Here is a set of business definitions that Twitter users in their company filings.
Monthly Active Users (MAUs)
Twitter users who logged in and accessed Twitter through its website, mobile website, desktop or mobile applications, SMS or registered third-party applications or websites in the 30 day period ending on the date of measurement. Average MAUs for a quarterly period represents the average of the MAUs at the end of each month during the period. MAUs are a measure of the size of the active user base.
The total number of timelines requested when registered users visit Twitter, refresh a timeline or view search results while logged in on a Twitter mobile website or desktop or mobile applications (excluding TweetDeck and Mac clients, as Twitter does not fully track this data).
Timeline Views Per MAU
These are calculated by dividing the total timeline views for the period by the average MAUs for the last three months of such period. Timeline views and timeline views per MAU are measures of user engagement.
Advertising Revenue Per Timeline View
Advertising revenue per 1,000 timeline views during the applicable period. Advertising revenue per timeline view is a measure of Twitter’s ability to monetize its platform. Advertising revenue is recorded based on the billing location of the advertisers, rather than the location of the users.
Twitter generates a substantial majority of revenue from the sale of advertising services. Twitter generates substantially all of its advertising revenue by selling its Promoted Products. Currently, its Promoted Products consist of the following:
- Promoted Tweets. Promoted Tweets, which are labeled as “promoted,” appear within a user’s timeline or search results just like an ordinary Tweet regardless of device, whether it be desktop or mobile. Using its proprietary algorithms and understanding of the interests of each user, Twitter can deliver Promoted Tweets that are intended to be relevant to a particular user. Twitter enables its advertisers to target an audience based on the users’ Interest Graphs. Twitter Promoted Tweets are pay-for-performance advertising that is priced through an auction. Twitter recognizes advertising revenue when a user engages with a Promoted Tweet.
- Promoted Accounts. Promoted Accounts, which are labeled as “promoted,” appear in the same format and place as accounts suggested by Twitter ‘Who to Follow’ recommendation engine. Promoted Accounts provide a way for the advertisers to grow a community of users who are interested in advertisers’ business, products or services. Twitter Promoted Accounts are pay-for-performance advertising that is priced through an auction. Twitter recognizes advertising revenue when a user follows a Promoted Account.
- Promoted Trends. Promoted Trends, which are labeled as “promoted,” appear at the top of the list of trending topics for an entire day in a particular country or on a global basis. When a user clicks on a Promoted Trend, search results for that trend are shown in a timeline and a Promoted Tweet created by the advertiser is displayed to the user at the top of those search results. Twitter sells Promoted Trends on a fixed-fee-per-day basis. Twitter features one Promoted Trend per day per geography and recognizes advertising revenue from a Promoted Trend when it is displayed on its platform.
Twitter offers data licenses that allow its data partners to access, search and analyze historical and real-time data on its platform. Twitter data partners generally purchase licenses to access all or a portion of the data for a fixed period, which is typically two years. Twitter recognizes data licensing revenue as the licensed data is made available to its data partners.
Twitter Total Revenues
It is the sum of Twitter’s advertising revenues and Twitter’s data licensing revenues.
Cost of Revenue
Cost of revenue consists primarily of data center costs related to the collocated facilities, which include lease and hosting costs, related support and maintenance costs and energy and bandwidth costs, as well as depreciation of the servers and networking equipment, and personnel-related costs, including salaries, benefits and stock-based compensation, for Twitter operations teams. Cost of revenue also includes allocated facilities and other supporting overhead costs, amortization of acquired intangible assets and capitalized labor costs.
Research and Development expenses
Twitter Research and development expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for engineers and other employees engaged in the research and development of Twitter products and services. In addition, research and development expenses include allocated facilities and other supporting overhead costs.
Sales and Marketing expenses
Twitter Sales and marketing expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation for Twitter employees engaged in sales, sales support, commissions, business development and media, marketing, corporate communications and customer service functions. In addition, marketing and sales-related expenses also include market research, tradeshows, branding, marketing and public relations costs, as well as allocated facilities and other supporting overhead costs.
General and Administrative Expenses
Twitter General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation, for Twitter executive, finance, legal, information technology, human resources and other administrative employees. In addition, general and administrative expenses include fees and costs for professional services, including consulting, third-party legal and accounting services and facilities and other supporting overhead costs that are not allocated to other departments.
Key Financial Metrics Formulae
YoY (Year on Year) Income Growth (for the quarters) = Income in a quarter / Income in the same quarter a year ago – 1
YoY (Year on Year) Income Growth (for the years) = Income in a year / Income in the previous year – 1
Gross Income = Total Revenues – Cost of Revenues
Gross Margin = Gross Income / Total Revenues
Operating Income = Total Revenues – Total Costs
Total Costs = Cost of Revenue + Sales and Marketing expenses + Research and Development expenses + General and Administrative expenses
Sales and Marketing as % of Revenues = Sales and Marketing expenses / Total Revenues
Research and Development as % of Revenues = Research and Development expenses / Total Revenues
Operating Margin = Operating Income / Total Revenues
Net Income = Operating Income + Interest Income (or –Interest Expenses) + Other Income (or –Other Expenses) – Income Taxes
Net Margin = Net Income / Total Revenue
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