Twitter Inc. (NYSE:TWTR)

Current Provision for Income Taxes

The current provision for income taxes generally fluctuated over the analyzed period. Starting at 19,060 thousand US dollars in 2017, it slightly increased to 19,668 thousand in 2018, then more than doubled to 46,991 thousand in 2019. Following this peak, the amount decreased to 20,291 thousand in 2020 before rising again to 39,070 thousand in 2021. This indicates variability in taxable income or adjustments in tax obligations within these years.

Deferred Provision (Benefit) for Income Taxes

The deferred provision demonstrated significant volatility and fluctuating signs during the period. Beginning with a moderate deferred benefit of -6,415 thousand in 2017, it sharply deepened to an extreme deferred benefit of -801,720 thousand in 2018 and further to -1,122,511 thousand in 2019. However, there was a substantial reversal in 2020, showing a large deferred expense provision of 1,064,396 thousand. In 2021, the figure reverted to a deferred benefit once again, amounting to -228,774 thousand. These fluctuations suggest considerable shifts in temporary differences between book and tax accounting, potentially influenced by changes in tax law, valuation allowances, or timing differences in recognizing income and expenses.

Total Provision (Benefit) for Income Taxes

The overall income tax provision, which combines both current and deferred components, reflects a similar volatile pattern. It started with a positive tax expense of 12,645 thousand in 2017, then shifted dramatically to a large tax benefit of -782,052 thousand in 2018. This trend continued with an even bigger tax benefit of -1,075,520 thousand in 2019. Subsequently, there was a reversal to a substantial expense of 1,084,687 thousand in 2020, followed by another benefit of -189,704 thousand in 2021. This total provision volatility underscores the unusual and inconsistent nature of tax expense recognition during this timeframe, driven primarily by the large swings in deferred tax amounts.

Summary Insights

The data reveals that while the current income tax provisions fluctuated moderately, the deferred income tax provisions experienced extreme and inconsistent variations. These large deferred tax movements had a dominant impact on the total income tax expense, causing significant swings between income tax benefits and expenses over the years. Such patterns may indicate complex tax planning strategies, significant changes in deferred tax asset or liability balances, or other accounting and tax policy adjustments affecting deferred tax recognition.

The data reveals notable fluctuations and trends in the tax-related financial metrics over the period from 2017 to 2021. The federal statutory tax rate remained stable at 21% from 2018 onward, following a reduction from 35% in 2017. This indicates a regulatory or legislative change likely influencing the statutory tax framework beginning in 2018.

The effective tax rate exhibits significant volatility throughout the analyzed years. In 2017, the effective tax rate was negative at -13.3%, suggesting the company benefited from tax credits, adjustments, or net operating losses reducing its tax expense below zero. This trend of negative effective tax rates intensified drastically in subsequent years, reaching extreme negative values peaking at -2129.38% in 2020.

Such severe negative rates imply substantial tax benefits far exceeding tax liabilities during those years, potentially linked to losses or accounting adjustments such as deferred tax assets or valuation allowances. However, the effective tax rate shifted sharply in 2021, recording a positive rate of 46.14%, which exceeds both the statutory rate and previous statutory norms. This change indicates a reversal from prior years' patterns and could reflect the recognition of tax expenses, adjustments to deferred tax assets, or other extraordinary tax items in that fiscal year.

Overall, the analysis highlights a persistent divergence between statutory and effective tax rates, with particularly high volatility in the latter. The effective tax rate trend points to underlying operational or fiscal factors influencing tax expenses, including possible loss positions in earlier years but a marked return to taxable profitability or tax expense accruals in the most recent year.

Federal Statutory Tax Rate

Decreased from 35% in 2017 to 21% from 2018 through 2021, showing regulatory stability after initial change.

Effective Tax Rate

Negative and highly volatile from 2017 (-13.3%) through 2020 (-2129.38%), indicating tax benefits or losses; sharply increased to 46.14% in 2021, surpassing the statutory rate.

Tax Rate Divergence

Significant disparity between statutory and effective rates throughout the period, reflecting complex tax situations or accounting effects impacting actual tax burdens.

The financial data reveals several notable trends regarding the company's tax assets, liabilities, and fixed assets over the five-year period ending December 31, 2021.

Net Operating Loss Carryforwards

The net operating loss carryforwards show a declining trend from US$720,444 thousand in 2017 to US$390,005 thousand in 2019, followed by a moderate increase to US$487,729 thousand by 2021. This pattern suggests utilization of loss carryforwards with some replenishment in the later years.

Tax Credits

Tax credits, which were not reported in 2017, steadily increased from US$375,699 thousand in 2018 to US$586,026 thousand in 2021. This consistent growth indicates effective accumulation or recognition of credits over the period.

Fixed Assets and Intangible Assets

Fixed and intangible assets rose dramatically from US$24,819 thousand in 2018 to over US$1.2 billion in 2019 and 2020, before declining to approximately US$1.15 billion in 2021. This sharp increase likely reflects significant investments or acquisitions made primarily in 2019 and 2020, followed by some asset reductions or impairments in 2021.

Operating Lease Liability and Right-of-Use Assets

Starting from 2019, operating lease liabilities grew gradually from US$170,817 thousand to US$299,514 thousand in 2021. Conversely, the operating lease right-of-use asset shows negative values increasing in absolute magnitude from -US$157,845 thousand in 2019 to -US$276,855 thousand in 2021, reflecting the recognition of lease obligations in compliance with accounting standards.

Litigation Settlement

A litigation settlement appears as a one-time value of US$194,897 thousand in 2021, which could represent a significant financial event impacting the company's liabilities or expenses for that year.

Other Items

The "Other" category fluctuates, starting at US$424,827 thousand in 2017, decreasing sharply to US$82,596 thousand in 2020, then rising again to US$169,278 thousand in 2021. In contrast, a negative "Other" category related to deferred tax liabilities shows increasing negative figures, reaching -US$50,716 thousand by 2021, indicating growing miscellaneous liabilities or adjustments.

Deferred Tax Assets and Valuation Allowance

Gross deferred tax assets increased substantially from US$1,156,074 thousand in 2017 to nearly US$2.9 billion in 2021, showcasing the rise in potential tax benefits. However, the valuation allowance fluctuates significantly, with a large negative balance of -US$1,021,326 thousand in 2017, which decreases sharply to a low of around -US$210,862 thousand in 2018 and 2019, before increasing again to over -US$1.4 billion in 2020 and 2021. This pattern suggests varying assessments of the recoverability of deferred tax assets, impacting net deferred tax assets.

Deferred Tax Assets, Net of Valuation Allowance

The net deferred tax assets first increased from US$134,748 thousand in 2017 to US$2,066,243 thousand in 2019, dropped notably to US$1,043,410 thousand in 2020, and then recovered somewhat to US$1,475,172 thousand in 2021. These fluctuations reflect changes in valuation allowances and underlying tax asset balances.

Deferred Tax Liabilities

Deferred tax liabilities also show an increasing negative trend from -US$124,531 thousand in 2017 to -US$327,571 thousand in 2021, indicating growing obligations or timing differences in taxable income recognition.

Net Deferred Tax Assets

The net deferred tax assets, calculated after offsetting liabilities, climbed considerably from a modest US$10,217 thousand in 2017 to US$1,907,260 thousand in 2019, then declined to US$795,296 thousand in 2020 before improving to US$1,147,601 thousand in 2021. This volatility highlights shifts in the tax position, valuation allowances, and deferred tax liabilities.

Overall, the data suggests significant changes in deferred tax positions, with substantial growth in tax credits and deferred tax assets, tempered by fluctuating valuation allowances and increased lease-related liabilities. The large investments reflected in fixed and intangible assets around 2019-2020 and the appearance of a litigation settlement in 2021 are notable financial events influencing these dynamics.

The financial data reveals notable fluctuations in the deferred tax assets and liabilities over the five-year period ending December 31, 2021.

Deferred Tax Assets

The deferred tax assets show a significant increase from 10,455 thousand US dollars at the end of 2017 to a peak of 1,908,086 thousand US dollars in 2019. This sharp rise indicates a substantial growth in deductible temporary differences or carryforwards during this period. However, after 2019, there is a marked decline in deferred tax assets, falling to 796,326 thousand US dollars in 2020. The subsequent year, 2021, sees a partial recovery, with deferred tax assets increasing to 1,148,573 thousand US dollars. Overall, the trend implies volatility in the company's deferred tax asset base, with a pronounced peak in 2019 followed by a decrease and partial rebound.

Deferred Tax Liabilities

Deferred tax liabilities, included within "Deferred and other long-term tax liabilities, net," display relatively low and stable values compared to deferred tax assets. Starting at 238 thousand US dollars in 2017, the amount drops to nil in 2018, possibly indicating reclassification or elimination at that time. The liabilities then rise modestly to 826 thousand US dollars in 2019, followed by incremental increases to 1,030 thousand US dollars in 2020 and a slight decrease to 972 thousand US dollars in 2021. The overall level of deferred tax liabilities remains minimal in absolute terms despite minor fluctuations.

In summary, the data points to significant volatility in deferred tax assets with a peak in 2019 and a subsequent partial decline and recovery. Deferred tax liabilities are low and exhibit minor changes over the period. This pattern may reflect changes in tax positions, adjustments in tax planning strategies, or fluctuations in taxable temporary differences impacting the company's deferred tax accounts over time.

Total Assets

The reported total assets increased steadily from approximately 7.41 billion US dollars at the end of 2017 to about 14.06 billion by the end of 2021, indicating substantial growth over the five-year period. The adjusted total assets show a similar upward trend, though the values are consistently lower than the reported figures, particularly notable in 2018 and subsequent years, which suggests that certain adjustments reduced the asset base when accounting for deferred income taxes or other factors.

Total Liabilities

Reported total liabilities also grew significantly, nearly tripling from approximately 2.37 billion US dollars in 2017 to 6.75 billion in 2021. The adjusted liabilities closely align with the reported figures throughout the period, indicating minimal adjustments in liabilities. The increasing liabilities correspond with the growing asset base, reflecting a likely expansion financed partially through debt or other obligations.

Stockholders’ Equity

Reported stockholders’ equity rose from about 5.05 billion US dollars in 2017 to a peak of approximately 8.7 billion in 2019, before declining to 7.31 billion by the end of 2021. In contrast, the adjusted equity figures are consistently lower and exhibit a noteworthy decline after peaking in 2018, falling to around 6.16 billion by 2021. This decreasing trend in adjusted equity suggests the adjustments, potentially related to deferred tax liabilities or other accounting considerations, reduced the equity base over time, signaling possible pressures on net worth despite asset growth.

Net Income (Loss)

The reported net income shows volatility, with a loss of approximately 108 million US dollars in 2017, followed by two years of significant profits peaking at roughly 1.47 billion in 2019. However, the company reported losses again in 2020 and 2021, though the loss magnitude decreased from 1.14 billion to 221 million US dollars. The adjusted net income paints a more conservative picture, showing a substantial positive adjustment in 2018 and 2019, but losses persist throughout, including a smaller loss in 2020 (-71 million) and a more considerable loss in 2021 (-450 million). The adjustments reduce the apparent profitability, highlighting ongoing financial challenges despite reported profits in some years.

Overall Assessment

The data reveal an expanding asset and liability base, with notable growth in total assets and liabilities over the period. The divergence between reported and adjusted figures, especially in equity and net income, suggests that deferred tax adjustments or other considerations materially impact the financial position and results, dampening perceived profitability and equity strength. The oscillation from profit to loss in net income, coupled with the decline in adjusted equity post-2019, points to emerging financial pressures or possibly increased expenses affecting the company’s financial health in recent years.

Net Profit Margin

The reported net profit margin experienced significant volatility over the analyzed period. It started negative at -4.42% in 2017, surged sharply to 39.63% in 2018, and peaked at 42.37% in 2019. Subsequently, it declined dramatically to -30.56% in 2020, improving slightly to -4.36% in 2021. The adjusted net profit margin showed a more moderate pattern, remaining negative or low positive throughout, peaking at 13.28% in 2018 and declining steadily afterward to -8.87% in 2021. This suggests that adjustments for reported and deferred income tax have a dampening effect on profitability measures, highlighting more conservative earnings perspectives.

Total Asset Turnover

The reported total asset turnover ratio displayed a gradual decline from 0.33 in 2017 to 0.27 in 2019, followed by a mild recovery to 0.36 in 2021. Adjusted ratios followed a somewhat similar but less pronounced trend, starting at 0.33 in 2017, decreasing slightly to 0.3 in 2020, then increasing to 0.39 in 2021. Overall, asset utilization efficiency showed a decline through 2019 and 2020 but improved in the final year, with adjustments generally reflecting a slightly higher turnover rate.

Financial Leverage

Financial leverage consistently increased over the five years under both reported and adjusted figures. Reported financial leverage rose from 1.47 in 2017 to 1.92 in 2021, indicating an expanding reliance on debt or financial obligations. Adjusted leverage ratios exhibited a similar upward trend but showed higher values at each point, moving from 1.47 in 2017 to 2.1 in 2021. This increase in leverage suggests an increasing risk profile in the company’s capital structure over time.

Return on Equity (ROE)

Reported ROE showed high variability, beginning at -2.14% in 2017, spiking to 17.71% in 2018, maintaining a similar level in 2019 at 16.84%, then plunging to -14.25% in 2020 before improving to -3.03% in 2021. The adjusted ROE presented a more tempered trajectory, rising moderately to 6.73% in 2018, then declining continuously to -7.31% in 2021. Adjustments considerably reduced the apparent profitability for equity holders, reflecting the impact of tax and other adjustments on sustainable earnings.

Return on Assets (ROA)

The reported ROA followed a pattern akin to ROE, with positive peaks in 2018 and 2019 (11.86% and 11.54%, respectively) before decreasing sharply to negative figures in 2020 (-8.49%) and modestly recovering in 2021 (-1.57%). The adjusted ROA, subdued by tax and other considerations, remained lower throughout, peaking at 4.32% in 2018, then declining to -3.49% in 2021. This trend highlights reduced asset profitability when adjustments are taken into account, signaling operational or cost structure challenges in recent years.

The financial data indicates fluctuating profitability for the company over the five-year period, with notable divergences between reported and adjusted figures.

Reported Net Income (Loss)

The reported net income shows significant volatility. Beginning with a loss of approximately US$108 million in 2017, the company experienced strong growth reaching about US$1.2 billion in 2018 and further increasing to around US$1.47 billion in 2019. However, this positive trend reversed sharply in 2020, with a substantial loss exceeding US$1.13 billion, followed by a reduced loss of approximately US$221 million in 2021.

Adjusted Net Income (Loss)

Adjusted net income follows a somewhat similar pattern but with less extreme fluctuations. From a loss of about US$114 million in 2017, it increased to a positive US$404 million in 2018, then slightly declined to approximately US$343 million in 2019. In 2020, the company reported a smaller adjusted loss of US$71 million compared to the reported loss, though the loss widened again in 2021 to approximately US$450 million.

Reported Net Profit Margin

The reported net profit margin aligns with the net income trends, shifting from negative 4.42% in 2017 to a peak of 42.37% in 2019, indicating robust profitability during that period. This profit margin sharply deteriorated to negative 30.56% in 2020 and slightly improved but remained negative at 4.36% in 2021.

Adjusted Net Profit Margin

Adjusted margin values are consistently lower than reported margins, reflecting adjustments that reduce profitability. Starting at negative 4.69% in 2017, the margin improved to 13.28% in 2018 and then decreased to 9.92% in 2019. The margin became negative again in 2020 at -1.92%, declining further to -8.87% in 2021, indicating a worsening profitability condition when excluding certain reported items.

Overall, the data illustrates a period of considerable financial instability, with a peak in profitability in 2018 and 2019 followed by significant losses in 2020 and 2021. The divergence between reported and adjusted figures suggests the presence of non-recurring or special items impacting the reported results, as adjustments consistently lower net income and margins, particularly in the latter years. The trend highlights challenges in sustaining profitability and potential issues that may require further investigation into the nature of adjustments made annually.

Total Assets

The reported total assets have consistently increased over the five-year period, rising from approximately 7.41 billion US dollars in 2017 to about 14.06 billion US dollars in 2021. Similarly, the adjusted total assets have shown a growth trend, increasing from roughly 7.40 billion to 12.91 billion US dollars in the same timeframe. Despite the growth in both reported and adjusted figures, the adjusted total assets remain consistently lower than the reported values each year, with the gap widening particularly after 2018.

Total Asset Turnover Ratios

The reported total asset turnover ratio demonstrates a declining trend from 0.33 in 2017 to 0.27 in 2019, followed by a modest recovery to 0.36 in 2021. In contrast, the adjusted total asset turnover ratio starts at 0.33 in 2017, remains stable at 0.33 in 2018, then gradually decreases to 0.3 in 2020 before increasing significantly to 0.39 in 2021. Overall, the adjusted ratios tend to be higher than the reported ratios from 2018 onward, indicating a relatively better asset utilization when adjustments are considered.

Insights on Performance

The consistent increase in total assets reflects expansion and growth in the company’s asset base. However, the decreasing trend in reported total asset turnover until 2019 suggests a reduction in efficiency in utilizing these assets to generate revenue. The subsequent improvement in turnover ratios by 2021, especially in the adjusted metrics, indicates a potential enhancement in operational efficiency or asset deployment. The difference between reported and adjusted values in both assets and turnover ratios points to the impact of income tax and related adjustments on financial performance analysis.

Total Assets

There is a consistent upward trend in both reported and adjusted total assets from 2017 to 2021. Reported total assets increased from approximately 7.41 billion US dollars in 2017 to about 14.06 billion US dollars in 2021. Adjusted total assets also show growth from around 7.40 billion US dollars to roughly 12.91 billion US dollars during the same period. The growth rate of reported total assets appears higher than the adjusted figures, indicating that deferred income tax adjustments may partially reduce the asset base when considered.

Stockholders’ Equity

Reported stockholders’ equity demonstrates growth from 5.05 billion US dollars in 2017, peaking at 8.70 billion US dollars in 2019, followed by a decline to approximately 7.31 billion US dollars by 2021. Adjusted stockholders’ equity shows a different pattern, starting at 5.04 billion US dollars in 2017, increasing to 6.80 billion in 2019, then slightly recovering to 7.17 billion in 2020, before decreasing to around 6.16 billion in 2021. The divergence between reported and adjusted equity appears to widen over time, highlighting the impact of tax-related adjustments, which overstate equity in reported figures compared to adjusted ones.

Financial Leverage

Financial leverage ratios, both reported and adjusted, reveal an increasing trend from 2017 through 2021, indicating a rising dependence on debt or liabilities relative to equity. Reported financial leverage increases from 1.47 in 2017 to 1.92 in 2021. Adjusted financial leverage begins at the same level as reported in 2017 but grows more markedly to 2.10 by 2021. The adjusted leverage being consistently higher than reported leverage in later years suggests that deferred tax adjustments reduce equity more significantly than total assets, thus amplifying the leverage ratio.

Insights

The overall analysis points to expanding asset bases with a fluctuating equity position, potentially reflecting volatile earnings or distributions affecting retained earnings. The steady increase in financial leverage ratios signals that the company is progressively utilizing more debt financing or liabilities relative to equity. The growing gap between reported and adjusted figures, especially in equity and leverage, underlines the importance of considering income tax adjustments for a comprehensive understanding of the company's financial health and risk profile.

Net Income (Loss)

The reported net income experienced significant fluctuations over the five-year period. Starting with a loss of approximately $108 million in 2017, it turned positive in 2018 and 2019, reaching peaks of $1.2 billion and $1.5 billion respectively. However, a marked decline occurred in 2020 and 2021, with losses of about $1.1 billion and $221 million, indicating a period of financial difficulty or increased expenses during the latter years.

The adjusted net income follows a similar pattern but with lower magnitudes. Initial loss was approximately $114 million in 2017, followed by positive values in 2018 and 2019 of $404 million and $343 million respectively. In 2020 and 2021, losses were reported again, though at smaller scales compared to reported figures, reflecting adjustments that likely account for non-recurring items or tax effects.

Stockholders’ Equity

Reported stockholders' equity indicates steady growth from 2017 to 2019, increasing from roughly $5.05 billion to $8.7 billion. A decline is observed in 2020 and 2021, settling around $7.3 billion by the end of 2021, which may signal asset write-downs, distributions, or losses impacting equity.

Adjusted stockholders' equity presents a different trend. After growing from about $5.04 billion in 2017 to $6.8 billion in 2019, it further increased slightly in 2020 to $7.17 billion but then decreased significantly to approximately $6.16 billion in 2021. This suggests that adjustments have a substantial impact on equity figures especially in the later years, possibly due to deferred tax assets/liabilities or other accounting adjustments.

Return on Equity (ROE)

Reported ROE exhibits considerable volatility, starting negative at -2.14% in 2017, peaking in 2018 and 2019 at around 17.71% and 16.84% respectively, then declining sharply into negative territory in 2020 (-14.25%) and slightly recovering but remaining negative in 2021 (-3.03%). This pattern aligns with the reported net income fluctuations and reflects the company’s profitability challenges in recent years.

Adjusted ROE demonstrates a more subdued and consistently lower performance across all periods. Beginning at -2.27% in 2017, it modestly improves to positive levels in 2018 and 2019 but remains significantly below reported figures (6.73% and 5.05%), before falling to -0.99% in 2020 and further declining to -7.31% in 2021. This suggests that the adjusted profitability, accounting for tax and other adjustments, is weaker and more conservative than the reported results indicate.

The data reveals fluctuating financial performance and asset growth over the analyzed period, with notable divergences between reported and adjusted figures.

Net Income (Loss)

The reported net income shows significant volatility. It starts with a loss in 2017, sharply turns positive in 2018 and 2019, with peak income in 2019, then reverses to substantial losses in 2020 and 2021, although the loss magnitude in 2021 is reduced compared to 2020. The adjusted net income follows a similar but less pronounced pattern, remaining negative in 2017, improving to positive figures in 2018 and 2019, but at lower levels than reported income. In 2020 and 2021, adjusted net income returns to losses, with a smaller negative value in 2020 compared to reported loss but a larger negative loss in 2021.

Total Assets

Both reported and adjusted total assets exhibit a steady upward trend across all periods. Reported total assets increase consistently from 7.41 billion to nearly 14.06 billion by 2021. Adjusted total assets also grow but at a slightly slower rate, starting slightly below reported figures and ending with a notable gap by 2021. This suggests some adjustments reduce asset values consistently over time.

Return on Assets (ROA)

The reported ROA follows the net income trend, moving from a negative return in 2017 to positive and relatively strong returns in 2018 and 2019, before declining sharply into negative territory in 2020 and 2021. The adjusted ROA shows the same directional shifts but remains significantly lower than reported ROA during profitable years and less negative in 2020, ultimately turning more negative in 2021. This indicates that adjustments impact profitability measurements considerably, reducing apparent returns during profitable years and altering losses during downturns.

Overall, the company exhibited strong financial performance in the middle of the period, with both net income and ROA peaking in 2018 and 2019, but this was followed by a reversal into losses and negative returns in the last two years analyzed. Asset growth has been continuous and steady, suggesting ongoing investment or acquisition activity. Adjusted metrics consistently present a more conservative view of profitability and asset size, which highlights the importance of considering adjustments to understand underlying performance accurately.