intangible assets in the nine months ended
September 30, 2019, and the income
tax provision from the establishment of a valuation allowance
against the deferred tax assets in the nine months ended
September 30, 2020, and no other
adjustments were made in the calculation of this measure. Adjusted
diluted net income (loss) per share is calculated by dividing
adjusted net income (loss) by GAAP diluted share count. 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
finance leases, less proceeds received from the 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 believes that revenues on a constant currency basis,
non-GAAP income before income taxes, non-GAAP provision (benefit)
for income taxes, non-GAAP net income (loss), non-GAAP diluted net
income (loss) per share, adjusted EBITDA, non-GAAP costs and
expenses, adjusted net income (loss), and adjusted diluted net
income (loss) per share 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 believes that revenues on a constant currency basis is a
useful metric that facilitates comparison to its historical
performance. Twitter believes that non-GAAP net income (loss),
non-GAAP diluted net income (loss) per share, adjusted EBITDA,
non-GAAP costs and expenses, adjusted net income (loss), and
adjusted diluted net income (loss) per share help identify
underlying trends in its business that could otherwise be masked by
expenses and one-time gains or charges, or the effects of the
income tax benefits related to the establishment of deferred tax
assets and the tax provisions from the establishment of a valuation
allowance against deferred tax assets described above, which are
non-operating benefits and expenses.
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:
Cherryl Valenzuela
ir@twitter.com
Press:
Giovanna Falbo
press@twitter.com
TWITTER,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
September 30,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
2,201,073
|
|
|
$
|
1,799,082
|
|
Short-term
investments
|
|
5,479,974
|
|
|
4,839,970
|
|
Accounts receivable,
net
|
|
747,548
|
|
|
850,184
|
|
Prepaid expenses and
other current assets
|
|
160,984
|
|
|
130,839
|
|
Total current
assets
|
|
8,589,579
|
|
|
7,620,075
|
|
Property and
equipment, net
|
|
1,392,720
|
|
|
1,031,781
|
|
Operating lease
right-of-use assets
|
|
828,213
|
|
|
697,095
|
|
Intangible assets,
net
|
|
58,923
|
|
|
55,106
|
|
Goodwill
|
|
1,289,147
|
|
|
1,256,699
|
|
Deferred tax assets,
net
|
|
792,362
|
|
|
1,908,086
|
|
Other
assets
|
|
137,848
|
|
|
134,547
|
|
Total
assets
|
|
$
|
13,088,792
|
|
|
$
|
12,703,389
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
241,102
|
|
|
$
|
161,148
|
|
Accrued and other
current liabilities (1)
|
|
623,885
|
|
|
500,893
|
|
Convertible notes,
short-term
|
|
905,532
|
|
|
—
|
|
Operating lease
liabilities, short-term
|
|
161,508
|
|
|
146,959
|
|
Finance lease
liabilities, short-term
|
|
3,076
|
|
|
23,476
|
|
Total current
liabilities
|
|
1,935,103
|
|
|
832,476
|
|
Convertible notes,
long-term
|
|
1,858,685
|
|
|
1,816,833
|
|
Senior notes,
long-term
|
|
692,742
|
|
|
691,967
|
|
Operating lease
liabilities, long-term
|
|
727,011
|
|
|
609,245
|
|
Deferred and other
long-term tax liabilities, net
|
|
28,845
|
|
|
24,170
|
|
Other long-term
liabilities
|
|
34,318
|
|
|
24,312
|
|
Total
liabilities
|
|
5,276,704
|
|
|
3,999,003
|
|
Stockholders'
equity:
|
|
|
|
|
Common
stock
|
|
4
|
|
|
4
|
|
Additional paid-in
capital
|
|
9,249,956
|
|
|
8,763,330
|
|
Accumulated other
comprehensive loss
|
|
(90,087)
|
|
|
(70,534)
|
|
Retained earnings
(accumulated deficit)
|
|
(1,347,785)
|
|
|
11,586
|
|
Total stockholders'
equity
|
|
7,812,088
|
|
|
8,704,386
|
|
Total liabilities and
stockholders' equity
|
|
$
|
13,088,792
|
|
|
$
|
12,703,389
|
|
|
|
|
|
|
(1) In July 2020, prior to our filing
of our Form 10-Q for the second quarter of 2020, we received a
draft complaint from the Federal Trade Commission and recorded an
accrual of $150.0 million, which is included in accrued and other
current liabilities in the consolidated balance sheets, as
described in Note 14 in the notes to the consolidated financial
statements included in our Form 10-Q for the second quarter of
2020.
|
TWITTER,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
|
$
|
936,233
|
|
|
$
|
823,717
|
|
|
$
|
2,427,308
|
|
|
$
|
2,451,988
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
361,388
|
|
|
281,057
|
|
|
933,464
|
|
|
823,033
|
|
Research and
development
|
|
208,877
|
|
|
178,553
|
|
|
625,071
|
|
|
484,041
|
|
Sales and
marketing
|
|
215,285
|
|
|
226,204
|
|
|
643,858
|
|
|
672,252
|
|
General and
administrative (1)
|
|
94,576
|
|
|
93,758
|
|
|
450,181
|
|
|
259,173
|
|
Total costs and
expenses
|
|
880,126
|
|
|
779,572
|
|
|
2,652,574
|
|
|
2,238,499
|
|
Income (loss) from
operations
|
|
56,107
|
|
|
44,145
|
|
|
(225,266)
|
|
|
213,489
|
|
Interest
expense
|
|
(39,614)
|
|
|
(36,226)
|
|
|
(112,712)
|
|
|
(111,803)
|
|
Interest
income
|
|
17,167
|
|
|
40,348
|
|
|
75,077
|
|
|
123,776
|
|
Other income
(expense), net
|
|
(3,977)
|
|
|
(504)
|
|
|
(12,057)
|
|
|
6,583
|
|
Income (loss) before
income taxes
|
|
29,683
|
|
|
47,763
|
|
|
(274,958)
|
|
|
232,045
|
|
Provision (benefit)
for income taxes
|
|
1,024
|
|
|
11,241
|
|
|
1,082,784
|
|
|
(1,114,841)
|
|
Net income
(loss)
|
|
$
|
28,659
|
|
|
$
|
36,522
|
|
|
$
|
(1,357,742)
|
|
|
$
|
1,346,886
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
0.05
|
|
|
$
|
(1.73)
|
|
|
$
|
1.75
|
|
Diluted
|
|
$
|
0.04
|
|
|
$
|
0.05
|
|
|
$
|
(1.73)
|
|
|
$
|
1.72
|
|
Weighted-average
shares used to compute net income (loss) per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
790,827
|
|
|
772,789
|
|
|
785,788
|
|
|
768,719
|
|
Diluted
|
|
806,383
|
|
|
790,523
|
|
|
785,788
|
|
|
784,443
|
|
|
|
|
|
|
|
|
|
|
(1)
In July 2020, prior to our filing of our Form 10-Q for the second
quarter of 2020, we received a draft complaint from the Federal
Trade Commission and recorded $150.0 million in general and
administrative expenses in the consolidated statements of
operations.
|
TWITTER,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
28,659
|
|
|
$
|
36,522
|
|
|
$
|
(1,357,742)
|
|
|
$
|
1,346,886
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
121,983
|
|
|
119,986
|
|
|
366,469
|
|
|
349,076
|
|
Stock-based
compensation expense
|
|
115,969
|
|
|
98,623
|
|
|
346,748
|
|
|
276,729
|
|
Amortization of
discount on convertible notes
|
|
26,673
|
|
|
30,464
|
|
|
74,733
|
|
|
93,251
|
|
Bad debt
expense
|
|
(634)
|
|
|
1,298
|
|
|
16,861
|
|
|
2,661
|
|
Deferred income
taxes
|
|
(6,345)
|
|
|
5,898
|
|
|
(32,382)
|
|
|
68,587
|
|
Deferred tax assets
establishment related to intra-entity transfers of intangible
assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,206,880)
|
|
Deferred tax assets
valuation allowance establishment
|
|
—
|
|
|
—
|
|
|
1,101,374
|
|
|
—
|
|
Impairment of
investments in privately-held companies
|
|
339
|
|
|
—
|
|
|
8,842
|
|
|
1,550
|
|
Other
adjustments
|
|
(2,571)
|
|
|
2,964
|
|
|
(7,756)
|
|
|
(16,502)
|
|
Changes in assets and
liabilities, net of assets acquired and liabilities assumed from
acquisitions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(136,469)
|
|
|
26,695
|
|
|
97,812
|
|
|
93,932
|
|
Prepaid expenses and
other assets
|
|
(27,722)
|
|
|
(18,669)
|
|
|
(24,765)
|
|
|
(21,216)
|
|
Operating lease
right-of-use assets
|
|
43,595
|
|
|
35,688
|
|
|
121,712
|
|
|
104,862
|
|
Accounts
payable
|
|
20,512
|
|
|
(7,859)
|
|
|
(5,722)
|
|
|
(12,599)
|
|
Accrued and other
liabilities
|
|
71,922
|
|
|
39,097
|
|
|
76,497
|
|
|
40,378
|
|
Operating lease
liabilities
|
|
(41,124)
|
|
|
(35,188)
|
|
|
(120,111)
|
|
|
(94,530)
|
|
Net cash provided by
operating activities
|
|
214,787
|
|
|
335,519
|
|
|
662,570
|
|
|
1,026,185
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(290,746)
|
|
|
(170,252)
|
|
|
(577,829)
|
|
|
(389,073)
|
|
Proceeds from sales of
property and equipment
|
|
1,910
|
|
|
1,233
|
|
|
5,815
|
|
|
4,290
|
|
Purchases of
marketable securities
|
|
(1,981,219)
|
|
|
(948,761)
|
|
|
(5,103,983)
|
|
|
(3,940,682)
|
|
Proceeds from
maturities of marketable securities
|
|
1,085,761
|
|
|
1,382,924
|
|
|
3,566,895
|
|
|
4,151,862
|
|
Proceeds from sales of
marketable securities
|
|
66,718
|
|
|
110,026
|
|
|
925,387
|
|
|
173,325
|
|
Purchases of
investments in privately-held companies
|
|
(2,500)
|
|
|
(50,750)
|
|
|
(3,839)
|
|
|
(51,163)
|
|
Business combinations,
net of cash acquired
|
|
—
|
|
|
—
|
|
|
(34,285)
|
|
|
(20,302)
|
|
Other investing
activities
|
|
—
|
|
|
(9,500)
|
|
|
(11,050)
|
|
|
2,281
|
|
Net cash provided by
(used in) investing activities
|
|
(1,120,076)
|
|
|
314,920
|
|
|
(1,232,889)
|
|
|
(69,462)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of convertible notes
|
|
—
|
|
|
—
|
|
|
1,000,000
|
|
|
—
|
|
Debt issuance
costs
|
|
—
|
|
|
—
|
|
|
(14,662)
|
|
|
—
|
|
Repayment of
convertible notes
|
|
—
|
|
|
(935,000)
|
|
|
—
|
|
|
(935,000)
|
|
Taxes paid related to
net share settlement of equity awards
|
|
(3,726)
|
|
|
(3,757)
|
|
|
(18,344)
|
|
|
(16,695)
|
|
Payments of finance
lease obligations
|
|
(4,117)
|
|
|
(15,694)
|
|
|
(20,573)
|
|
|
(53,627)
|
|
Proceeds from exercise
of stock options
|
|
31
|
|
|
244
|
|
|
454
|
|
|
753
|
|
Proceeds from
issuances of common stock under employee stock purchase
plan
|
|
—
|
|
|
—
|
|
|
34,395
|
|
|
25,209
|
|
Net cash provided by
(used in) financing activities
|
|
(7,812)
|
|
|
(954,207)
|
|
|
981,270
|
|
|
(979,360)
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
|
(913,101)
|
|
|
(303,768)
|
|
|
410,951
|
|
|
(22,637)
|
|
Foreign exchange
effect on cash, cash equivalents and restricted cash
|
|
924
|
|
|
(8,792)
|
|
|
(14,854)
|
|
|
(1,790)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
3,135,940
|
|
|
2,210,008
|
|
|
1,827,666
|
|
|
1,921,875
|
|
Cash, cash
equivalents and restricted cash at end of period
|
|
$
|
2,223,763
|
|
|
$
|
1,897,448
|
|
|
$
|
2,223,763
|
|
|
$
|
1,897,448
|
|
Supplemental
disclosures of non-cash investing and financing
activities
|
|
|
|
|
|
|
|
|
Common stock issued in
connection with acquisitions
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,312
|
|
|
$
|
—
|
|
Changes in accrued
property and equipment purchases
|
|
$
|
63,400
|
|
|
$
|
(50,932)
|
|
|
$
|
103,649
|
|
|
$
|
26,679
|
|
Reconciliation of
cash, cash equivalents and restricted cash as shown in the
consolidated statements of cash flows
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
2,201,073
|
|
|
$
|
1,869,444
|
|
|
$
|
2,201,073
|
|
|
$
|
1,869,444
|
|
Restricted cash
included in prepaid expenses and other current assets
|
|
2,251
|
|
|
1,869
|
|
|
2,251
|
|
|
1,869
|
|
Restricted cash
included in other assets
|
|
20,439
|
|
|
26,135
|
|
|
20,439
|
|
|
26,135
|
|
Total cash, cash
equivalents and restricted cash
|
|
$
|
2,223,763
|
|
|
$
|
1,897,448
|
|
|
$
|
2,223,763
|
|
|
$
|
1,897,448
|
|
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,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Non-GAAP net
income (loss) and net income (loss) per share:
|
|
|
|
|
|
|
|
|
Net income (loss)
(1)
|
|
$
|
28,659
|
|
|
$
|
36,522
|
|
|
$
|
(1,357,742)
|
|
|
$
|
1,346,886
|
|
Exclude: Provision
(benefit) for income taxes
|
|
1,024
|
|
|
11,241
|
|
|
1,082,784
|
|
|
(1,114,841)
|
|
Income (loss) before
income taxes
|
|
29,683
|
|
|
47,763
|
|
|
(274,958)
|
|
|
232,045
|
|
Stock-based
compensation expense
|
|
115,969
|
|
|
98,623
|
|
|
346,748
|
|
|
276,729
|
|
Amortization of
acquired intangible assets
|
|
5,424
|
|
|
3,806
|
|
|
17,984
|
|
|
12,509
|
|
Non-cash interest
expense related to convertible notes
|
|
26,673
|
|
|
30,464
|
|
|
74,733
|
|
|
93,251
|
|
Impairment on
investments in privately-held companies
|
|
339
|
|
|
—
|
|
|
8,842
|
|
|
(8,611)
|
|
Restructuring
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(217)
|
|
Non-GAAP income before
income taxes
|
|
178,088
|
|
|
180,656
|
|
|
173,349
|
|
|
605,706
|
|
Non-GAAP provision
(benefit) for income taxes (2)
|
|
26,713
|
|
|
43,820
|
|
|
1,174,944
|
|
|
(1,058,352)
|
|
Non-GAAP net income
(loss)
|
|
$
|
151,375
|
|
|
$
|
136,836
|
|
|
$
|
(1,001,595)
|
|
|
$
|
1,664,058
|
|
GAAP basic
shares
|
|
790,827
|
|
|
772,789
|
|
|
785,788
|
|
|
768,719
|
|
Dilutive equity awards
(3)
|
|
15,556
|
|
|
17,734
|
|
|
—
|
|
|
15,724
|
|
Non-GAAP diluted
shares (4)
|
|
806,383
|
|
|
790,523
|
|
|
785,788
|
|
|
784,443
|
|
Non-GAAP diluted net
income (loss) per share
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
|
$
|
(1.27)
|
|
|
$
|
2.12
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Net income (loss)
(1)
|
|
$
|
28,659
|
|
|
$
|
36,522
|
|
|
$
|
(1,357,742)
|
|
|
$
|
1,346,886
|
|
Stock-based
compensation expense
|
|
115,969
|
|
|
98,623
|
|
|
346,748
|
|
|
276,729
|
|
Depreciation and
amortization expense
|
|
121,983
|
|
|
119,986
|
|
|
366,469
|
|
|
349,076
|
|
Interest and other
expense (income), net
|
|
26,424
|
|
|
(3,618)
|
|
|
49,692
|
|
|
(18,556)
|
|
Provision (benefit)
for income taxes
|
|
1,024
|
|
|
11,241
|
|
|
1,082,784
|
|
|
(1,114,841)
|
|
Restructuring
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(217)
|
|
Adjusted
EBITDA
|
|
$
|
294,059
|
|
|
$
|
262,754
|
|
|
$
|
487,951
|
|
|
$
|
839,077
|
|
Stock-based
compensation expense by function:
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
$
|
8,581
|
|
|
$
|
5,757
|
|
|
$
|
23,333
|
|
|
$
|
16,778
|
|
Research and
development
|
|
66,111
|
|
|
53,009
|
|
|
204,686
|
|
|
149,499
|
|
Sales and
marketing
|
|
25,550
|
|
|
23,755
|
|
|
73,572
|
|
|
64,022
|
|
General and
administrative
|
|
15,727
|
|
|
16,102
|
|
|
45,157
|
|
|
46,430
|
|
Total stock-based
compensation expense
|
|
$
|
115,969
|
|
|
$
|
98,623
|
|
|
$
|
346,748
|
|
|
$
|
276,729
|
|
Amortization of
acquired intangible assets by function:
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
$
|
5,424
|
|
|
$
|
3,806
|
|
|
$
|
17,984
|
|
|
$
|
11,889
|
|
Sales and
marketing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
620
|
|
Total amortization of
acquired intangible assets
|
|
$
|
5,424
|
|
|
$
|
3,806
|
|
|
$
|
17,984
|
|
|
$
|
12,509
|
|
Restructuring
charges by function:
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(13)
|
|
Research and
development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(73)
|
|
Sales and
marketing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(87)
|
|
General and
administrative
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44)
|
|
Total restructuring
charges
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(217)
|
|
Non-GAAP costs and
expenses:
|
|
|
|
|
|
|
|
|
Total costs and
expenses
|
|
$
|
880,126
|
|
|
$
|
779,572
|
|
|
$
|
2,652,574
|
|
|
$
|
2,238,499
|
|
Less: stock-based
compensation expense
|
|
(115,969)
|
|
|
(98,623)
|
|
|
(346,748)
|
|
|
(276,729)
|
|
Less: amortization of
acquired intangible assets
|
|
(5,424)
|
|
|
(3,806)
|
|
|
(17,984)
|
|
|
(12,509)
|
|
Less: restructuring
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
217
|
|
Total non-GAAP costs
and expenses
|
|
$
|
758,733
|
|
|
$
|
677,143
|
|
|
$
|
2,287,842
|
|
|
$
|
1,949,478
|
|
TWITTER,
INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(In thousands,
except per share data)
|
(Unaudited)
|
(Continued)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Adjusted free cash
flow:
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
214,787
|
|
|
$
|
335,519
|
|
|
$
|
662,570
|
|
|
$
|
1,026,185
|
|
Less: purchases of
property and equipment
|
|
(290,746)
|
|
|
(170,252)
|
|
|
(577,829)
|
|
|
(389,073)
|
|
Plus: proceeds from
sales of property and equipment
|
|
1,910
|
|
|
1,233
|
|
|
5,815
|
|
|
4,290
|
|
Adjusted free cash
flow
|
|
$
|
(74,049)
|
|
|
$
|
166,500
|
|
|
$
|
90,556
|
|
|
$
|
641,402
|
|
Adjusted net
income (loss) and adjusted diluted net income (loss) per
share:
|
|
|
|
|
|
|
|
|
Net income (loss)
(1)
|
|
$
|
28,659
|
|
|
$
|
36,522
|
|
|
$
|
(1,357,742)
|
|
|
$
|
1,346,886
|
|
Exclude: benefit from
deferred tax asset (5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,206,880)
|
|
Exclude: provision for
deferred tax assets valuation allowance (6)
|
|
—
|
|
|
—
|
|
|
1,101,374
|
|
|
—
|
|
Adjusted net income
(loss)
|
|
$
|
28,659
|
|
|
$
|
36,522
|
|
|
$
|
(256,368)
|
|
|
$
|
140,006
|
|
GAAP diluted
shares
|
|
806,383
|
|
|
790,523
|
|
|
785,788
|
|
|
784,443
|
|
Adjusted diluted net
income (loss) per share
|
|
$
|
0.04
|
|
|
$
|
0.05
|
|
|
$
|
(0.33)
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
(1)
In July 2020, prior to our filing of our Form 10-Q for the second
quarter of 2020, we received a draft complaint from the Federal
Trade Commission and recorded $150.0 million in general and
administrative expenses in the consolidated statements of
operations.
|
(2) The
non-GAAP benefit from income taxes for the nine months ended
September 30, 2019 includes benefits of $1.21 billion from the
establishment of deferred tax assets from intra-entity transfers of
intangible assets. The non-GAAP provision for income taxes for the
nine months ended September 30, 2020 includes a provision of $1.11
billion related to the establishment of a valuation allowance
against deferred tax assets.
|
(3) 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.
|
(4) GAAP diluted shares are the same
as non-GAAP diluted shares for all periods presented.
|
(5) The benefit from deferred tax
asset in the nine months ended September 30, 2019 is primarily
related to the establishment of deferred tax assets from
intra-entity transfers of intangible assets.
|
(6) The provision for deferred tax
assets valuation allowance in the nine months ended September 30,
2020 is related to the establishment of a valuation allowance
against deferred tax assets.
|
TWITTER,
INC.
|
RECONCILIATION OF
GAAP REVENUE TO NON-GAAP CONSTANT CURRENCY REVENUE
|
(In
millions)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue,
advertising revenue, data licensing and other revenue,
international revenue and international advertising revenue
excluding foreign exchange effect (1):
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
936
|
|
|
$
|
824
|
|
|
$
|
2,427
|
|
|
$
|
2,452
|
|
Foreign exchange
effect on 2020 revenue using 2019 rates
|
|
(1)
|
|
|
|
|
4
|
|
|
|
Revenue excluding
foreign exchange effect
|
|
$
|
935
|
|
|
|
|
$
|
2,431
|
|
|
|
Revenue
year-over-year change percent
|
|
14
|
%
|
|
|
|
(1)
|
%
|
|
|
Revenue excluding
foreign exchange effect year-over-year change percent
|
|
14
|
%
|
|
|
|
(1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
revenue
|
|
$
|
808
|
|
|
$
|
702
|
|
|
$
|
2,053
|
|
|
$
|
2,109
|
|
Foreign exchange
effect on 2020 advertising revenue using 2019 rates
|
|
(1)
|
|
|
|
|
4
|
|
|
|
Advertising revenue
excluding foreign exchange effect
|
|
$
|
807
|
|
|
|
|
$
|
2,057
|
|
|
|
Advertising revenue
year-over-year change percent
|
|
15
|
%
|
|
|
|
(3)
|
%
|
|
|
Advertising revenue
excluding foreign exchange effect year-over-year change
percent
|
|
15
|
%
|
|
|
|
(2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Data licensing and
other revenue
|
|
$
|
128
|
|
|
$
|
121
|
|
|
$
|
375
|
|
|
$
|
343
|
|
Foreign exchange
effect on 2020 data licensing and other revenue using 2019
rates
|
|
—
|
|
|
|
|
—
|
|
|
|
Data licensing and
other revenue excluding foreign exchange effect
|
|
$
|
128
|
|
|
|
|
$
|
375
|
|
|
|
Data licensing and
other revenue year-over-year change percent
|
|
5
|
%
|
|
|
|
9
|
%
|
|
|
Data licensing and
other revenue excluding foreign exchange effect year-over-year
change percent
|
|
5
|
%
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
International
revenue
|
|
$
|
424
|
|
|
$
|
358
|
|
|
$
|
1,081
|
|
|
$
|
1,099
|
|
Foreign exchange
effect on 2020 international revenue using 2019 rates
|
|
(1)
|
|
|
|
|
4
|
|
|
|
International revenue
excluding foreign exchange effect
|
|
$
|
423
|
|
|
|
|
$
|
1,086
|
|
|
|
International revenue
year-over-year change percent
|
|
18
|
%
|
|
|
|
(2)
|
%
|
|
|
International revenue
excluding foreign exchange effect year-over-year change
percent
|
|
18
|
%
|
|
|
|
(1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
International
advertising revenue
|
|
$
|
381
|
|
|
$
|
318
|
|
|
$
|
960
|
|
|
$
|
983
|
|
Foreign exchange
effect on 2020 international advertising revenue using 2019
rates
|
|
(1)
|
|
|
|
|
4
|
|
|
|
International
advertising revenue excluding foreign exchange effect
|
|
$
|
380
|
|
|
|
|
$
|
964
|
|
|
|
International
advertising revenue year-over-year change percent
|
|
20
|
%
|
|
|
|
(2)
|
%
|
|
|
International
advertising revenue excluding foreign exchange effect
year-over-year change percent
|
|
20
|
%
|
|
|
|
(2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1) The sum of individual metrics may
not always equal total amounts indicated due to
rounding.
|
View original
content:http://www.prnewswire.com/news-releases/twitter-announces-third-quarter-2020-results-301163371.html
SOURCE Twitter, Inc.