Twitter Inc. (TWTR), the social media company founded 14 years ago, is now ubiquitous via its posts - called tweets - on the Internet and all forms of media. It's best known for news-breaking tweets from politicians and celebrities, but it provides a platform for millions of users to publish their thoughts, interact, share content, and read breaking news. The platform itself is free to use for individuals and businesses alike. Once a user has created an account, they can post messages ("tweets") of up to 280 characters and up to 2,400 times per day, which are automatically distributed to followers in a feed that is constantly refreshed. Twitter divides its revenue into two categories: the sale of advertising services, which constitutes the vast majority of the company's revenue, as well as data licensing and other services. Twitter's major competitors include other social media companies like Facebook Inc. (FB) and Alphabet Inc. (GOOG).
- Twitter is a social media company providing a platform for users to interact in real time.
- The company generated the vast majority of its revenue through advertising services in Q2 2020.
- Some high-profile Twitter accounts were hacked in mid-July, including the accounts of Joe Biden, Bill Gates, Elon Musk, and others.
In Q2 2020 (ended June 30, 2020), Twitter generated a net loss of $1.4 billion, a significant change from the $1.1 billion of net income posted in Q2 2019. The company posted revenue of $683.4 million, down 18.8% compared to the same three-month period a year ago. Twitter noted that the COVID-19 pandemic as well as U.S. civil unrest during the second quarter has led to significant declines in advertising revenue. But the company sees demand for advertising services picking up again.
Twitter's Business Segments
Twitter has a single operating segment and reporting structure. However, in its financial reporting the company does separate its revenue into two categories: Advertising Services, and Data Licensing and Other.
Advertising makes up about $562.0 million, or about 82%, of Twitter's revenue as of Q2 2020. The segment's revenue fell 22.7% compared to Q2 2019. Twitter generates most of its advertising revenue by selling promoted products, including promoted tweets, promoted accounts, and promoted trends, to advertisers. The company creates tailored advertising opportunities by using an algorithm to make sure promoted products make it into the right users' timelines, "Who to Follow" lists or at the top of the list of trending topics for an entire day in a particular country or globally. Advertisers also have the option of paying for in-stream video ads delivered to a targeted audience or sponsoring video content from publishing partners. While the majority of revenue from advertising services is generated through Twitter's owned and operated platform, a small portion of the advertising products Twitter sells are also placed on third-party publishers’ websites, applications and other offerings.
Data Licensing and Other
Nearly 18% of Twitter's revenue in Q2 2020, or $121.4 million, was from data licensing and other sources. Revenue for the segment grew 6.3% compared to the same quarter a year ago. Twitter also sells subscriptions to public data beyond its public API to companies and developers looking to "access, search and analyze historical and real-time data" on the platform. The "other sources" includes service fees Twitter collects from users of its mobile ad exchange, MoPub.
Twitter's Recent Developments
A number of celebrity Twitter accounts were hacked in mid-July, including the accounts of Democratic presidential candidate Joe Biden, Microsoft Corp. (MSFT) founder Bill Gates, Tesla Inc. (TSLA) CEO Elon Musk, and former New York mayor Michael Bloomberg. The hackers were able to send tweets from these high-profile users' accounts. Twitter said that the hackers targeted a small number of its employees through a phone spear phishing attack, which provided the hackers with access to the platform's internal network and internal support tools.
How Twitter Reports Diversity & Inclusiveness
As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Twitter and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Twitter releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.
Below is a table of potential diversity measurements. It shows whether Twitter discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Twitter breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.
|Twitter Diversity & Inclusiveness Reporting|
|Race||Gender||Ability||Veteran Status||Sexual Orientation|
|Board of Directors|
|General Management||✔ (U.S. Only)||✔|
|Employees||✔ (U.S. Only)||✔|
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Twitter Inc. "Form 10-Q for the quarterly period ended June 30, 2020," page 13. Accessed Aug. 16, 2020.
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Twitter Inc. "Form 10-Q for the quarterly period ended June 30, 2020," page 36. Accessed Aug. 16, 2020.
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