Twitter, Inc.
TWITTER, INC. (Form: 8-K, Received: 10/27/2014 16:08:19)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

October 27, 2014

 

Twitter, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

001-36164

 

20-8913779

(State or other jurisdiction of
incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

1355 Market Street, Suite 900

San Francisco, California 94103

(Address of principal executive offices, including zip code)

(415) 222-9670

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.

On October 27, 2014, Twitter, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter of 2014. In the press release, the Company also announced that it would be holding a conference call on October 27, 2014 to discuss its financial results for the third quarter of 2014. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

This information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

(d)

Exhibits.

 

Exhibit No.

  

Description

 

 

99.1

  

 

Press release issued by Twitter, Inc. dated October 27, 2014.

 

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

TWITTER, INC.

 

By:

 

 

/s/ Vijaya Gadde

 

 

Vijaya Gadde

 

 

General Counsel & Secretary

Date: October 27, 2014

 

 

 

 


 

EXHIBIT INDEX

 

Exhibit No.

  

Description

 

 

99.1

  

 

Press release issued by Twitter, Inc. dated October 27, 2014.

 

 

Exhibit 99.1

Twitter Reports Third Quarter 2014 Results

SAN FRANCISCO, Calif. – October 27, 2014 – Twitter, Inc. (NYSE: TWTR) today announced financial results for the quarter ended September 30, 2014.

·

Q3 revenue of $361 million, up 114% year-over-year

·

Q3 net loss of $175 million and non-GAAP net income of $7 million

·

Q3 GAAP EPS of ($0.29) and non-GAAP EPS of $0.01

·

Q3 adjusted EBITDA of $68 million, representing an adjusted EBITDA margin of 19%

“We had another very strong financial quarter,” said Dick Costolo, CEO of Twitter. “I’m confident in our ability to build the largest daily audience in the world, over time, by strengthening the core, reducing barriers to consumption and building new apps and services.”

Third Quarter 2014 Financial Summary

(In thousands, except per share data)

 

Three Months Ended

 

 

Nine Months Ended

 

 

Sep 30, 2014

 

 

Sep 30, 2013

 

 

Sep 30, 2014

 

 

Sep 30, 2013

 

GAAP Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

361,266

 

 

$

168,580

 

 

$

923,924

 

 

$

422,215

 

Net loss

$

(175,464

)

 

$

(64,601

)

 

$

(452,468

)

 

$

(133,852

)

Diluted net loss per share

$

(0.29

)

 

$

(0.48

)

 

$

(0.76

)

 

$

(1.02

)

Non-GAAP Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

68,326

 

 

$

9,293

 

 

$

159,406

 

 

$

30,685

 

Non-GAAP net income (loss)

$

6,972

 

 

$

(17,216

)

 

$

21,751

 

 

$

(44,104

)

Non-GAAP diluted net income (loss) per share

$

0.01

 

 

$

(0.13

)

 

$

0.03

 

 

$

(0.34

)

For information regarding the non-GAAP financial measures discussed in this release, please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

 

Third Quarter 2014 Operational Highlights

 

·

Average Monthly Active Users (MAUs) were 284 million for the third quarter, an increase of 23% year-over-year.

·

Average Mobile MAUs represented around 80% of total MAUs.

·

Timeline views reached 181 billion for the third quarter of 2014, an increase of 14% year-over-year.

·

Advertising revenue per thousand timeline views reached $1.77 in the third quarter of 2014, an increase of 83% year-over-year.

 

Third Quarter 2014 Product Highlights

 

·

Users: Twitter launched its biggest update to the profile experience on the iPhone with an increased focus on bios, tweets and photos, making it easy for users to get a glimpse into the people they care most about on Twitter, resulting in an 83% increase in profile impressions on iOS. Twitter also launched new consumer experiences around the NFL, making it easy to stay up to date and keep up with the latest action. In the #NFL Timeline, users can see NFL-related Tweets from people in their network, along with relevant Tweets from teams, players, coaches, press, fans and celebrities. Finally, Twitter released a new camera for the Vine app with powerful new ways to edit videos as well as the ability to import existing videos and turn them into Vines.

·

Advertisers: Twitter launched a number of new advertiser tools, including: a Promoted Video beta, which streamlines video playback and brings a one-tap viewing experience to users’ timelines; a test of the “Buy” button, allowing users to complete an entire purchase directly from a tweet; objective-based campaigns, reports and pricing, which make it easier for advertisers to create and optimize successful marketing campaigns and pay only for the actions that are aligned with their marketing objectives; and new tools to make it even easier to create, manage and activate tailored audiences on Twitter. The new tailored audience features include audience list upload capability, better audience management tools, new supported ID types for creating audiences — specifically, mobile advertising IDs and mobile phone numbers — and improved targeting options to help advertisers reach additional users similar to their existing audiences.

1


·

International Expansion: Twitter continued the international expansion of Twitter Ads to 12 additional markets in Central, Continental and Eastern Europe. In addition, Twitter entered 12 new countries with its self-service ad products for small- and medium-sized businesses (SMBs): Argentina, Chile, Colombia, Ecuador, Guatemala, Mexico and Peru in Latin America, and Belgium, France, Italy, Luxembourg and the Netherlands in Europe. Twitter’s self serve ad products now serve marketers in 20 countries that, in aggregate, account for more than 45% of its global monthly active user base.  

·

Developers: Twitter announced its first mobile developer conference, Flight, where it subsequently unveiled Fabric, a modular, integrated SDK that combines the functionality of Crashlytics, the MoPub ad serving platform, and a new Twitter SDK to help developers build and deliver scalable, stable apps with state of the art app monitoring, mobile identity and monetization services .

·

Acquired Companies: Finally, Twitter closed the acquisitions of CardSpring, a payments infrastructure company, TapCommerce, a leader in mobile retargeting and re-engagement advertising, and SnappyTV, a platform for video editing and distribution.

 

Third Quarter 2014 Financial Highlights

Revenue – Revenue for the third quarter of 2014 totaled $361 million, an increase of 114% compared to $169 million in the same period last year.

·

Advertising revenue totaled $320 million, an increase of 109% year-over-year.

·

Mobile advertising revenue was 85% of total advertising revenue.

·

Data licensing and other revenue totaled $41 million, an increase of 171% year-over-year.

·

International revenue totaled $121 million, an increase of 176% year-over-year.  

·

International revenue was 34% of total revenue.

Net loss – GAAP net loss was $175 million for the third quarter of 2014 compared to a GAAP net loss of $65 million in the same period last year. GAAP net loss for the third quarter of 2014 included $ 170 million of stock-based compensation expense.

Adjusted EBITDA – Adjusted EBITDA was $68 million for the third quarter of 2014, an increase of 635% compared to $9 million in the same period last year.

Non-GAAP net income / loss – Non-GAAP net income was $7 million for the third quarter of 2014 compared to a non-GAAP net loss of $17 million in the same period last year. Non-GAAP net income was negatively impacted by $8 million in non-cash foreign exchange adjustments resulting from currency fluctuations, as reported in other expense. In addition, non-GAAP net income was negatively impacted by $0.6 million in higher interest expense due to the completion of the company’s convertible note offering in the third quarter, as reported in interest expense. Without these items, non-GAAP net income would have been $15.4 million.

EPS – Basic and diluted GAAP EPS was ($0.29) for the third quarter of 2014 compared to ($0.48) in the same period last year.

Non-GAAP EPS – Non-GAAP EPS was $0.01 for the third quarter of 2014 compared to ($0.13) in the same period last year. Non-GAAP EPS was negatively impacted by $8 million in non-cash foreign exchange adjustments resulting from currency fluctuations, as reported in other expense. In addition, non-GAAP EPS was negatively impacted by $0.6 million in higher interest expense due to the completion of the company’s convertible note offering in the third quarter, as reported in interest expense. Without these items, using non-GAAP diluted shares of 683 million, non-GAAP EPS would have been $0.02.

Capital expenditures – Purchases of property and equipment for the third quarter of 2014 were $39 million. Additionally, $62 million of equipment was financed through capital leases during the third quarter of 2014.

Cash, cash equivalents and marketable securities – As of September 30, 2014, cash, cash equivalents and marketable securities were approximately $3.6 billion, compared to $2.1 billion as of June 30, 2014, reflecting the successful completion of the company’s convertible note offering.

Outlook

Twitter’s outlook for the fourth quarter of 2014 is as follows:

·

Revenue is projected to be in the range of $440 million to $450 million.

·

Adjusted EBITDA is projected to be in the range of $100 million to $105 million.

·

Capital expenditures are projected to be in the range of $120 million to $150 million.

2


·

Stock-based compensation expense is projected to be in the range of $175 million to $185 million, excluding the impact of equity awards that may be granted in connection with potential future acquisitions.

Twitter’s revised outlook for the full year of 2014 is as follows:

·

Revenue is projected to be in the range of $1,365 million to $1,375 million.

·

Adjusted EBITDA is projected to be in the range of $260 million to $265 million.

·

Capital expenditures are projected to be in the range of $360 million to $390 million.

·

Stock-based compensation expense is projected to be in the range of $630 million to $640 million excluding the impact of equity awards that may be granted in connection with potential future acquisitions.

Webcast and Conference Call Details

Twitter will host a conference call today, Monday, October 27, 2014, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss financial results. Questions submitted via Twitter, directed to @TwitterIR, using the hashtag #TWTRearnings will be considered during the Q&A portion of the conference call in addition to questions submitted by conference call participants. A live webcast of the conference call, Twitter’s financial results and supplemental slides will be accessible from the Investor Relations page of Twitter’s website at investor.twitterinc.com. A replay will be archived and accessible at the same website after the conference call. Twitter has used, and intends to continue to use, its Investor Relations website (investor.twitterinc.com), as well as certain Twitter accounts (@dickc, @twitter and @twitterIR), as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About Twitter, Inc.

Twitter (NYSE: TWTR) is a global platform for public self-expression and conversation in real time. By developing a fundamentally new way for people to create, distribute and discover content, we have democratized content creation and distribution, enabling any voice to echo around the world instantly and unfiltered. The service can be accessed at  Twitter.com , via the Twitter mobile application and via text message . Available in more than 35 languages, Twitter has 284 million monthly active users. For more information, visit discover.twitter.com or follow @twitter.

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,” “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, plans or intentions. Forward-looking statements in this press release include, but are not limited to, Twitter’s strategies and business plans and Twitter’s expectations regarding its revenue, adjusted EBITDA, capital expenditures and stock-based compensation expense for the fourth quarter and full year 2014. 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 continue to grow; 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 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 year ended December 31, 2013 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 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, 2014. 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, or GAAP, Twitter considers certain financial measures that are not prepared in accordance with GAAP, including adjusted EBITDA, non-GAAP net income (loss), adjusted EBITDA margin and non-GAAP EPS. Twitter defines adjusted EBITDA as net loss adjusted to exclude stock-based compensation expense, depreciation and amortization expense, interest and other expenses and provision (benefit) for income taxes; and Twitter defines non-GAAP net income (loss) as net loss adjusted to exclude stock-based compensation expense, amortization of acquired intangible assets, non-cash interest expense related to convertible notes and the income tax effects related to acquisitions.  Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.

 

3


Twitter uses the non-GAAP financial measures of adjusted EBITDA, non-GAAP net income (loss), adjusted EBITDA margin and non-GAAP EPS in evaluating its operating results and for financial and operational decision-making purposes.  Twitter believes that adjusted EBITDA, non-GAAP net income (loss), adjusted EBITDA margin and non-GAAP EPS help identify underlying trends in its business that could otherwise be masked by the effect of the expenses that we exclude in adjusted EBITDA, non-GAAP net income (loss), adjusted EBITDA margin and non-GAAP EPS. Twitter also believes that adjusted EBITDA, non-GAAP net income (loss), adjusted EBITDA margin and non-GAAP 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 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.

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.  

For future periods, Twitter is unable to provide a reconciliation of adjusted EBITDA to net loss as a result of the uncertainty regarding, and the potential variability of, depreciation and amortization expense, interest and other expenses and provision (benefit) for income taxes, that are expected to be incurred in the future.

 

Contacts

Investors:  
Dave Rivinus

ir@twitter.com

Press: 
Jim Prosser

jprosser@twitter.com

 

 

 

4


 

TWITTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

2014

 

 

2013

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

2,252,795

 

 

$

841,010

 

Short-term investments

 

1,394,887

 

 

 

1,393,044

 

Accounts receivable, net

 

324,731

 

 

 

247,328

 

Prepaid expenses and other current assets

 

201,472

 

 

 

93,297

 

Total current assets

 

4,173,885

 

 

 

2,574,679

 

Property and equipment, net

 

503,958

 

 

 

332,662

 

Intangible assets

 

115,346

 

 

 

77,627

 

Goodwill

 

622,638

 

 

 

363,477

 

Other assets

 

32,827

 

 

 

17,795

 

Total assets

$

5,448,654

 

 

$

3,366,240

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

30,619

 

 

$

27,994

 

Accrued and other current liabilities

 

301,330

 

 

 

110,310

 

Capital leases, short-term

 

110,527

 

 

 

87,126

 

Total current liabilities

 

442,476

 

 

 

225,430

 

Convertible notes

 

1,293,604

 

 

 

 

Capital leases, long-term

 

121,621

 

 

 

110,520

 

Deferred and other long-term tax liabilities, net

 

29,420

 

 

 

59,500

 

Other long-term liabilities

 

36,495

 

 

 

20,784

 

Total liabilities

 

1,923,616

 

 

 

416,234

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock

 

3

 

 

 

3

 

Additional paid-in capital

 

4,973,349

 

 

 

3,944,952

 

Accumulated other comprehensive loss

 

(1,220

)

 

 

(323

)

Accumulated deficit

 

(1,447,094

)

 

 

(994,626

)

Total stockholders’ equity

 

3,525,038

 

 

 

2,950,006

 

Total liabilities and stockholders’ equity

$

5,448,654

 

 

$

3,366,240

 

 

 

 

 

 

 

 

 

 

 

 

5


 

TWITTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Revenue

$

361,266

 

 

$

168,580

 

 

$

923,924

 

 

$

422,215

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

124,166

 

 

 

62,239

 

 

 

309,696

 

 

 

154,067

 

Research and development

 

183,342

 

 

 

87,307

 

 

 

509,828

 

 

 

199,144

 

Sales and marketing

 

164,015

 

 

 

61,214

 

 

 

410,511

 

 

 

138,911

 

General and administrative

 

51,174

 

 

 

21,152

 

 

 

134,602

 

 

 

56,248

 

Total costs and expenses

 

522,697

 

 

 

231,912

 

 

 

1,364,637

 

 

 

548,370

 

Loss from operations

 

(161,431

)

 

 

(63,332

)

 

 

(440,713

)

 

 

(126,155

)

Interest income (expense), net

 

(5,795

)

 

 

(1,727

)

 

 

(10,472

)

 

 

(4,473

)

Other income (expense), net

 

(8,079

)

 

 

818

 

 

 

(5,501

)

 

 

(1,730

)

Loss before income taxes

 

(175,305

)

 

 

(64,241

)

 

 

(456,686

)

 

 

(132,358

)

Provision (benefit) for income taxes

 

159

 

 

 

360

 

 

 

(4,218

)

 

 

1,494

 

Net loss

$

(175,464

)

 

$

(64,601

)

 

$

(452,468

)

 

$

(133,852

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.29

)

 

$

(0.48

)

 

$

(0.76

)

 

$

(1.02

)

Weighted-average shares used to

   compute net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

614,395

 

 

 

133,699

 

 

 

596,722

 

 

 

131,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6


TWITTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(175,464

)

 

$

(64,601

)

 

$

(452,468

)

 

$

(133,852

)

Adjustments to reconcile net loss to net cash provided by

   (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

60,155

 

 

 

29,023

 

 

 

145,737

 

 

 

77,670

 

Stock-based compensation expense

 

169,602

 

 

 

43,602

 

 

 

454,382

 

 

 

79,170

 

Provision for bad debt

 

1,508

 

 

 

513

 

 

 

2,944

 

 

 

758

 

Deferred income tax benefit

 

(2,000

)

 

 

16

 

 

 

(9,737

)

 

 

(492

)

Non-cash acquisition-related costs

 

13

 

 

 

 

 

 

320

 

 

 

566

 

Amortization of investment premium and other

 

9,061

 

 

 

(921

)

 

 

9,420

 

 

 

2,124

 

Amortization of discount on convertible notes

 

2,411

 

 

 

 

 

 

2,411

 

 

 

 

Changes in assets and liabilities, net of assets acquired

   and liabilities assumed from acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(40,620

)

 

 

(22,913

)

 

 

(77,833

)

 

 

(34,262

)

Prepaid expenses and other assets

 

(123,481

)

 

 

2,891

 

 

 

(140,710

)

 

 

(2,410

)

Accounts payable

 

3,891

 

 

 

(6,369

)

 

 

5,298

 

 

 

(8,292

)

Accrued and other liabilities

 

9,022

 

 

 

13,366

 

 

 

98,714

 

 

 

23,286

 

Net cash provided by (used in) operating activities

 

(85,902

)

 

 

(5,393

)

 

 

38,478

 

 

 

4,266

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(38,762

)

 

 

(19,867

)

 

 

(132,839

)

 

 

(46,628

)

Purchases of marketable securities

 

(578,401

)

 

 

(45,949

)

 

 

(1,617,415

)

 

 

(281,574

)

Proceeds from maturities of marketable securities

 

512,656

 

 

 

79,821

 

 

 

1,522,582

 

 

 

300,167

 

Proceeds from sales of marketable securities

 

30

 

 

 

10,465

 

 

 

168,168

 

 

 

34,765

 

Restricted cash

 

687

 

 

 

(5,129

)

 

 

(11,029

)

 

 

(7,541

)

Business combinations, net of cash acquired

 

(32,281

)

 

 

(5,750

)

 

 

(165,177

)

 

 

(8,072

)

Net cash provided by (used in) investing activities

 

(136,071

)

 

 

13,591

 

 

 

(235,710

)

 

 

(8,883

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of convertible notes

 

1,800,000

 

 

 

 

 

 

1,800,000

 

 

 

 

Convertible notes initial issuance discount

 

(27,475

)

 

 

 

 

 

(27,475

)

 

 

 

Purchases of convertible note hedges

 

(387,450

)

 

 

 

 

 

(387,450

)

 

 

 

Proceeds from issuance of warrants

 

275,130

 

 

 

 

 

 

275,130

 

 

 

 

Taxes paid related to net share settlement of equity awards

 

 

 

 

 

 

 

(16,168

)

 

 

 

Repayments of capital lease obligations

 

(32,190

)

 

 

(18,174

)

 

 

(75,076

)

 

 

(49,242

)

Proceeds from exercise of stock options, net of repurchase

 

9,120

 

 

 

1,239

 

 

 

25,027

 

 

 

6,937

 

Proceeds from issuances of common stock under

   employee stock purchase plan

 

 

 

 

 

 

 

21,224

 

 

 

 

Other financing activities

 

(1,500

)

 

 

(1,125

)

 

 

(2,662

)

 

 

(1,125

)

Net cash provided by (used in) financing activities

 

1,635,635

 

 

 

(18,060

)

 

 

1,612,550

 

 

 

(43,430

)

Net increase (decrease) in cash and cash equivalents

 

1,413,662

 

 

 

(9,862

)

 

 

1,415,318

 

 

 

(48,047

)

Foreign exchange effect on cash and cash equivalents

 

(5,843

)

 

 

1,057

 

 

 

(3,533

)

 

 

423

 

Cash and cash equivalents at beginning of period

 

844,976

 

 

 

164,509

 

 

 

841,010

 

 

 

203,328

 

Cash and cash equivalents at end of period

$

2,252,795

 

 

$

155,704

 

 

$

2,252,795

 

 

$

155,704

 

Supplemental disclosures of non-cash investing and financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common and convertible preferred stock issued in connection

   with acquisitions

$

96,112

 

 

$

3,000

 

 

$

147,958

 

 

$

112,945

 

Equipment purchases under capital leases

$

62,670

 

 

$

36,743

 

 

$

110,409

 

 

$

95,500

 

Changes in accrued equipment purchases

$

(29,252

)

 

$

7,191

 

 

$

14,345

 

 

$

16,522

 

Unpaid deferred offering costs

$

 

 

$

2,786

 

 

$

 

 

$

2,786

 

 

7


 

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,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Non-GAAP net income (loss) and net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(175,464

)

 

$

(64,601

)

 

$

(452,468

)

 

$

(133,852

)

Stock-based compensation expense

 

169,602

 

 

 

43,602

 

 

 

454,382

 

 

 

79,170

 

Amortization of acquired intangible assets

 

11,869

 

 

 

3,783

 

 

 

26,144

 

 

 

10,961

 

Non-cash interest expense related to convertible notes

 

2,411

 

 

 

 

 

 

2,411

 

 

 

 

Income tax effects related to acquisitions

 

(1,446

)

 

 

 

 

 

(8,718

)

 

 

(383

)

Non-GAAP net income (loss)

$

6,972

 

 

$

(17,216

)

 

$

21,751

 

 

$

(44,104

)

GAAP diluted shares

 

614,395

 

 

 

133,699

 

 

 

596,722

 

 

 

131,196

 

Dilutive equity awards (1)

 

68,672

 

 

 

 

 

 

86,465

 

 

 

 

Non-GAAP diluted shares

 

683,067

 

 

 

133,699

 

 

 

683,187

 

 

 

131,196

 

Non-GAAP diluted net income (loss) per share

$

0.01

 

 

$

(0.13

)

 

$

0.03

 

 

$

(0.34

)

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(175,464

)

 

$

(64,601

)

 

$

(452,468

)

 

$

(133,852

)

Stock-based compensation expense

 

169,602

 

 

 

43,602

 

 

 

454,382

 

 

 

79,170

 

Depreciation and amortization expense

 

60,155

 

 

 

29,023

 

 

 

145,737

 

 

 

77,670

 

Interest and other expense, net

 

13,874

 

 

 

909

 

 

 

15,973

 

 

 

6,203

 

Provision (benefit) for income taxes

 

159

 

 

 

360

 

 

 

(4,218

)

 

 

1,494

 

Adjusted EBITDA

$

68,326

 

 

$

9,293

 

 

$

159,406

 

 

$

30,685

 

Stock-based compensation expense by function:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

13,596

 

 

$

3,060

 

 

$

37,296

 

 

$

5,015

 

Research and development

 

93,973

 

 

 

29,180

 

 

 

264,784

 

 

 

53,377

 

Sales and marketing

 

42,884

 

 

 

5,742

 

 

 

108,232

 

 

 

10,356

 

General and administrative

 

19,149

 

 

 

5,620

 

 

 

44,070

 

 

 

10,422

 

Total stock-based compensation expense

$

169,602

 

 

$

43,602

 

 

$

454,382

 

 

$

79,170

 

Amortization of acquired intangible assets by function:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

8,855

 

 

$

3,783

 

 

$

18,749

 

 

$

10,961

 

Research and development

 

512

 

 

 

 

 

 

792

 

 

 

 

Sales and marketing

 

2,502

 

 

 

 

 

 

6,603

 

 

 

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

Total amortization of acquired intangible assets

$

11,869

 

 

$

3,783

 

 

$

26,144

 

 

$

10,961

 

 

(1) Gives effect to potential common stock instruments such as stock options, RSUs, unvested restricted stock and warrant.

There is no dilutive effect of the notes nor of the related hedge and warrant transactions.

8