Twitter Inc. (NYSE:TWTR)

Convertible Notes, Short-term

This category showed presence in 2018 and 2020 with amounts of approximately 897 million and 918 million USD respectively. The data for 2017, 2019, and 2021 is missing, suggesting either no short-term convertible notes were outstanding or data was not reported. The figures that are available appear relatively stable between the two reporting years.

Finance Lease Liabilities, Short-term

There is a clear downward trend in short-term finance lease liabilities from about 85 million USD in 2017 to less than 1 million USD by 2020, indicating a significant reduction in short-term lease obligations over the period. This may reflect a shift in leasing strategy or repayment of lease-related debts.

Convertible Notes, Long-term

The long-term convertible notes exhibit a consistent upward trend, starting at approximately 1.63 billion USD in 2017 and reaching over 3.56 billion USD by the end of 2021. This reflects a substantial increase in long-term convertible debt, more than doubling over the five-year span, which could indicate increased reliance on convertible debt financing.

Senior Notes, Long-term

Senior notes appear only starting from 2019, with amounts close to 692 million USD each year through 2021. This suggests the issuance of senior notes began in 2019 and remained stable in subsequent years. The stable amounts imply no significant repayment or additional issuance during this period.

Finance Lease Liabilities, Long-term

Long-term finance lease liabilities declined considerably from about 81 million USD in 2017 to negligible or zero by 2019 and thereafter. This indicates that long-term leasing obligations were largely eliminated by 2019, mirroring a similar pattern observed in short-term lease liabilities.

Total Debt (Carrying Amount)

Total debt levels increased noticeably across the examined years, rising from 1.79 billion USD in 2017 to over 4.25 billion USD by 2021. Despite some fluctuations, the overall trend is upward, reflecting growing debt obligations. The increase is driven primarily by the rise in long-term convertible notes and the introduction of senior notes. The reduction in finance lease liabilities partially offsets this, but total debt has nevertheless more than doubled in five years.

Summary Insight

The data exhibits a shift in debt composition over the reported period, with a marked decrease in finance lease liabilities both short- and long-term and a substantial increase in convertible notes, particularly long-term, and stable senior notes from 2019 onward. Total debt rising sharply suggests an increasing leverage position, with potential implications for financial risk and capital structure strategy.

The data on annual interest costs incurred reveals several notable trends over the five-year period under consideration.

Interest Expense

The interest expense consistently increased from 2017 through 2020, starting at 105,237 thousand US dollars and rising each year to reach a peak of 152,878 thousand US dollars in 2020. However, there was a significant decline in 2021, with the amount dropping sharply to 51,186 thousand US dollars. This suggests a major reduction in interest-bearing obligations or more favorable borrowing terms in the final year of the period.

Interest Costs Capitalized

Interest costs capitalized showed relatively stable values between 2017 and 2020, ranging from 3,600 to 4,600 thousand US dollars, with no clear trend of increase or decrease. In 2021, however, the capitalized interest sharply declined to 1,500 thousand US dollars, mirroring the downward movement seen in interest expense. This decline may indicate reduced investment in capital projects or changes in accounting policies regarding capitalization of interest.

Interest Costs Incurred

Interest costs incurred, which represents the sum of interest expense and capitalized interest, followed a similar pattern as individual components. This metric increased steadily from 108,837 thousand US dollars in 2017 to a maximum of 156,678 thousand US dollars in 2020, and then fell dramatically to 52,686 thousand US dollars in 2021. The consistency in the combined measure reflects the trends in both interest expense and capitalized interest, underscoring a marked decrease in the overall financing costs within the latest year reported.

In summary, from 2017 to 2020, there was a clear and steady increase in the company’s interest-related costs, indicating possibly higher debt levels or increased borrowing costs. In contrast, the year 2021 shows a pronounced reduction across all interest-related figures, suggesting substantial deleveraging, refinancing activities, or other financial strategies that significantly lowered these expenses.

The analysis of the interest coverage ratios over the five-year period reveals significant fluctuations in the company's ability to cover its interest expenses.

Interest Coverage Ratio (without capitalized interest)

The ratio started at a very low level of 0.09 in 2017, indicating minimal earnings relative to interest expense. In 2018 and 2019, there was a marked improvement, with the ratio increasing substantially to 4.19 and 3.82 respectively, demonstrating a stronger capacity to meet interest obligations during this period. However, from 2019 onwards, the ratio declined sharply to 0.67 in 2020 and further deteriorated to -7.03 in 2021, reflecting worsening financial performance and inability to cover interest expenses through operating earnings.

Adjusted Interest Coverage Ratio (with capitalized interest)

This adjusted ratio shows a very similar trend, beginning at 0.09 in 2017 and rising to 4.08 in 2018 and 3.7 in 2019, consistent with the pattern observed without capitalized interest. The decline after 2019 is also evident here, with ratios of 0.65 in 2020 and a negative value of -6.83 in 2021, suggesting that capitalizing interest expenses has minimal effect on the overall trend and financial stress indicated by the coverage metrics.

Overall, the data imply that the company experienced a period of financial strengthening between 2017 and 2019 in terms of interest expense coverage, followed by a rapid deterioration in 2020 and 2021. The negative ratios in the last year signal potential liquidity issues or operational losses that compromised the company's ability to service debt obligations effectively.