Twitter Loss Soars, Overseas Challenges Abound

Twitter, the "global platform for public self-expression and conversation in real-time," registered a rise in September quarter-ended red ink to $64.6M from $21.6M, according to its Oct. 15 amended S-1 filing with the Securities and Exchange Commission ahead of its initial public offering. 

Revenues soared 105 percent to $168.8M from a year ago.

Twitter’s advertising revenues from promoted Tweets, accounts and trends rose 123 percent to $153.4M during the quarter.

The micro-blogging service has the bulk of its monthly active users overseas. Twitter had 53M users in the U.S. and 179M elsewhere at the end of September.

Twitter’s growth is faster in Argentina, France, Japan, Russia, and Saudi Arabia than in the U.S.

The challenge is to monetize that overseas user base, which only accounts for a quarter of Twitter revenues. Each U.S. timeline view generates $2.58 vs. 36 cents overseas.

According to the SEC document, many international markets are not familiar with digital advertising, which will “require a significant investments of time and resources to educate advertisers” about the benefits of promoting products and services via Twitter. 

There are government regulatory hurdles in the European Union and difficulties in emerging markets where users access Twitter via phones with limited functionality, rather than through smartphones, tablets and desktops.

Twitter believes its operating results could be harmed by censorship or barriers erected by overseas governments.

China has blocked Twitter, while temporary shutdowns have occurred in Iran, Pakistan, Libya and Syria for political reasons.

As of Sept. 30, Twitter employed 2,300 compared to 1,200 a year ago.

CEO Richard Costolo who was paid a $200K salary in 2012, took a pay cut to $14K in August. He did earn $11.3M in 2012 stock awards/options.

Costolo signed an executive employment letter effective Oct. 1 that has no specific term and provides for at-will employment.

Adam Bain, who earned $200K in 2012 salary and $6.5M in stock/options/incentives for global revenue president duties, and Christopher Fry, who earned $145M in pay and $10.1M in options for senior VP-engineering work, have similar executive employment letter.