Twitter unveils IPO filing, aims to raise $1bn
SAN FRANCISCO: Twitter Inc will seek to raise $1 billion in the largest Silicon ValleyIPO since Facebook Inc's 2012 coming-out party, hoping to woo investors with rip-roaring revenue growth despite never having made a profit in the past three years.
The eight-year-old microblogging service, the preferred communications tool for celebrities and politicians alike, gave potential investors their first glance at its financials on Thursday when it publicly filed its IPO documents.
Revenue almost tripled to $316.9 million in 2012, driven largely by advertising. In the first half, it posted revenue of $253.6 million but had a loss of $69.3 million.
But in a typical laundry list of risk factors appended to all company IPO filings, Twitter warned it was heavily reliant on advertising revenue. It said more than 87 percent of its revenue came from advertising in the first half of 2013.
Although its user base was expanding steadily, Twitter warned that the ad prices it commanded from marketers had been falling for the past five quarters, signaling that the effectiveness of its key money-maker, the "Promoted Products" suite, may be waning.
The average cost per ad engagement slid 46 percent in the June quarter, compared with the previous quarter.
But the company added that ad prices have gone down as a result of a conscious, long-term effort by the service to rapidly expand its available inventory and change its algorithm to distribute ads throughout each day.
Twitter noted that revenue has risen because this strategy attracted more advertisers, especially small- and medium-sized businesses as well as international clients.
"We generate the substantial majority of our revenue from advertising. The loss of advertising revenue could harm our business" the company said in its filing.
Twitter's debut will be the culmination of its journey from side-project to sociocultural phenomenon, today the platform of choice for everyone from the Pope to President Barack Obama.
Along the way, the company helped create new ways for advertisers and corporations to reach audiences, from a "promoted tweets" model now replicated by Facebook and other Internet platforms, to its "second screen" approach to encouraging real-time debate around television programs.
Its IPO has drawn multiple comparisons to Facebook, another social media titan. When the world's largest social network debuted, concerns centered around its inability to fully earn revenue off mobile users.
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