How Twitter’s I.P.O. Filing Evolved to Contain New Details

How Twitter’s I.P.O. Filing Evolved to Contain New Details

Laying the groundwork for its initial public offering, Twitter on Thursday filed a regulatory document that contains important details about its business.

But Twitter may not have intended for some of those details to make their way into the public eye.

The document that came out on Thursday, called an S-1, was the first public filing to disclose important financial data about the company, like earnings and revenue, as well as other information that might help investors decide if they want to buy the company’s shares. But Twitter had already filed four earlier versions of this document with the Securities and Exchange Commission. Those versions were not made public at the time, but on Friday, Twitter released them.

The first S-1, which was confidentially filed with the S.E.C. in July, did not contain disclosures that ended up in the later versions. It’s not clear why the information was added. But it may have been inserted at the commission’s request.

In the coming weeks, any correspondence that Twitter had with the S.E.C. over the earlier S-1s will be made public.

Usually, the public gets to see changes to S-1s as they happen. That was the case with Facebook and Groupon.

Twitter, however, is doing its I.P.O. under a less restrictive regime, ushered in by legislation passed last year, that allows companies with revenue under $ 1 billion to keep their filings secret for a while.

Twitter added some eye-opening, potentially helpful disclosures to its later documents. For instance, it tried to quantify how many of its users might be fake. This is a significant statistic, since Twitter’s advertisers want to reach real users.

In the first two S-1s, Twitter discussed the problem of spam and users whose identities are made up. But it was not until the third filing that Twitter estimated that spam or false accounts represented less than 5 percent of its monthly users.

Twitter may not have included the number initially because it might have trouble measuring it. In the third S-1, it said, “This estimate is based on an internal review of a sample of accounts and we apply significant judgment in making this determination.”

Twitter also added geographical data that seemed significant. One of the questions hanging over social networks is whether they can generate profits outside of the comparatively wealthy and developed United States market.

In its first S-1, Twitter included a metric designed to show how much advertising revenue it takes in based on user activity. The yardstick was for the company as a whole in the first filing. By the second version, it applied the metric to United States advertising and compared it with the rest of the world.

The difference was stark. The yardstick was $ 2.17 per “timeline view” in the United States, versus 30 cents for the rest of the world.

Disclosures about the price of advertising on Twitter were also expanded in the second S-1. Twitter is charging advertisers less than it did, which is increases demand among advertisers. But Facebook is managing to increase how much it charges advertisers. It was not until the second S-1 that Twitter noted that the effective cost of ads had fallen 59 percent from the year-earlier period.

Other, nonfinancial details were added to the later S-1s. The first one mentioned that President Obama had used Twitter to first declare victory in the 2012 election. Later, the document had an image of the post, which included a photo of the president hugging his wife.



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