It’s not that they aren’t making money. They made $317 million last year but obviously they spent more than that – thus the lack of profit. What amazes me is how companies can continue to move forward with such huge losses. If I run out of money at the end of the month I can rob Peter to pay Paul for maybe another month or two, but after that there’s no catching up.
Twitter’s hope lies in advertising for the holiday season. Right now, 65% of their income is coming in on mobile ads. Since 75% of their users are accessing the site via mobile, there’s a lot of potential there – except for one thing. Twitter says 78% of their users are outside the US. That means they need to grow their international advertising business right now.
A big part of Twitter’s recent losses are a result of internal growth. They acquired Crashlytics and Bluefin and they’re poured a lot of manpower into their TV rating and hashtag programs. It feels like they’re doing everything right. Let me re-state that: they are doing everything right. They’ve changed when they needed to, stuck to their guns when they knew they were right. When conversations about TV naturally evolved into a driving force, they created a division to explore it and exploit it.
Along with the required IPO documents, Twitter included a brief note to potential investors explaining their position and passion:
The mission we serve as Twitter, Inc. is to give everyone the power to create and share ideas and information instantly without barriers. Our business and revenue will always follow that mission in ways that improve–and do not detract from–a free and global conversation.
Profitable or not, I believe in Twitter. Do you?