The whole world is following this company. Twitter operates a free digital service site that blends social networking with the ability to post short messages (or micro-blogs) limited to 140 characters or less, commonly known by users as "Tweets." Twitter's service works equally well on personal computers, mobile devices, and smartphones. The service has become a key communication platform as major events unfold live in real-time around the world. Currently Twitter claims more than 230 million users worldwide. Evan Williams, Jack Dorsey, and Biz Stone co-founded Twitter in 2006. In 2013 the fast-growing company went public, raising $1.82 billion in the process.
The company took advantage of new SEC rules to keep its IPO plans and its finances secret for as long as possible, and it announced the filing of its S-1 with a tweet of its own. Investors who balked at Facebook's IPO are less skeptical about Twitter's ability to generate revenue through advertising sales (and more importantly mobile advertising sales).
Its headquarters are located in downtown San Francisco, California -- but Twitter is a truly global phenomenon. In its short life, the site's popularity has soared and its user base has grown exponentially.
Large news and media companies such as the BBC, CNN, and the New York Times regularly use the service to distribute and promote content, while Twitter also allows even the most remote or isolated individuals to get their message out. The company recently rolled out an alert system for emergencies and disasters.
In fiscal 2012 Twitter generated about 83% of its revenue from accounts in the US, with the remaining 17% coming from international accounts. The company believes the international market is key to its long-term growth.
Twitter generates 85% of its revenue from the sale of advertising (and most of that is from mobile advertising), with the remaining 15% coming from data licensing arrangements.
The company's advertising revenue comes from three streams: promoted tweets, promoted accounts, and promoted trends. Most advertising is sold on a pay-for-performance basis, which means advertisers are only charged when a user engages with their ad.
The data licensing business may be the company's secret sauce however, as marketers and even investors clamor for data they can analyze for insight into news events and trends.
Sales and Marketing
The company maintains a global sales force and sales support staff. Twitter has recently focused its international spending on sales support and marketing activities in specific countries, including Australia, Brazil, Canada, Japan, and the UK. In countries where it has not invested to build a local sales force, the company relies on resellers that serve as outside sales agents for the sale of its promoted products.
The company's revenue has been skyrocketing. Twitter brought in about $316.9 million in revenue during fiscal 2012. That was a dramatic increase of nearly 200% compared to fiscal 2011, when the company reported revenue of $106.3 million. Twitter only reported $28 million in revenue back in fiscal 2010.
The increased revenue is mainly attributable to the company's advertising business, which grew significantly in late 2011 and throughout 2012, but Twitter's data services segment's revenue has also been trending steadily upward. The majority of the company's revenue in fiscal 2012 ($269.4 million) came from advertising sales while the remaining $47.5 million came from its data services products.
Twitter is still not profitable yet, but the company is getting there. Its net loss decreased by 38% to $79.4 million in fiscal 2012, after it lost some $128 million in fiscal 2011.
Maintaining its standing as a dominant player in the digital media world requires constant innovation and the service has undergone some redesign. The company will continue to develop and improve its mobile applications by building and acquiring new technologies.
Twitter rolled out its Vine mobile video app during 2013. Vine enables users to create and distribute short video up to six seconds long. As of now there are no ads on Vine. The company also launched its #Music app in 2013. The app allows users to discover new songs and artists.
Twitter’s strategy for growth includes developing global partnerships in established and emerging markets and the company plans to invest in its international operations in order to expand its global user and advertiser base. The service’s number of users is growing at a faster rate in many international markets, particularly Argentina, France, Japan, Russia, South Africa, and Saudi Arabia.
The company hopes to cash in on its ability to generate real-time online reactions by charging television networks for trend tracking and consumer commentary. Meanwhile, Twitter will also have to fend off competition from Facebook and other sites popular with young users such as Instagram.
Mergers and Acquisitions
Twitter has not been shy about acquiring companies it sees as complementary to its business. In fiscal 2012 it made 12 acquisitions.
Among other purchases, during 2013 Twitter acquired mobile-advertising exchange startup MoPub for about $350 million in a deal that added real-time bidding to the microblogging service’s ad platform. The acquisition shows Twitter is committed to creating state-of-the-art mobile advertising products.
The following year, in an effort to provide more trend tracking and insight into consumer sentiment, Twitter purchased partner Gnip, which provides analysis of social media data.