Key numbers to know before Twitter's IPO
The long wait is almost over: Twitter will hold its public offering Thursday -- but is it a good buy? Here's a guide for the perplexed.
Twitter becomes a public company on Thursday, but if you don't have the time or the stomach to leaf through the 200-plus page prospectus before then, here's a guide to get you past the clutter.
Price range: $23-$25
What it means: The social network is being far less conservative than initially planned, which should affect if much the stock pops on opening day. The range makes Twitter worth as much as $13.9 billion. The company may even price higher on the eve of its IPO.
Proceeds: $1.62 billion-$1.86 billion
What it means: This is how much Twitter will net from the sale of 70 million shares in the offering at a midpoint price of $24 per share. The larger amount includes proceeds from 10.5 million additional shares that underwriters have the option of selling.
Monthly active users (MAUs): 231.7 million
What it means: While Twitter continues to grow -- MAUs are up 39 percent from the year-ago quarter -- the company's annual user growth rate is in decline. Twitter is also still less than one-fifth the size of Facebook.
Mobile MAUs: 175 million, or 76 percent of MAUs
What it means: With more than three-fourths of Twitter's audience accessing the social network from smartphones or tablets, Twitter is, by definition, a mobile company. Investors need not worry about whether the company can monetize its massive mobile audience. In fact, 70 percent of Twitter's advertising revenue in the third quarter was generated from mobile devices.
Daily active users (DAUs): 100 million
What it means: If you calculate engagement as the ratio of daily active users to mobile active users, as Facebook does, then Twitter's engagement rate is around 43 percent. That's not bad, but it's also not great. Facebook, for comparison, has an engagement rate of 61 percent.
US MAUs: 52.7 million
What it means: Twitter makes an extremely disproportionate amount of money from its US members. More than three-fourths of Twitter users (78 percent) are overseas, yet only 25 percent of its year-to-date (YTD) revenue -- or $106.7 million -- came from its international audience.
YTD revenue: $422.2 million
What it means: Twitter has grown revenue by 106 percent year over year, but the growth rate has decelerated from the previous year.
YTD advertising revenue: $374.9 million, or 89 percent of revenue
What it means: The company made a paltry $47.3 million from its only other business: data licensing. One could argue that Twitter needs to diversify its business in order to continue to grow revenue at a fast enough clip to please Wall Street.
YTD net loss: $133.9 million
What it means: Losses are increasing -- up 89 percent year over year -- and Twitter is a ways away from turning a profit.
YTD adjusted EBITDA: $30.7 million
What it means: If you exclude Twitter's expenses (stock, taxes, interest, depreciation), this is the amount the company would have earned in the first nine months of 2013.
Average revenue per timeline view: 97 cents
What it means: This is Twitter's primary metric for calculating the health of its business, and is a measure of advertising revenue for every 1,000 timeline views. The metric, when broken down by US and international timeline views, shows just how lopsided Twitter's business is. In the US, average revenue per timeline view is $2.58. Overseas, Twitter makes 36 cents per 1,000 timeline views.
Q3 timeline views per MAU: 685
What it means: Timeline views are Twitter's be-all, end-all metric for measuring attention. The company noticed just an 8 percent year-over-year growth in timeline views per user. Growth in US timeline views was just 2 percent from the year-ago quarter. Meanwhile, growth in timeline views in the rest of the world, where Twitter isn't adept at monetizing member attention, was 11 percent.
Off-Twitter impressions: 48 billion
What it means: Tweets have appeared on more than 1 million third-party Web sites, accounting for the 48 billion impressions taking place off Twitter. The additional exposure is good for Twitter. However, it's unclear if the extra attention has any affect on revenue as Twitter makes a majority of its money from the ads it serves to people inside its own desktop and mobile applications.