Stock Analysis on Net
Stock Analysis on Net

Twitter Inc. (NYSE:TWTR)

This company has been moved to the archive! The financial data has not been updated since July 26, 2022.

Common-Size Income Statement

Twitter Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Revenue 100.00 100.00 100.00 100.00 100.00
Cost of revenue -35.40 -36.77 -32.87 -31.72 -35.25
Gross profit 64.60% 63.23% 67.13% 68.28% 64.75%
Research and development -24.55 -23.49 -19.72 -18.20 -22.18
Sales and marketing -23.16 -23.89 -26.42 -25.35 -29.36
General and administrative -11.51 -15.13 -10.40 -9.82 -11.62
Litigation settlement, net -15.08 0.00 0.00 0.00 0.00
Income (loss) from operations -9.70% 0.72% 10.59% 14.90% 1.59%
Interest expense -1.01 -4.11 -3.99 -4.36 -4.31
Interest income 0.70 2.37 4.56 3.66 1.82
Other income (expense), net 1.91 -0.35 0.12 -0.28 -3.00
Income (loss) before income taxes -8.10% -1.37% 11.28% 13.92% -3.91%
(Provision) benefit for income taxes 3.74 -29.19 31.09 25.71 -0.52
Net income (loss) -4.36% -30.56% 42.37% 39.63% -4.42%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The common-size income statement reveals a period of significant volatility in net profitability despite a relatively stable gross margin profile. While the company maintained consistent control over the direct costs of revenue, operating margins deteriorated sharply toward the end of the period, culminating in an operational loss in 2021.

Gross Profitability
Gross profit margins remained resilient throughout the five-year period, fluctuating within a narrow range between 63.23% and 68.28%. The cost of revenue showed minimal variance, generally hovering between 31% and 36% of total revenue, indicating a stable cost structure for the delivery of services.
Operating Expense Dynamics
A strategic shift in resource allocation is observable in the operating expenses. Sales and marketing expenses as a percentage of revenue trended downward from 29.36% in 2017 to 23.16% in 2021, suggesting improved marketing efficiency or increased organic growth. Conversely, research and development spending generally increased, rising from 22.18% in 2017 to 24.55% in 2021, reflecting a higher relative investment in product innovation. General and administrative expenses remained relatively stable, with a notable peak of 15.13% in 2020.
Operating Income and Extraordinary Items
Operating margins experienced significant instability, peaking at 14.90% in 2018 before declining to a negative 9.70% in 2021. The sharp decline in the final year is primarily attributed to a substantial litigation settlement, which consumed 15.08% of total revenue, effectively erasing the operating profit.
Net Income and Tax Impact
Net income exhibits extreme volatility that does not align closely with operating performance, largely due to the impact of tax provisions and benefits. The substantial net income spikes in 2018 (39.63%) and 2019 (42.37%) were driven by significant tax benefits of 25.71% and 31.09%, respectively. Similarly, the deep net loss in 2020 (-30.56%) was heavily influenced by a tax provision of -29.19%. This suggests that bottom-line results were driven more by fiscal accounting entries than by core business operations.
Financial Costs and Other Income
Interest expenses as a percentage of revenue remained consistent around 4% from 2017 to 2020 before dropping sharply to 1.01% in 2021. Interest income also saw a decline from its peak of 4.56% in 2019 to 0.70% in 2021, indicating a reduction in interest-bearing assets or changes in the cash position relative to total revenue.

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