Twitter, Inc.
TWITTER, INC. (Form: 8-K, Received: 10/27/2015 16:11:05)

 

 

 

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, 2015

 

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, 2015, Twitter, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter of 2015. In the press release, the Company also announced that it would be holding a conference call on October 27, 2015 to discuss its financial results for the third quarter of 2015. 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 Number

  

Description

 

99.1

  

 

Press release issued by Twitter, Inc. dated October 27, 2015.

 

 

 

 

 

 

 

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, 2015

 

 

 

 


 

EXHIBIT INDEX

 

Exhibit Number

  

Description

 

99.1

  

 

Press release issued by Twitter, Inc. dated October 27, 2015.

 

 

Exhibit 99.1

 

October 27, 2015

 

Twitter Reports Third Quarter 2015 Results

 

SAN FRANCISCO, California - Twitter, Inc. (NYSE: TWTR) today announced financial results for the quarter ended September 30, 2015.

 

 

·

Q3 revenue of $569 million, up 58% year-over-year, and above the previously forecast range of $545 million to $560 million. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased 64%

 

·

Q3 GAAP net loss of $132 million and non-GAAP net income of $67 million

 

·

Q3 GAAP EPS of ($0.20) and non-GAAP diluted EPS of $0.10

 

·

Q3 adjusted EBITDA of $142 million, up 108% year-over-year, and above the previously forecast range of $110 million to $115 million, representing an adjusted EBITDA margin of 25%

 

“We continued to see strong financial performance this quarter, as well as meaningful progress across our three areas of focus: ensuring more disciplined execution, simplifying our services, and better communicating the value of our platform,” said Jack Dorsey, CEO of Twitter. “We’ve simplified our roadmap and organization around a few big bets across Twitter, Periscope, and Vine that we believe represent our largest opportunities for growth.”

 

Third Quarter 2015 Financial Summary

(In thousands, except per share data)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

GAAP Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

569,237

 

 

$

361,266

 

 

$

1,507,559

 

 

$

923,924

 

Net loss

$

(131,690

)

 

$

(175,464

)

 

$

(430,795

)

 

$

(452,468

)

Diluted net loss per share

$

(0.20

)

 

$

(0.29

)

 

$

(0.66

)

 

$

(0.76

)

Non-GAAP Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

142,148

 

 

$

68,326

 

 

$

366,389

 

 

$

159,406

 

Non-GAAP net income

$

66,984

 

 

$

6,972

 

 

$

162,010

 

 

$

21,751

 

Non-GAAP diluted net income per share

$

0.10

 

 

$

0.01

 

 

$

0.23

 

 

$

0.03

 

For additional 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 2015 Operational and Product Highlights

Monthly Active Users – Total average Monthly Active Users (MAUs) were 320 million for the third quarter, up 11% year-over-year, and compared to 316 million in the previous quarter. Excluding SMS Fast Followers, MAUs were 307 million for the third quarter, up 8% year-over-year, and compared to 304 million in the previous quarter. Mobile MAUs represented approximately 80% of total MAUs.

1


Consumer Products Twitter launched Highlights on Android, Music on Vine, and landscape view and web profiles for Periscope. We introduced an updated version of the logged-out Twitter.com desktop home page. We also removed the 140-character limit on direct messages .

Advertising Products –Twitter launched video auto-play on all devices, expanded its self-service ads platform to over 200 countries and territories, and extended the offerings of the Twitter Audience Platform (formerly the Twitter Publisher Network) to include additional targeted objectives and new creative formats. For performance marketers, Twitter introduced new optimization and bidding enhancements. Twitter also introduced event targeting as well as ads editor, a new tool that enables advertisers to seamlessly create and edit numerous campaigns at once.

Partnerships – Twitter announced commerce partnerships with platforms that power e-commerce sites, including Bigcommerce, Demandware, and Shopify, and retailers and brands such as Best Buy, Adidas, and PacSun. These commerce partnerships are powered by Stripe Relay. Twitter partnered with Square to enable U.S. political donations through Tweets. Twitter also extended its existing agreement with Bloomberg to bring more Twitter data to financial professionals. 

Third Quarter 2015 Financial Highlights

Revenue – Revenue for the third quarter of 2015 totaled $569 million, an increase of 58% compared to $361 million in the same period in 2014. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased 64%.

 

·

Advertising revenue totaled $513 million, an increase of 60% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased 67%.

 

·

Mobile advertising revenue was 86% of total advertising revenue.

 

·

Data licensing and other revenue totaled $56 million, an increase of 37% year-over-year.

 

·

U.S. revenue totaled $370 million, an increase of 54% year-over-year.  

 

·

International revenue totaled $199 million, an increase of 65% year-over-year.

Net loss – GAAP net loss was $132 million for the third quarter of 2015 compared to $175 million in the same period in 2014. GAAP net loss for the third quarter of 2015 included $166 million of stock-based compensation expense .

Adjusted EBITDA – Adjusted EBITDA was $142 million for the third quarter of 2015, an increase of 108% compared to $68 million in the same period in 2014.

Non-GAAP net income – Non-GAAP net income was $67 million for the third quarter of 2015 compared to $7 million in the same period in 2014.

EPS – Basic and diluted GAAP EPS was ($0.20) for the third quarter of 2015 compared to ($0.29) in the same period in 2014.

Non-GAAP diluted EPS – Non-GAAP diluted EPS was $0.10 for the third quarter of 2015 compared to $0.01 in the same period in 2014.

Capital expenditures – Purchases of property and equipment for the third quarter of 2015 were $106 million. Additionally, $14 million of equipment purchases were financed through capital leases during the third quarter of 2015.

Cash, cash equivalents, and marketable securities – As of September 30, 2015, cash, cash equivalents, and marketable securities were approximately $3.5 billion, compared to $3.6 billion as of June 30, 2015.

 

2


Outlook

Twitter’s outlook for the fourth quarter of 2015 is as follows:

 

·

Revenue is projected to be in the range of $695 million to $710 million.

 

·

Adjusted EBITDA is projected to be in the range of $155 million to $175 million.

 

·

GAAP expenses are projected to include the vast majority of the $5 million to $15 million of total restructuring charges expected from corporate restructuring activities. These charges are projected to be $10 million to $20 million in cash expenditures. GAAP expenses are lower than cash restructuring costs due to a credit related to non-cash stock-based compensation expense reversals for unvested stock awards.

 

·

Capital expenditures are projected to be no more than $110 million.

 

·

Stock-based compensation expense is projected to be in the range of $170 million to $180 million, excluding the impact of equity awards that may be granted in connection with potential future acquisitions.

 

Note that Twitter's outlook for the fourth quarter of 2015 reflects foreign exchange rates as of October 15, 2015.

 

Webcast and Conference Call Details

Twitter will host a conference call today, Tuesday, October 27, 2015, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss financial results. The company will be following the conversation on Twitter about the earnings announcement. Tweet to @TwitterIR or use #TWTRearnings or $TWTR to have your questions considered during the Q&A portion of the conference call along with those submitted by conference call participants. Watch a live broadcast of the call on Periscope from the @TwitterIR account or tune in to a live webcast on the company’s Investor Relations page at investor.twitterinc.com. The Investor Relations website will also have the company’s financial results, supplemental slides, and an archived replay of the webcast. Twitter has used, and intends to continue to use, its Investor Relations website and the Twitter accounts of @jack, @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 consume, create, distribute, and discover content, Twitter enables any voice to echo around the world instantly and unfiltered. The service can be accessed at Twitter.com, on a variety of mobile devices, and via SMS. Available in more than 35 languages, Twitter has 320 million monthly active users. For more information, visit about.twitter.com or follow @twitter.

3


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, Twitter's expectations regarding its revenue, adjusted EBITDA, capital expenditures and stock-based compensation expense for the fourth quarter 2015. 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; 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 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, 2014 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 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, 2015. 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 revenue excluding foreign exchange effect, advertising revenue excluding foreign exchange effect, adjusted EBITDA, non-GAAP net income, adjusted EBITDA margin and non-GAAP diluted EPS. Twitter defines adjusted EBITDA as net loss adjusted to exclude stock-based compensation expense, depreciation and amortization expense, interest and other expenses, net and provision (benefit) for income taxes; and Twitter defines non-GAAP net income as net 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 and the income tax effects related to acquisitions. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.

Twitter uses the non-GAAP financial measures of adjusted EBITDA, non-GAAP net income, 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, 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 that we exclude in adjusted EBITDA, non-GAAP net income, adjusted EBITDA margin and non-GAAP diluted EPS. Twitter also believes that adjusted EBITDA, non-GAAP net income, 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 translated revenue and advertising revenue for the quarter and nine months ended September 30, 2015 using the prior year's monthly exchange rates for its settlement currencies other than the U.S. dollar, which Twitter believes is a useful metric that facilitates comparison to its historical 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.


4


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, net 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

 

 

 

5


 

TWITTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

876,432

 

 

$

1,510,724

 

Short-term investments

 

2,612,762

 

 

 

2,111,154

 

Accounts receivable, net

 

536,788

 

 

 

418,454

 

Prepaid expenses and other current assets

 

237,577

 

 

 

215,521

 

Total current assets

 

4,263,559

 

 

 

4,255,853

 

Property and equipment, net

 

699,502

 

 

 

557,019

 

Intangible assets

 

147,286

 

 

 

105,011

 

Goodwill

 

1,123,121

 

 

 

622,570

 

Other assets

 

55,596

 

 

 

42,629

 

Total assets

$

6,289,064

 

 

$

5,583,082

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

40,100

 

 

$

53,241

 

Accrued and other current liabilities

 

294,057

 

 

 

228,233

 

Capital leases, short-term

 

93,621

 

 

 

112,320

 

Total current liabilities

 

427,778

 

 

 

393,794

 

Convertible notes

 

1,434,968

 

 

 

1,376,020

 

Capital leases, long-term

 

73,525

 

 

 

118,950

 

Deferred and other long-term tax liabilities, net

 

32,958

 

 

 

24,706

 

Other long-term liabilities

 

45,672

 

 

 

43,209

 

Total liabilities

 

2,014,901

 

 

 

1,956,679

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock

 

3

 

 

 

3

 

Additional paid-in capital

 

6,311,697

 

 

 

5,208,870

 

Accumulated other comprehensive loss

 

(34,296

)

 

 

(10,024

)

Accumulated deficit

 

(2,003,241

)

 

 

(1,572,446

)

Total stockholders’ equity

 

4,274,163

 

 

 

3,626,403

 

Total liabilities and stockholders’ equity

$

6,289,064

 

 

$

5,583,082

 

 

 

 

 

 

 

 

 

 

 

6


TWITTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Revenue

$

569,237

 

 

$

361,266

 

 

$

1,507,559

 

 

$

923,924

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

200,195

 

 

 

124,166

 

 

 

511,293

 

 

 

309,696

 

Research and development

 

207,937

 

 

 

183,342

 

 

 

596,590

 

 

 

509,828

 

Sales and marketing

 

208,797

 

 

 

164,015

 

 

 

594,302

 

 

 

410,511

 

General and administrative

 

57,545

 

 

 

51,174

 

 

 

188,231

 

 

 

134,602

 

Total costs and expenses

 

674,474

 

 

 

522,697

 

 

 

1,890,416

 

 

 

1,364,637

 

Loss from operations

 

(105,237

)

 

 

(161,431

)

 

 

(382,857

)

 

 

(440,713

)

Interest expense

 

(25,239

)

 

 

(6,079

)

 

 

(73,995

)

 

 

(11,835

)

Other income (expense), net

 

1,948

 

 

 

(7,795

)

 

 

10,378

 

 

 

(4,138

)

Loss before income taxes

 

(128,528

)

 

 

(175,305

)

 

 

(446,474

)

 

 

(456,686

)

Provision (benefit) for income taxes

 

3,162

 

 

 

159

 

 

 

(15,679

)

 

 

(4,218

)

Net loss

$

(131,690

)

 

$

(175,464

)

 

$

(430,795

)

 

$

(452,468

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.20

)

 

$

(0.29

)

 

$

(0.66

)

 

$

(0.76

)

Weighted-average shares used to

   compute net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

670,604

 

 

 

614,395

 

 

 

655,721

 

 

 

596,722

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


TWITTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(131,690

)

 

$

(175,464

)

 

$

(430,795

)

 

$

(452,468

)

Adjustments to reconcile net loss to net cash provided by

   (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

81,464

 

 

 

60,155

 

 

 

225,377

 

 

 

145,737

 

Stock-based compensation expense

 

165,921

 

 

 

169,602

 

 

 

523,869

 

 

 

454,382

 

Amortization of discount on convertible notes

 

17,495

 

 

 

2,411

 

 

 

51,139

 

 

 

2,411

 

Provision for bad debt

 

(2,985

)

 

 

1,508

 

 

 

360

 

 

 

2,944

 

Deferred income tax

 

86

 

 

 

(2,000

)

 

 

(24,220

)

 

 

(9,737

)

Other adjustments

 

10,524

 

 

 

9,074

 

 

 

5,327

 

 

 

9,740

 

Changes in assets and liabilities, net of assets acquired

   and liabilities assumed from acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(61,542

)

 

 

(40,620

)

 

 

(105,486

)

 

 

(77,833

)

Prepaid expenses and other assets

 

(4,823

)

 

 

(123,481

)

 

 

(12,684

)

 

 

(140,710

)

Accounts payable

 

1,926

 

 

 

3,891

 

 

 

(9,511

)

 

 

5,298

 

Accrued and other liabilities

 

25,292

 

 

 

9,022

 

 

 

60,452

 

 

 

98,714

 

Net cash provided by (used in) operating activities

 

101,668

 

 

 

(85,902

)

 

 

283,828

 

 

 

38,478

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(106,476

)

 

 

(38,762

)

 

 

(266,816

)

 

 

(132,839

)

Purchases of marketable securities

 

(850,507

)

 

 

(578,401

)

 

 

(3,086,004

)

 

 

(1,617,415

)

Proceeds from maturities of marketable securities

 

883,118

 

 

 

512,656

 

 

 

2,225,255

 

 

 

1,522,582

 

Proceeds from sales of marketable securities

 

24,556

 

 

 

30

 

 

 

359,817

 

 

 

168,168

 

Changes in restricted cash

 

957

 

 

 

687

 

 

 

(2,840

)

 

 

(11,029

)

Business combinations, net of cash acquired

 

(25,344

)

 

 

(30,981

)

 

 

(51,644

)

 

 

(163,477

)

Purchases of cost method investments and other

 

(5,430

)

 

 

(1,300

)

 

 

(12,430

)

 

 

(1,700

)

Net cash used in investing activities

 

(79,126

)

 

 

(136,071

)

 

 

(834,662

)

 

 

(235,710

)

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

 

(2,398

)

 

 

 

 

 

(8,878

)

 

 

(16,168

)

Repayments of capital lease obligations

 

(28,431

)

 

 

(32,190

)

 

 

(91,365

)

 

 

(75,076

)

Proceeds from exercise of stock options

 

1,488

 

 

 

9,120

 

 

 

8,450

 

 

 

25,027

 

Proceeds from issuances of common stock under

   employee stock purchase plan

 

 

 

 

 

 

 

21,600

 

 

 

21,224

 

Other financing activities

 

1,983

 

 

 

(1,500

)

 

 

1,983

 

 

 

(2,662

)

Net cash provided by (used in) financing activities

 

(27,358

)

 

 

1,635,635

 

 

 

(68,210

)

 

 

1,612,550

 

Net increase (decrease) in cash and cash equivalents

 

(4,816

)

 

 

1,413,662

 

 

 

(619,044

)

 

 

1,415,318

 

Foreign exchange effect on cash and cash equivalents

 

(2,059

)

 

 

(5,843

)

 

 

(15,248

)

 

 

(3,533

)

Cash and cash equivalents at beginning of period

 

883,307

 

 

 

844,976

 

 

 

1,510,724

 

 

 

841,010

 

Cash and cash equivalents at end of period

$

876,432

 

 

$

2,252,795

 

 

$

876,432

 

 

$

2,252,795

 

Supplemental disclosures of non-cash investing and financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued in connection with acquisitions

$

 

 

$

96,112

 

 

$

516,538

 

 

$

147,958

 

Equipment purchases under capital leases

$

13,692

 

 

$

62,670

 

 

$

24,236

 

 

$

110,409

 

Changes in accrued equipment purchases

$

(13,467

)

 

$

(29,252

)

 

$

(4,380

)

 

$

14,345

 

 

8


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,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Non-GAAP net income and net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(131,690

)

 

$

(175,464

)

 

$

(430,795

)

 

$

(452,468

)

Stock-based compensation expense

 

165,921

 

 

 

169,602

 

 

 

523,869

 

 

 

454,382

 

Amortization of acquired intangible assets

 

14,481

 

 

 

11,869

 

 

 

39,241

 

 

 

26,144

 

Non-cash interest expense related to convertible notes

 

17,495

 

 

 

2,411

 

 

 

51,139

 

 

 

2,411

 

Non-cash expense related to acquisitions

 

 

 

 

 

 

 

926

 

 

 

 

Income tax effects related to acquisitions

 

777

 

 

 

(1,446

)

 

 

(22,370

)

 

 

(8,718

)

Non-GAAP net income

$

66,984

 

 

$

6,972

 

 

$

162,010

 

 

$

21,751

 

GAAP diluted shares

 

670,604

 

 

 

614,395

 

 

 

655,721

 

 

 

596,722

 

Dilutive equity awards (1)

 

29,474

 

 

 

68,672

 

 

 

38,916

 

 

 

86,465

 

Non-GAAP diluted shares

 

700,078

 

 

 

683,067

 

 

 

694,637

 

 

 

683,187

 

Non-GAAP diluted net income per share

$

0.10

 

 

$

0.01

 

 

$

0.23

 

 

$

0.03

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(131,690

)

 

$

(175,464

)

 

$

(430,795

)

 

$

(452,468

)

Stock-based compensation expense

 

165,921

 

 

 

169,602

 

 

 

523,869

 

 

 

454,382

 

Depreciation and amortization expense

 

81,464

 

 

 

60,155

 

 

 

225,377

 

 

 

145,737

 

Interest and other expense, net

 

23,291

 

 

 

13,874

 

 

 

63,617

 

 

 

15,973

 

Provision (benefit) for income taxes

 

3,162

 

 

 

159

 

 

 

(15,679

)

 

 

(4,218

)

Adjusted EBITDA

$

142,148

 

 

$

68,326

 

 

$

366,389

 

 

$

159,406

 

Stock-based compensation expense by function:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

8,973

 

 

$

13,596

 

 

$

32,345

 

 

$

37,296

 

Research and development

 

100,673

 

 

 

93,973

 

 

 

306,830

 

 

 

264,784

 

Sales and marketing

 

37,889

 

 

 

42,884

 

 

 

120,154

 

 

 

108,232

 

General and administrative

 

18,386

 

 

 

19,149

 

 

 

64,540

 

 

 

44,070

 

Total stock-based compensation expense

$

165,921

 

 

$

169,602

 

 

$

523,869

 

 

$

454,382

 

Amortization of acquired intangible assets by function:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

9,558

 

 

$

8,855

 

 

$

28,104

 

 

$

18,749

 

Research and development

 

64

 

 

 

512

 

 

 

192

 

 

 

792

 

Sales and marketing

 

4,859

 

 

 

2,502

 

 

 

10,945

 

 

 

6,603

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

Total amortization of acquired intangible assets

$

14,481

 

 

$

11,869

 

 

$

39,241

 

 

$

26,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 the related hedge and warrant transactions.

 

 

9


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,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Revenue and advertising revenue excluding foreign exchange effect:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

569

 

 

$

361

 

 

$

1,508

 

 

$

924

 

Foreign exchange effect on 2015 revenue using 2014 rates

 

23

 

 

 

 

 

 

 

61

 

 

 

 

 

Revenue excluding foreign exchange effect

$

592

 

 

 

 

 

 

$

1,569

 

 

 

 

 

Revenue year-over-year change percent

 

58

%

 

 

 

 

 

 

63

%

 

 

 

 

Revenue excluding foreign exchange effect year-over-year change percent

 

64

%

 

 

 

 

 

 

70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising revenue

$

513

 

 

$

320

 

 

$

1,353

 

 

$

824

 

Foreign exchange effect on 2015 advertising revenue using 2014 rates

 

23

 

 

 

 

 

 

 

61

 

 

 

 

 

Advertising revenue excluding foreign exchange effect

$

536

 

 

 

 

 

 

$

1,414

 

 

 

 

 

Advertising revenue year-over-year change percent

 

60

%

 

 

 

 

 

 

64

%

 

 

 

 

Advertising revenue excluding foreign exchange effect year-over-year change percent

 

67

%

 

 

 

 

 

 

72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10