Twitter Inc, racing toward the largest Silicon Valley IPO since Facebook Inc's 2012 coming-out party, hopes 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 of 2013, it posted revenue of $253.6 million but had a loss of $69.3 million.
Crucially, Twitter managed average revenue per user in the second quarter of 2013 of 64 cents
compared to Facebook's roughly $1.60, according to Reuters' calculations.
Although its user base is expanding steadily, Twitter's IPO filing showed that the ad prices it has commanded from marketers had been falling for the past five quarters.
"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.
The average cost per ad engagement slid 46 percent in the June quarter, compared with the previous quarter. But the company said that decline was the result of a conscious effort to rapidly expand its available inventory, and change its algorithm to distribute ads more frequently throughout each day.
Its target is to raise $1 billion, a figure devised mainly for registration purposes and that will change as the company embarks on a roadshow to sell its IPO to investors.
About 65 percent of its revenue derives from mobile users,for twitter mobile is not an issue.
