 "Twitter sets market debut in motion by filing for IPO")
Twitter Inc, the microblogging service with more than 200 million members worldwide, filed to go public, moving closer to the most highly anticipated offering since Facebook Inc.
Goldman Sachs Group Inc will be the lead underwriter for the initial public offering, according to people with knowledge of the matter who asked not to be identified because the information isn't public. Twitter - which on Thursday disclosed it had filed to go public in one of its 140-character messages known as a tweet - didn't say when it may complete its market debut, or how much it plans to raise.
A public listing marks a watershed moment in Twitter's journey from its 2006 beginning as a way for Web users to publish short messages, to a megaphone for hundreds of millions of members worldwide to join conversations on global affairs, sports and entertainment. CEO Dick Costolo will need to convince investors that the offering will fare better than internet IPOs from Facebook, Groupon Inc, and Zynga Inc, which all lost more than half their value within six months of their listings.
While the San Francisco-based company is set to be one of the largest Internet offerings since Facebook, Twitter is still a fraction of the size of the world's biggest social-networking service. Twitter was valued last month at about $10.5 billion by GSV Capital Corp, one of its investors, up 5 per cent from a May estimate. Facebook, which raised $16 billion in May 2012 in the biggest IPO for a technology company, has a market value of about $109 billion.
Cloaked financials
Twitter didn't give insight into its financials because the company filed confidentially with the US Securities and Exchange Commission under the Jumpstart Our Business Startups, or JOBS, Act. Under the rule, companies with less than $1 billion in annual revenue can submit IPO filings without making their S-1 prospectus public until shortly before the sale.
"We've confidentially submitted an S-1 to the SEC for a planned IPO," the company said in its tweet. "This Tweet does not constitute an offer of any securities for sale."
Jim Prosser, a spokesman for Twitter, declined to comment beyond the post.
Twitter is widely recognised as one of the major social media companies that is well positioned in the fast-growing mobile arena, since consumers increasingly access the service on their smartphones and tablets. It has also rapidly expanded revenue after introducing an advertising model in 2010, giving marketers new ways to reach its growing user base.
Rising revenue
Twitter now lets marketers pay to give their tweets prominent placement on timelines, where people get updates from the accounts they follow.
The company also lets advertisers pay to be placed next to a list of popular topics on Twitter in different geographies.
Twitter will increase ad revenue 63 per cent to $950 million in 2014 from $582.8 million this year, according to an EMarketer Inc estimate. That's up from just $139.5 million in 2011, according to the research firm. Advertising tied to wireless devices should make up more than half of revenue this year, EMarketer said.
Popular culture
Revenue is rising as Twitter has become a cultural touchstone, used by celebrities, politicians and businesses to interact with the public. According to Twittercounter.com, which collects data from Twitter, Justin Bieber is the most popular member with 44.4 million followers. Katy Perry is second with 42.6 million, followed by Lady Gaga with 40.1 million and President Barack Obama with 36.5 million. Among businesses, Google Inc's YouTube has the most followers with 33.4 million.
Twitter's ubiquity is a far cry from its early history when the service was borne out of a failing startup from co-founder Evan Williams called Odeo. Other co-founders include Biz Stone and Jack Dorsey.
The company's leadership was initially marked by management changes. Dorsey was CEO before Williams took the role over. When Williams and Stone stepped back from the company, Costolo became CEO in 2010 after earlier joining as chief operating officer. Dorsey, who also runs mobile-payments company Square Inc, remains Twitter's chairman.
Other executives include Chief Financial Officer Mike Gupta, who joined the company last year and formerly worked at Zynga. Costolo promoted Ali Rowghani to COO from CFO last year. Vijaya Gadde, a former lawyer for Wilson Sonsini Goodrich & Rosati, was promoted to general counsel on August 30 to replace Alexander Macgillivray.
Investor bonanza?
Twitter's investors include venture-capital firms Benchmark, Union Square Ventures, Spark Capital and Kleiner Perkins Caufield & Byers, as well as mutual-fund manager T Rowe Price Group Inc and securities-firm Morgan Stanley. In January the company was valued at about $9 billion when a fund managed by BlackRock Inc bought stock from employees, a $1 billion increase from a 2011 investment round led by DST Global.
Without details of Twitter's financials, some investors said they would hold back.
"We've been waiting for the IPO, but until we get the details, we don't know how attractive it is," Tim Cunningham, a fund manager at Thornburg Investment Management Inc., which oversees about $91 billion in assets, said by phone from Santa Fe, New Mexico. "We know revenues are less than $1 billion, which is the only incremental data point we get."
IPO market
Some investors have shied from internet offerings after Facebook, Zynga and Groupon rode a wave of hype before their IPOs, and then plunged below their offering prices when investors questioned the sustainability of their businesses and their valuations. Facebook priced its IPO at 107 times trailing 12-month earnings, making it more expensive than 99 per cent of all companies in the Standard & Poor's 500 Index at the time.
Facebook stock last month rose back over its $38 offering price and this week hit an all-time high. The company has grown its mobile-ad business, spurring investor optimism.
IPOs have accelerated in the U.S. as the broader stock market has rallied. There have been 124 initial offerings so far this year, more in number than the comparable period of any year since 2007, according to data compiled by Bloomberg. Companies have raised $30.2 billion in the sales, the data show.
Goldman Scores
For Goldman Sachs, which is on pace to be the top adviser on U.S. IPOs for the first time since 2009, landing the top role on Twitter's public offering is a coup. The investment bank lost out to rival Morgan Stanley on similar roles in the highest-profile technology IPOs in recent years, including Facebook.
New York-based Goldman Sachs could increase its lead over rivals if Twitter's offering is completed this year. The bank is ranked first among advisers of U.S. IPOs with an estimated 11 percent share of the market so far this year, according to data compiled by Bloomberg.
Citigroup Inc. is ranked second in the U.S., while Morgan Stanley currently ranks in seventh place, the data show. Globally, Morgan Stanley has the largest share of the IPO underwriting market, with 8.3 percent, while Goldman Sachs is in fourth place.
Emerging Growth
Under the JOBS Act, companies can categorize themselves as emerging growth, allowing them to submit a filing to the SEC for confidential review. The filings can remain private until about three weeks before the company begins its road show to market to investors before setting a final price.
If Twitter ceases to qualify as an emerging-growth company during the confidential review, it will have to register again and comply with the current rules for typical public companies.
Twitter isn't the first company to inform the public that it has filed confidentially. SolarCity Corp. (SCTY), which raised $92 million in a December IPO, announced its confidential filing in a press release in April 2012. The company filed its public S-1 on Oct. 5, ahead of the December debut.
Other technology companies, including Workday Inc., Tableau Software Inc., and Chegg Inc., have filed under the JOBS Act without notifying the public until later.
In a sign that Twitter plans to keep its head down, the company sent out another tweet after disclosing its IPO filing that said, "Now, back to work." It posted a photo of a busy conference room to accompany the message.
OFFERING TWEETS
Twitter Inc has filed for an initial public offering with US regulators, taking the first step toward what would be Silicon Valley's most anticipated debut since Facebook Inc's last year. Here are some titbits of the microblogging site.
Goldman Sachs Group Inc will be the lead underwriter for the initial public offering, according to people with knowledge of the matter who asked not to be identified because the information isn't public. Twitter - which on Thursday disclosed it had filed to go public in one of its 140-character messages known as a tweet - didn't say when it may complete its market debut, or how much it plans to raise.
A public listing marks a watershed moment in Twitter's journey from its 2006 beginning as a way for Web users to publish short messages, to a megaphone for hundreds of millions of members worldwide to join conversations on global affairs, sports and entertainment. CEO Dick Costolo will need to convince investors that the offering will fare better than internet IPOs from Facebook, Groupon Inc, and Zynga Inc, which all lost more than half their value within six months of their listings.
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"This is obviously one of the seminal IPOs that the industry has been waiting for," Byron Deeter, a partner at Bessemer Venture Partners in Menlo Park, California, said in an interview. Bessemer isn't an investor in Twitter.
While the San Francisco-based company is set to be one of the largest Internet offerings since Facebook, Twitter is still a fraction of the size of the world's biggest social-networking service. Twitter was valued last month at about $10.5 billion by GSV Capital Corp, one of its investors, up 5 per cent from a May estimate. Facebook, which raised $16 billion in May 2012 in the biggest IPO for a technology company, has a market value of about $109 billion.
Cloaked financials
Twitter didn't give insight into its financials because the company filed confidentially with the US Securities and Exchange Commission under the Jumpstart Our Business Startups, or JOBS, Act. Under the rule, companies with less than $1 billion in annual revenue can submit IPO filings without making their S-1 prospectus public until shortly before the sale.
"We've confidentially submitted an S-1 to the SEC for a planned IPO," the company said in its tweet. "This Tweet does not constitute an offer of any securities for sale."
Jim Prosser, a spokesman for Twitter, declined to comment beyond the post.
Twitter is widely recognised as one of the major social media companies that is well positioned in the fast-growing mobile arena, since consumers increasingly access the service on their smartphones and tablets. It has also rapidly expanded revenue after introducing an advertising model in 2010, giving marketers new ways to reach its growing user base.
Rising revenue
Twitter now lets marketers pay to give their tweets prominent placement on timelines, where people get updates from the accounts they follow.
The company also lets advertisers pay to be placed next to a list of popular topics on Twitter in different geographies.
Twitter will increase ad revenue 63 per cent to $950 million in 2014 from $582.8 million this year, according to an EMarketer Inc estimate. That's up from just $139.5 million in 2011, according to the research firm. Advertising tied to wireless devices should make up more than half of revenue this year, EMarketer said.
Popular culture
Revenue is rising as Twitter has become a cultural touchstone, used by celebrities, politicians and businesses to interact with the public. According to Twittercounter.com, which collects data from Twitter, Justin Bieber is the most popular member with 44.4 million followers. Katy Perry is second with 42.6 million, followed by Lady Gaga with 40.1 million and President Barack Obama with 36.5 million. Among businesses, Google Inc's YouTube has the most followers with 33.4 million.
Twitter's ubiquity is a far cry from its early history when the service was borne out of a failing startup from co-founder Evan Williams called Odeo. Other co-founders include Biz Stone and Jack Dorsey.
The company's leadership was initially marked by management changes. Dorsey was CEO before Williams took the role over. When Williams and Stone stepped back from the company, Costolo became CEO in 2010 after earlier joining as chief operating officer. Dorsey, who also runs mobile-payments company Square Inc, remains Twitter's chairman.
Other executives include Chief Financial Officer Mike Gupta, who joined the company last year and formerly worked at Zynga. Costolo promoted Ali Rowghani to COO from CFO last year. Vijaya Gadde, a former lawyer for Wilson Sonsini Goodrich & Rosati, was promoted to general counsel on August 30 to replace Alexander Macgillivray.
Investor bonanza?
Twitter's investors include venture-capital firms Benchmark, Union Square Ventures, Spark Capital and Kleiner Perkins Caufield & Byers, as well as mutual-fund manager T Rowe Price Group Inc and securities-firm Morgan Stanley. In January the company was valued at about $9 billion when a fund managed by BlackRock Inc bought stock from employees, a $1 billion increase from a 2011 investment round led by DST Global.
Without details of Twitter's financials, some investors said they would hold back.
"We've been waiting for the IPO, but until we get the details, we don't know how attractive it is," Tim Cunningham, a fund manager at Thornburg Investment Management Inc., which oversees about $91 billion in assets, said by phone from Santa Fe, New Mexico. "We know revenues are less than $1 billion, which is the only incremental data point we get."
IPO market
Some investors have shied from internet offerings after Facebook, Zynga and Groupon rode a wave of hype before their IPOs, and then plunged below their offering prices when investors questioned the sustainability of their businesses and their valuations. Facebook priced its IPO at 107 times trailing 12-month earnings, making it more expensive than 99 per cent of all companies in the Standard & Poor's 500 Index at the time.
Facebook stock last month rose back over its $38 offering price and this week hit an all-time high. The company has grown its mobile-ad business, spurring investor optimism.
IPOs have accelerated in the U.S. as the broader stock market has rallied. There have been 124 initial offerings so far this year, more in number than the comparable period of any year since 2007, according to data compiled by Bloomberg. Companies have raised $30.2 billion in the sales, the data show.
Goldman Scores
For Goldman Sachs, which is on pace to be the top adviser on U.S. IPOs for the first time since 2009, landing the top role on Twitter's public offering is a coup. The investment bank lost out to rival Morgan Stanley on similar roles in the highest-profile technology IPOs in recent years, including Facebook.
New York-based Goldman Sachs could increase its lead over rivals if Twitter's offering is completed this year. The bank is ranked first among advisers of U.S. IPOs with an estimated 11 percent share of the market so far this year, according to data compiled by Bloomberg.
Citigroup Inc. is ranked second in the U.S., while Morgan Stanley currently ranks in seventh place, the data show. Globally, Morgan Stanley has the largest share of the IPO underwriting market, with 8.3 percent, while Goldman Sachs is in fourth place.
Emerging Growth
Under the JOBS Act, companies can categorize themselves as emerging growth, allowing them to submit a filing to the SEC for confidential review. The filings can remain private until about three weeks before the company begins its road show to market to investors before setting a final price.
If Twitter ceases to qualify as an emerging-growth company during the confidential review, it will have to register again and comply with the current rules for typical public companies.
Twitter isn't the first company to inform the public that it has filed confidentially. SolarCity Corp. (SCTY), which raised $92 million in a December IPO, announced its confidential filing in a press release in April 2012. The company filed its public S-1 on Oct. 5, ahead of the December debut.
Other technology companies, including Workday Inc., Tableau Software Inc., and Chegg Inc., have filed under the JOBS Act without notifying the public until later.
In a sign that Twitter plans to keep its head down, the company sent out another tweet after disclosing its IPO filing that said, "Now, back to work." It posted a photo of a busy conference room to accompany the message.
OFFERING TWEETS
Twitter Inc has filed for an initial public offering with US regulators, taking the first step toward what would be Silicon Valley's most anticipated debut since Facebook Inc's last year. Here are some titbits of the microblogging site.
- There are 200 million members on the microblogging platform worldwide
- Goldman Sachs Group Inc will be the lead underwriter for the IPO
- Twitter started in 2006 by Jack Dorsey as a way for Web users to publish short messages
- Twitter was valued last month at about $10.5 billion by GSV Capital Corp, one of its investors, up 5 per cent from a May estimate
- Twitter will increase ad revenue 63 per cent to $950 mn in 2014 from $582.8 mn this year
- Justin Bieber is the most popular member on Twitter with 44.4 mn followers, while Katy Perry is second with 42.6 mn, followed by Lady Gaga with 40.1 mn and President Barack Obama with 36.5 mn .
- Among businesses, Google Inc's YouTube has the most followers with 33.4 mn
- Twitter's investors include venture-capital firms Benchmark, Union Square Ventures, Spark Capital and Kleiner Perkins Caufield & Byers, as well as mutual-fund manager T Rowe Price Group Inc and securities-firm Morgan Stanley