Twitter Announces Second Quarter 2019 Results

This Post Was Syndicated Under License Via QuoteMedia

Reports 18% Year-over-Year Total Revenue Growth and 14% Year-over-Year Growth in Monetizable Daily Active Usage

 

SAN FRANCISCO, July 26, 2019 /PRNewswire/ — Twitter, Inc. (NYSE: TWTR) today announced financial results for its second quarter 2019.

“Health remains our top priority and we are proud of the work we did in Q2. Our focus was on ensuring that our rules, and how we enforce them, are easy to understand. We also continued our work to proactively identify and address malicious behavior, resulting in an 18% drop in reports of spammy or suspicious behavior across all Tweet detail pages, which show the replies to any given Tweet on our service,” said Jack Dorsey, Twitter’s CEO. “In addition, we continued to leverage machine learning to deliver more relevant content, driving increased usage of Twitter on a daily basis, with mDAU up 14% year-over-year.”

“We continued to deliver solid performance in Q2, with revenue up 20% year-over-year on a constant currency basis driven by strength in the US,” said Ned Segal, Twitter’s CFO. “Focusing on our most important ad products and delivering high performing ads will help advertisers launch something new and connect with what’s happening on Twitter.”

Second Quarter 2019 Operational and Financial Highlights

Except as otherwise stated, all financial results discussed below are presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. As supplemental information, we have provided certain non-GAAP financial measures in this press release’s supplemental tables, and such supplemental tables include a reconciliation of these non-GAAP measures to our GAAP results. Also, please note that, as of Q2’19, we will no longer be providing a slide deck as part of our quarterly disclosure package. All information previously provided in our slide deck is now provided in the Selected Company Metrics and Financials PDF posted on our IR site.

  • Revenue totaled $841 million, an increase of 18% year-over-year or 20% on a constant currency basis.
    • Advertising revenue totaled $727 million, an increase of 21% year-over-year or 23% on a constant currency basis.
      • Total ad engagements increased 20% year-over-year.
      • Cost per engagement (CPE) was approximately flat year-over-year.
    • Data licensing and other revenue totaled $114 million, an increase of 4% year-over-year.
    • US revenue totaled $455 million, an increase of 24% year-over-year.
    • International revenue totaled $386 million, an increase of 12% year-over-year or 16% on a constant currency basis.
  • Costs and expenses totaled $766 million, an increase of 21% year-over-year, resulting in operating income of $76 million and 9% operating margin.
  • Net income was $1.1 billion, representing a net margin of 133% and diluted EPS of $1.43. Adjusted net income was $37 million, adjusted net margin was 4% and adjusted diluted EPS was $0.05, which all exclude the impact of a significant income tax benefit related to the establishment of a deferred tax asset for corporate structuring for certain geographies. In the same period last year, we reported net income of $100 million, net margin of 14%, and diluted EPS of $0.13. Also in the same period last year, excluding the impact of a net income tax benefit due to a valuation allowance release, adjusted net income was $58 million, adjusted net margin was 8% and adjusted diluted EPS was $0.08.
  • Average monetizable daily active usage (mDAU) was 139 million, compared to 122 million in the same period of the previous year and compared to 134 million in the previous quarter.
    • Average US mDAU was 29 million, compared to 26 million in the same period of the previous year and compared to 28 million in the previous quarter.
    • Average international mDAU was 110 million, compared to 96 million in the same period of the previous year and compared to 105 million in the previous quarter.

Outlook

For Q3, we expect:

  • Total revenue to be between $815 million and $875 million
  • Operating income to be between $45 million and $80 million

For FY 2019, we expect:

  • GAAP operating expenses to increase approximately 20% on a year-over-year basis in 2019 as we continue to invest for growth and support the top priorities we outlined at the beginning of the year: health, conversation, revenue product and sales, and platform
  • Stock-based compensation expense to be in the range of $350 million to $400 million
  • Capital expenditures to be between $550 million and $600 million

Note that our outlook for Q3 and the full year 2019 reflects foreign exchange rates as of July 2019.

For more information regarding the non-GAAP financial measures discussed in this press release, please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

Appendix

Second Quarter 2019 Webcast and Conference Call Details
Twitter will host a conference call today, Friday, July 26, 2019, at 5am Pacific Time (8am Eastern Time) to discuss financial results for the second quarter of 2019. The company will be following the conversation about the earnings announcement on Twitter. To have your questions considered during the Q&A, Tweet your question to @TwitterIR using $TWTR. To listen to a live audio webcast, please visit the company’s Investor Relations page at investor.twitterinc.com. Twitter has used, and intends to continue to use, its Investor Relations website and the Twitter accounts of @jack, @nedsegal, @Twitter, and @TwitterIR as means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD.

Third Quarter Earnings Release Details
Twitter will release financial results for the third quarter of 2019 on October 24, 2019, before the market opens at approximately 4am Pacific Time (7am Eastern Time). On the same day, Twitter will host a conference call to discuss those financial results at 5am Pacific Time (8am Eastern Time).

About Twitter, Inc. (NYSE: TWTR)
Twitter is what’s happening in the world and what people are talking about right now. From breaking news and entertainment to sports, politics, and everyday interests, see every side of the story. Join the open conversation. Watch live-streaming events. Available in more than 40 languages around the world, the service can be accessed via twitter.com, an array of mobile devices, and SMS. For more information, please visit about.twitter.com, follow @Twitter, and download both the Twitter and Periscope apps at twitter.com/download and periscope.tv.

A Note About Metrics
Twitter defines monetizable daily active usage or users (mDAU) as Twitter users who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com or Twitter applications that are able to show ads. Average mDAU for a period represents the number of mDAU on each day of such period divided by the number of days for such period. Changes in mDAU are a measure of changes in the size of our daily logged in or otherwise authenticated active user base. To calculate the year-over-year change in mDAU, we subtract the average mDAU for the three months ended in the previous year from the average mDAU for the same three months ended in the current year and divide the result by the average mDAU for the three months ended in the previous year. Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. 

The numbers of active users presented in our earnings materials are based on internal company data. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring usage and user engagement across our large user base around the world. Furthermore, our metrics may be impacted by our information quality efforts, which are our overall efforts to reduce malicious activity on the service, inclusive of spam, malicious automation, and fake accounts. For example, there are a number of false or spam accounts in existence on our platform. We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the second quarter of 2019 represented fewer than 5% of our mDAU during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter. In making this

determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated. We are continually seeking to improve our ability to estimate the total number of spam accounts and eliminate them from the calculation of our active users, and have made improvements in our spam detection capabilities that have resulted in the suspension of a large number of spam, malicious automation and fake accounts. We intend to continue to make such improvements. After we determine an account is spam, malicious automation or fake, we stop counting it in our mDAU, or other related metrics. We also treat multiple accounts held by a single person or organization as multiple users for purposes of calculating our active users because we permit people and organizations to have more than one account. Additionally, some accounts used by organizations are used by many people within the organization. As such, the calculations of our active users may not accurately reflect the actual number of people or organizations using our platform.

In addition, our data regarding user geographic location for purposes of reporting the geographic location of our mDAU is based on the IP address or phone number associated with the account when a user initially registered the account on Twitter. The IP address or phone number may not always accurately reflect a user’s actual location at the time such user engaged with our platform. For example, a mobile user may appear to be accessing Twitter from the location of the proxy server that the user connects to rather than from a user’s actual location.

We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy. Our measures of user growth and user engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology.

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,” “going to,” “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, priorities, plans, or intentions. Forward-looking statements in this press release include, but are not limited to, statements regarding Twitter’s future financial and operating performance, including its outlook, guidance and statements regarding future disclosures; Twitter’s expectations regarding its strategies, product, and business plans, including its priorities, product initiatives, and product experiments; Twitter’s strategies for improving the health of the platform and improving safety; and Twitter’s strategies and expectations for increasing audience growth, including delivering more relevant content, and advertiser value. 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 grow or decline; Twitter’s strategies, priorities, or plans take longer to execute than anticipated; 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, 2018, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, each 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 June 30, 2019. 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 of America, or GAAP, Twitter considers certain financial measures that are not prepared in accordance with GAAP, including revenues excluding foreign exchange effect, which we refer to as on a constant currency basis, non-GAAP income before income taxes, non-GAAP provision (benefit) for income taxes, non-GAAP net income, non-GAAP diluted net income per share, adjusted EBITDA, non-GAAP costs and expenses, adjusted net income, adjusted net margin, adjusted diluted net income per share, and adjusted free cash flow. In order to present revenues on a constant currency basis for the fiscal quarter ended June 30, 2019, Twitter translated the applicable measure using the prior year’s monthly exchange rates for its settlement currencies other than the US dollar. Twitter defines non-GAAP income before income taxes as income before income taxes 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, impairment (gain) on investments in privately-held companies, restructuring charges and one-time nonrecurring gain, if any; Twitter defines non-GAAP provision (benefit) for income taxes as the current and deferred income tax expense commensurate with the non-GAAP measure of profitability using the estimated annual effective tax rate, which is dependent on the jurisdictional mix of earnings; and Twitter defines non-GAAP net income as net income 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, impairment (gain) on investments in privately-held companies, restructuring charges and one-time nonrecurring gain, if any, and adjustment to income tax expense based on the non-GAAP measure of profitability using the estimated annual effective tax rate, which is dependent on the jurisdictional mix of earnings. Non-GAAP diluted net income per share is calculated by dividing non-GAAP net income by non-GAAP diluted share count. Non-GAAP diluted share count is GAAP basic share count plus potential common stock instruments such as stock options, RSUs, shares to be purchased under employee stock purchase plans, unvested restricted stock, the conversion feature of convertible senior notes, and warrants. Twitter defines adjusted EBITDA as net income adjusted to exclude stock-based compensation expense, depreciation and amortization expense, interest and other expense, net, provision (benefit) for income taxes, restructuring charges and one-time nonrecurring gain, if any. Twitter defines non-GAAP costs and expenses as total costs and expenses adjusted to exclude stock-based compensation expense, amortization of acquired intangible assets, non-cash expense related to acquisitions, restructuring charges and one-time nonrecurring gain, if any. We have presented adjusted net income solely to exclude the benefit related to the establishment of deferred tax assets for corporate structuring for certain geographies in the three and six months ended June 30, 2019 and to the release of a deferred tax asset valuation allowance in the three and six months ended June 30, 2018, and no other adjustments were made in the calculation of these measures. Adjusted net margin is calculated by dividing adjusted net income by GAAP revenue. Adjusted diluted net income per share is calculated by dividing adjusted net income by GAAP diluted share count. Adjusted free cash flow is GAAP net cash provided by operating activities less capital expenditures (i.e., purchases of property and equipment including equipment purchases that were financed through finance leases, less proceeds received from the disposition of property and equipment).

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.

Twitter believes that revenues excluding foreign exchange effect, non-GAAP income before income taxes, non-GAAP provision (benefit) for income taxes, non-GAAP net income, non-GAAP diluted net income per share, adjusted EBITDA, non-GAAP costs and expenses, adjusted net income, adjusted net margin, and adjusted dilutive net income per share 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 believes that revenues on a constant currency basis is a useful metric that facilitates comparison to its historical performance. Twitter believes that non-GAAP net income, non-GAAP diluted net income per share, adjusted EBITDA, non-GAAP costs and expenses, adjusted net income, adjusted net margin, and adjusted diluted net income per share help identify underlying trends in its business that could otherwise be masked by expenses and one-time gains or charges that it excludes in non-GAAP net income, non-GAAP diluted net income per share, adjusted EBITDA, non-GAAP costs and expenses, adjusted net income, adjusted net margin, and adjusted diluted net income per share, or the effect of the one-time benefits related to the establishment of deferred tax assets or the release of deferred tax asset valuation allowance described above, which are non-operating benefits. In addition, Twitter believes that adjusted free cash flow provides useful information to management and investors about the amount of cash from operations and that it is typically a more conservative measure of cash flows. However, adjusted free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of its ability to fund its cash needs.

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.

Contacts               

 
   

Investors:   
Cherryl Valenzuela       

[email protected]

   

Press:       
Giovanna Falbo           

[email protected]

 

 

TWITTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

                 
 

June 30,

   

December 31,

   
 

2019

   

2018

   

Assets

               

Current assets:

               

Cash and cash equivalents

$

2,183,111

   

$

1,894,444

   

Short-term investments

 

4,503,427

     

4,314,957

   

Accounts receivable, net

 

719,904

     

788,700

   

Prepaid expenses and other current assets

 

106,341

     

112,935

   

Total current assets

 

7,512,783

     

7,111,036

   

Property and equipment, net

 

982,513

     

885,078

   

Operating lease right-of-use assets

 

694,855

     

   

Intangible assets, net

 

50,722

     

45,025

   

Goodwill

 

1,246,883

     

1,227,269

   

Deferred tax assets, net

 

1,954,808

     

808,459

   

Other assets

 

79,043

     

85,705

   

Total assets

$

12,521,607

   

$

10,162,572

   

Liabilities and stockholders equity

               

Current liabilities:

               

Accounts payable

$

206,282

   

$

145,186

   

Accrued and other current liabilities

 

428,296

     

405,751

   

Convertible notes, short-term

 

923,648

     

897,328

   

Operating lease liabilities, short-term

 

129,919

     

   

Finance lease liabilities, short-term

 

45,593

     

68,046

   

Total current liabilities

 

1,733,738

     

1,516,311

   

Convertible notes, long-term

 

1,773,092

     

1,730,922

   

Operating lease liabilities, long-term

 

614,213

     

   

Finance lease liabilities, long-term

 

7,576

     

24,394

   

Deferred and other long-term tax liabilities, net

 

23,393

     

17,849

   

Other long-term liabilities

 

24,781

     

67,502

   

Total liabilities

 

4,176,793

     

3,356,978

   

Stockholders’ equity:

               

Common stock

 

4

     

4

   

Additional paid-in capital

 

8,535,463

     

8,324,974

   

Accumulated other comprehensive loss

 

(46,944)

     

(65,311)

   

Accumulated deficit

 

(143,709)

     

(1,454,073)

   

Total stockholders’ equity

 

8,344,814

     

6,805,594

   

Total liabilities and stockholders’ equity

$

12,521,607

   

$

10,162,572

   
                 

 

TWITTER, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

(In thousands, except per share data)

 

(Unaudited)

 
                               
 

Three Months Ended

   

Six Months Ended

 
 

June 30,

   

June 30,

 
 

2019

   

2018

   

2019

   

2018

 

Revenue

$

841,381

   

$

710,541

   

$

1,628,271

   

$

1,375,412

 

Costs and expenses

                             

Cost of revenue

 

277,965

     

230,185

     

541,976

     

453,008

 

Research and development

 

159,242

     

138,574

     

305,488

     

261,920

 

Sales and marketing

 

240,249

     

188,032

     

446,048

     

366,091

 

General and administrative

 

88,239

     

74,126

     

165,415

     

139,844

 

Total costs and expenses

 

765,695

     

630,917

     

1,458,927

     

1,220,863

 

Income from operations

 

75,686

     

79,624

     

169,344

     

154,549

 

Interest expense

 

(38,317)

     

(29,982)

     

(75,577)

     

(56,997)

 

Interest income

 

42,887

     

21,960

     

83,428

     

38,141

 

Other income (expense), net

 

7,523

     

(5,735)

     

7,087

     

(5,944)

 

Income before income taxes

 

87,779

     

65,867

     

184,282

     

129,749

 

Provision (benefit) for income taxes

 

(1,031,781)

     

(34,250)

     

(1,126,082)

     

(31,365)

 

Net income

$

1,119,560

   

$

100,117

   

$

1,310,364

   

$

161,114

 

Net income per share:

                             

Basic

$

1.46

   

$

0.13

   

$

1.71

   

$

0.21

 

Diluted

$

1.43

   

$

0.13

   

$

1.68

   

$

0.21

 

Weighted-average shares used to

   compute net income per share:

                             

Basic

 

768,755

     

752,351

     

766,658

     

750,037

 

Diluted

 

785,056

     

772,556

     

781,378

     

769,222

 
                               

 

TWITTER, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In thousands)

 

(Unaudited)

 
                               
 

Three Months Ended

   

Six Months Ended

 
 

June 30,

   

June 30,

 
 

2019

   

2018

   

2019

   

2018

 

Cash flows from operating activities

                             

Net income

$

1,119,560

   

$

100,117

     

1,310,364

   

$

161,114

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

                             

Depreciation and amortization expense

 

115,616

     

105,982

     

229,090

     

202,828

 

Stock-based compensation expense

 

94,615

     

79,469

     

178,106

     

152,735

 

Amortization of discount on convertible notes

 

31,910

     

23,309

     

62,787

     

44,031

 

Deferred income taxes

 

(1,034,135)

     

(41,615)

     

(1,144,191)

     

(42,285)

 

Impairment of investments in privately-held companies

 

1,550

     

3,000

     

1,550

     

3,000

 

Other adjustments

 

(22,176)

     

(3,411)

     

(18,103)

     

(3,059)

 

Changes in assets and liabilities, net of assets acquired and liabilities assumed from acquisitions:

                             

Accounts receivable

 

(36,396)

     

(14,198)

     

67,237

     

46,968

 

Prepaid expenses and other assets

 

40,478

     

2,590

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66,627

     

(20,302)

 

Accounts payable

 

8,139

     

10,120

     

(4,740)

     

(16,828)

 

Accrued and other liabilities

 

19,812

     

55,777

     

(58,061)

     

35,611

 

Net cash provided by operating activities

 

338,973

     

321,140

     

690,666

     

563,813

 

Cash flows from investing activities

                             

Purchases of property and equipment

 

(135,795)

     

(196,450)

     

(218,821)

     

(289,541)

 

Proceeds from sales of property and equipment

 

1,101

     

2,693

     

3,057

     

4,456

 

Purchases of marketable securities

 

(1,356,779)

     

(1,158,986)

     

(2,991,921)

     

(1,990,868)

 

Proceeds from maturities and sales of marketable securities

 

1,086,579

     

972,541

     

2,832,237

     

1,638,109

 

Business combinations, net of cash acquired

 

(20,302)

     

(32,504)

     

(20,302)

     

(32,504)

 

Other investing activities

 

11,368

     

(825)

     

11,368

     

(2,175)

 

Net cash used in investing activities

 

(413,828)

     

(413,531)

     

(384,382)

     

(672,523)

 

Cash flows from financing activities

                             

Proceeds from issuance of convertible notes

 

     

1,150,000

     

     

1,150,000

 

Purchases of convertible note hedges

 

     

(267,950)

     

     

(267,950)

 

Proceeds from issuance of warrants concurrent with note hedges

 

     

186,760

     

     

186,760

 

Debt issuance costs

 

     

(11,730)

     

     

(11,730)

 

Taxes paid related to net share settlement of equity awards

 

(3,461)

     

(1,803)

     

(12,938)

     

(9,360)

 

Payments of finance lease obligations

 

(18,214)

     

(23,035)

     

(37,933)

     

(47,282)

 

Proceeds from exercise of stock options

 

414

     

329

     

509

     

3,097

 

Proceeds from issuances of common stock under employee stock purchase plan

 

25,209

     

16,337

     

25,209

     

16,337

 

Net cash provided by (used in) financing activities

 

3,948

     

1,048,908

     

(25,153)

     

1,019,872

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(70,907)

     

956,517

     

281,131

     

911,162

 

Foreign exchange effect on cash, cash equivalents and restricted cash

 

7,148

     

(14,464)

     

7,002

     

(12,514)

 

Cash, cash equivalents and restricted cash at beginning of period

 

2,273,767

     

1,630,452

     

1,921,875

     

1,673,857

 

Cash, cash equivalents and restricted cash at end of period

$

2,210,008

   

$

2,572,505

   

$

2,210,008

   

$

2,572,505

 

Supplemental disclosures of non-cash investing and financing
activities

                             

Common stock issued in connection with acquisitions

$

   

$

19,165

   

$

   

$

19,165

 

Equipment purchases under finance leases

$

   

$

   

$

   

$

16,086

 

Changes in accrued property and equipment purchases

$

33,891

   

$

10,352

   

$

77,611

   

$

7,554

 

Reconciliation of cash, cash equivalents and restricted cash as
shown in the consolidated statements of cash flows

                             

Cash and cash equivalents

$

2,183,111

   

$

2,544,641

   

$

2,183,111

   

$

2,544,641

 

Restricted cash included in prepaid expenses and other current assets

 

1,379

     

2,261

     

1,379

     

2,261

 

Restricted cash included in other assets

 

25,518

     

25,603

     

25,518

     

25,603

 

Total cash, cash equivalents and restricted cash

$

2,210,008

   

$

2,572,505

   

$

2,210,008

   

$

2,572,505

 
                               

 

TWITTER, INC.

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

 

(In thousands, except per share data)

 

(Unaudited)

 
                               
 

Three Months Ended

   

Six Months Ended

 
 

June 30,

   

June 30,

 
 

2019

   

2018

   

2019

   

2018

 

Non-GAAP net income and net income per share:

                             

Net income

$

1,119,560

   

$

100,117

   

$

1,310,364

   

$

161,114

 

Exclude: Provision (benefit) for income taxes

 

(1,031,781)

     

(34,250)

     

(1,126,0820

     

(31,365)

 

Income before income taxes

 

87,779

     

65,867

     

184,282

     

129,749

 

Stock-based compensation expense

 

94,615

     

79,469

     

178,106

     

152,735

 

Amortization of acquired intangible assets

 

3,918

     

4,876

     

8,703

     

9,818

 

Non-cash interest expense related to convertible notes

 

31,910

     

23,309

     

62,787

     

44,031

 

Impairment (gain) on investments in privately-held companies

 

(8,611)

     

3,000

     

(8,611)

     

3,000

 

Restructuring charges

 

(217)

     

(265)

     

(217)

     

(1,248)

 

Non-GAAP income before income taxes

 

209,394

     

176,256

     

425,050

     

338,085

 

Non-GAAP provision (benefit) for income taxes(1)

 

(1,029,343)

     

42,301

     

(1,102,172)

     

81,140

 

Non-GAAP net income

$

1,238,737

   

$

133,955

   

$

1,527,222

   

$

256,945

 

GAAP basic shares

 

768,755

     

752,351

     

766,658

     

750,037

 

Dilutive equity awards (2)

 

16,301

     

20,205

     

14,720

     

19,185

 

Non-GAAP diluted shares (3)

 

785,056

     

772,556

     

781,378

     

769,222

 

Non-GAAP diluted net income per share

$

1.58

   

$

0.17

   

$

1.95

   

$

0.33

 

Adjusted EBITDA:

                             

Net income

$

1,119,560

   

$

100,117

   

$

1,310,364

   

$

161,114

 

Stock-based compensation expense

 

94,615

     

79,469

     

178,106

     

152,735

 

Depreciation and amortization expense

 

115,616

     

105,982

     

229,090

     

202,828

 

Interest and other expense, net

 

(12,093)

     

13,757

     

(14,938)

     

24,800

 

Provision (benefit) for income taxes

 

(1,031,781)

     

(34,250)

     

(1,126,082)

     

(31,365)

 

Restructuring charges

 

(217)

     

(265)

     

(217)

     

(1,248)

 

Adjusted EBITDA

$

285,700

   

$

264,810

   

$

576,323

   

$

508,864

 

Stock-based compensation expense by function:

                             

Cost of revenue

$

5,973

   

$

3,338

   

$

11,021

   

$

8,137

 

Research and development

 

50,229

     

45,069

     

96,490

     

87,015

 

Sales and marketing

 

22,202

     

18,225

     

40,267

     

33,047

 

General and administrative

 

16,211

     

12,837

     

30,328

     

24,536

 

Total stock-based compensation expense

$

94,615

   

$

79,469

   

$

178,106

   

$

152,735

 

Amortization of acquired intangible assets by function:

                             

Cost of revenue

$

3,763

   

$

4,411

   

$

8,083

   

$

8,888

 

Sales and marketing

 

155

     

465

     

620

     

930

 

Total amortization of acquired intangible assets

$

3,918

   

$

4,876

   

$

8,703

   

$

9,818

 

Restructuring charges by function:

                             

Cost of revenue

$

(13)

   

$

(17)

   

$

(13)

   

$

(77)

 

Research and development

 

(73)

     

(89)

     

(73)

     

(419)

 

Sales and marketing

 

(87)

     

(107)

     

(87)

     

(507)

 

General and administrative

 

(44)

     

(52)

     

(44)

     

(245)

 

Total restructuring charges

$

(217)

   

$

(265)

   

$

(217)

   

$

(1,248)

 

Non-GAAP costs and expenses:

                             

Total costs and expenses

$

765,695

   

$

630,917

   

$

1,458,927

   

$

1,220,863

 

Less: stock-based compensation expense

 

(94,615)

     

(79,469)

     

(178,106)

     

(152,735)

 

Less: amortization of acquired intangible assets

 

(3,918)

     

(4,876)

     

(8,703)

     

(9,818)

 

Less: restructuring charges

 

217

     

265

     

217

     

1,248

 

Total non-GAAP costs and expenses

$

667,379

   

$

546,837

   

$

1,272,335

   

$

1,059,558

 

Adjusted free cash flow:

                             

Net cash provided by operating activities

$

338,973

   

$

321,140

   

$

690,666

   

$

563,813

 

Less: purchases of property and equipment

 

(135,795)

     

(196,450)

     

(218,821)

     

(289,541)

 

Plus: proceeds from sales of property and equipment

 

1,101

     

2,693

     

3,057

     

4,456

 

Less: equipment purchases under finance leases

 

     

     

     

(16,086)

 

Adjusted free cash flow

$

204,279

   

$

127,383

   

$

474,902

   

$

262,642

 

Adjusted net income and adjusted diluted net income per share:

                             

Net income

$

1,119,560

   

$

100,117

   

$

1,310,364

   

$

161,114

 

Exclude: benefit from deferred tax assets (4)

 

(1,082,460)

     

(41,688)

     

(1,206,880)

     

(41,688)

 

Adjusted net income

$

37,100

   

$

58,429

   

$

103,484

   

$

119,426

 

GAAP diluted shares

 

785,056

     

772,556

   

$

781,378

     

769,222

 

Adjusted diluted net income per share

$

0.05

   

$

0.08

   

$

0.13

   

$

0.16

 
                               
   

(1) The non-GAAP benefit from income taxes for the three and six months ended June 30, 2019 includes benefits of $1.08 billion and $1.21 billion, respectively, from the establishment of deferred
tax assets from intra-entity transfers of intangible assets.

 

(2) Gives effect to potential common stock instruments such as stock options, RSUs, shares to be issued under ESPP, unvested restricted stocks and warrants. There is no dilutive effect of the notes or the related hedge and warrant transactions.

 

(3) GAAP dilutive shares are the same as non-GAAP dilutive shares for the three and six months ended June 30, 2019 and 2018.

 

(4) The benefit from deferred tax asset in the three and six months ended June 30, 2019 is primarily related to the establishment of deferred tax assets from intra-entity transfers of intangible assets. The benefit from deferred tax asset in the three and six months ended June 30, 2018 is primarily due to a tax benefit primarily driven by the release of a deferred tax asset valuation allowance for Brazil.

 
                               
   

TWITTER, INC.

 

RECONCILIATION OF GAAP REVENUE TO NON-GAAP CONSTANT CURRENCY REVENUE

 

(In millions)

 

(Unaudited)

 
                                 
   

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

2019

   

2018

   

2019

   

2018

 

Revenue, advertising revenue, data licensing and other revenue,
international revenue and international advertising revenue excluding
foreign exchange effect:

                               

Revenue(1)

 

$

841

   

$

711

   

$

1,628

   

$

1,375

 

Foreign exchange effect on 2019 revenue using 2018 rates

   

14

             

25

         

Revenue excluding foreign exchange effect

 

$

855

           

$

1,653

         

Revenue year-over-year change percent

   

18%

             

18%

         

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

   

20%

             

20%

         
                                 

Advertising revenue

 

$

727

   

$

601

   

$

1,407

   

$

1,176

 

Foreign exchange effect on 2019 advertising revenue using 2018 rates

   

14

             

25

         

Advertising revenue excluding foreign exchange effect

 

$

741

           

$

1,432

         

Advertising revenue year-over-year change percent

   

21%

             

20%

         

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

   

23%

             

22%

         
                                 

Data licensing and other revenue

 

$

114

   

$

109

   

$

222

   

$

199

 

Foreign exchange effect on 2019 data licensing and other revenue using
2018 rates

   

             

         

Data licensing and other revenue excluding foreign exchange effect

 

$

114

           

$

222

         

Data licensing and other revenue year-over-year change percent

   

4%

             

11%

         

Data licensing and other revenue excluding foreign exchange effect year-over-year change percent

   

4%

             

11%

         
                                 

International revenue

 

$

386

   

$

344

   

$

741

   

$

662

 

Foreign exchange effect on 2019 international revenue using 2018 rates

   

14

             

25

         

International revenue excluding foreign exchange effect

 

$

400

           

$

766

         

International revenue year-over-year change percent

   

12%

             

12%

         

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

   

16%

             

16%

         
                                 

International advertising revenue

 

$

349

   

$

308

   

$

665

   

$

596

 

Foreign exchange effect on 2019 international advertising revenue using
2018 rates

   

14

             

25

         

International advertising revenue excluding foreign exchange effect

 

$

363

           

$

690

         

International advertising revenue year-over-year change percent

   

13%

             

12%

         

International advertising revenue excluding foreign exchange effect year-over-year change percent

   

18%

             

16%

         
                                 

(1) Note the sum of advertising revenue and data licensing and other revenue does not add up to total revenue in the six months
ended June 30, 2019 and in the three months ended June 30, 2018 above due to rounding.

 
   

 

Cision View original content:http://www.prnewswire.com/news-releases/twitter-announces-second-quarter-2019-results-300891610.html

SOURCE Twitter, Inc.