Twitter Posts First Ever Net Profit, Shares Jump 25%
Friday, February 9th, 2018
Twitter, Inc. announced financial results for its fourth quarter and fiscal year 2017.
"Q4 was a strong finish to the year," said Jack Dorsey, Twitter CEO. "We returned to revenue growth, achieved our goal of GAAP profitability, increased our shipping cadence, and reached five consecutive quarters of double digit DAU growth. I'm proud of the steady progress we made in 2017, and confident in our path ahead."
Fourth Quarter 2017 Operational and Financial Highlights
The company reported fourth quarter revenue of $732 million, an increase of 2% year-over-year. Quarterly GAAP net income was $91 million, representing a GAAP net margin of 12% and GAAP diluted EPS of $0.12. This compares with a quarterly GAAP net loss of $167 million, a GAAP net margin of (23%) and GAAP diluted EPS of ($0.23) for the same period last year.
Quarterly non-GAAP net income was $141 million, or $0.19 per diluted share. This compares with a quarterly non-GAAP net income of $78 million, or $0.11 per diluted share for the same period last year.
Adjusted EBITDA was $308 million or 42% of total revenue, compared to $215 million or 30% of total revenue for the same period last year.
Average MAU was 330 million for the quarter, flat quarter-over-quarter and up 4% year-over-year. Average DAU grew 12% year-over-year, marking the fifth consecutive quarter of double-digit growth.
Fiscal Year 2017 Financial Highlights
Total annual revenue was $2.4 billion, a decrease of 3% year-over-year. GAAP net loss narrowed to $108 million and a net margin of (4%) in 2017, compared to $457 million and a net margin of (18%) in 2016. Adjusted EBITDA for the full year was $863 million with a 35% margin compared to $751 million and 30% margin for the previous year.
Annual stock-based compensation expense decreased 29% year-over-year to $434 million, or 18% of total revenue, down from $615 million, or 24% of total revenue in 2016.
GAAP net cash provided by operating activities in the period was $831 million, an increase from $763 million in the previous year. Annual capital expenditures were approximately $281 million, a decrease of 12% from 2016. The company generated $550 million in annual adjusted free cash flow compared to $444 million in 2016, and ended the year with $4.4 billion in cash, cash equivalents, and marketable securities.
"We're pleased with our performance in 2017 and our return to revenue growth in the fourth quarter," said Ned Segal, Twitter CFO. "Total revenue in the fourth quarter increased 2% year-over-year, and owned-and-operated advertising revenue increased 7% year-over-year, driven by continued strong engagement growth, improvements in our revenue products, improved return for advertisers, and better sales execution. We achieved record GAAP net margins and our long-term target adjusted EBITDA margin range in the quarter, reflecting our continued prioritization and disciplined execution."
For Q1, we expect:
Adjusted EBITDA to be between $185 million and $205 million
Adjusted EBITDA margin to be between 33% and 34%
Stock-based compensation expense to be in the range of $100 million to $110 million
For FY 2018, we expect:
Stock-based compensation expense to be in the range of $350 million to $450 million
Capital expenditures to be between $375 million and $450 million
Note that our outlook for Q1 and the full year 2018 reflects foreign exchange rates as of January 22, 2018.