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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Twitter Inc., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net operating profit after taxes (NOPAT)¹	(387,636)	17,546)	382,306)	442,934)	(73,949)
Cost of capital²	9.24%	10.19%	10.12%	9.89%	10.15%
Invested capital³	7,449,784)	5,970,409)	5,287,225)	5,185,025)	4,627,898)

Economic profit⁴	(1,075,816)	(590,861)	(152,607)	(70,070)	(543,831)

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).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -387,636 – 9.24% × 7,449,784 = -1,075,816

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Twitter Inc. economic profit decreased from 2019 to 2020 and from 2020 to 2021.

Twitter Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income (loss)	(221,409)	(1,135,626)	1,465,659)	1,205,596)	(108,063)
Deferred income tax expense (benefit)¹	(228,774)	1,064,396)	(1,122,511)	(801,720)	(6,415)
Increase (decrease) in allowance for doubtful accounts²	(1,668)	14,545)	(1,158)	(1,871)	(1,786)
Increase (decrease) in deferred revenue³	17,223)	(6,809)	30,051)	11,125)	(5,835)
Increase (decrease) in equity equivalents⁴	(213,219)	1,072,132)	(1,093,618)	(792,466)	(14,036)
Interest expense	51,186)	152,878)	138,180)	132,606)	105,237)
Interest expense, operating lease liability⁵	43,981)	37,882)	32,517)	16,342)	13,224)
Adjusted interest expense	95,167)	190,760)	170,697)	148,948)	118,461)
Tax benefit of interest expense⁶	(19,985)	(40,060)	(35,846)	(31,279)	(41,461)
Adjusted interest expense, after taxes⁷	75,182)	150,700)	134,850)	117,669)	76,999)
Interest income	(35,683)	(88,178)	(157,703)	(111,221)	(44,383)
Investment income, before taxes	(35,683)	(88,178)	(157,703)	(111,221)	(44,383)
Tax expense (benefit) of investment income⁸	7,493)	18,517)	33,118)	23,356)	15,534)
Investment income, after taxes⁹	(28,190)	(69,661)	(124,585)	(87,865)	(28,849)
Net operating profit after taxes (NOPAT)	(387,636)	17,546)	382,306)	442,934)	(73,949)

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).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in equity equivalents to net income (loss).

⁵ 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,293,555 × 3.40% = 43,981

⁶ 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 95,167 × 21.00% = 19,985

⁷ Addition of after taxes interest expense to net income (loss).

⁸ 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 35,683 × 21.00% = 7,493

⁹ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Twitter Inc. NOPAT decreased from 2019 to 2020 and from 2020 to 2021.

Twitter Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Provision (benefit) for income taxes	(189,704)	1,084,687)	(1,075,520)	(782,052)	12,645)
Less: Deferred income tax expense (benefit)	(228,774)	1,064,396)	(1,122,511)	(801,720)	(6,415)
Add: Tax savings from interest expense	19,985)	40,060)	35,846)	31,279)	41,461)
Less: Tax imposed on investment income	7,493)	18,517)	33,118)	23,356)	15,534)
Cash operating taxes	51,562)	41,833)	49,720)	27,591)	44,987)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Twitter Inc. cash operating taxes decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Twitter Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Convertible notes, short-term	—)	917,866)	—)	897,328)	—)
Finance lease liabilities, short-term	—)	567)	23,476)	68,046)	84,976)
Convertible notes, long-term	3,559,023)	1,875,878)	1,816,833)	1,730,922)	1,627,460)
Senior notes, long-term	693,996)	692,994)	691,967)	—)	—)
Finance lease liabilities, long-term	—)	—)	205)	24,394)	81,308)
Operating lease liability¹	1,293,555)	996,895)	756,204)	770,826)	546,426)
Total reported debt & leases	5,546,574)	4,484,200)	3,288,685)	3,491,516)	2,340,170)
Stockholders’ equity	7,307,199)	7,970,082)	8,704,386)	6,805,594)	5,047,218)
Net deferred tax (assets) liabilities²	(1,147,601)	(795,296)	(1,907,260)	(808,459)	(10,217)
Allowance for doubtful accounts³	15,278)	16,946)	2,401)	3,559)	5,430)
Deferred revenue⁴	79,414)	62,191)	69,000)	38,949)	27,824)
Equity equivalents⁵	(1,052,909)	(716,159)	(1,835,859)	(765,951)	23,037)
Accumulated other comprehensive (income) loss, net of tax⁶	117,320)	66,094)	70,534)	65,311)	31,579)
Adjusted stockholders’ equity	6,371,610)	7,320,017)	6,939,061)	6,104,954)	5,101,834)
Construction in progress⁷	(261,267)	(349,935)	(100,551)	(96,488)	(49,417)
Short-term investments⁸	(4,207,133)	(5,483,873)	(4,839,970)	(4,314,957)	(2,764,689)
Invested capital	7,449,784)	5,970,409)	5,287,225)	5,185,025)	4,627,898)

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).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of deferred revenue.

⁵ Addition of equity equivalents to stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of short-term investments.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Twitter Inc. invested capital increased from 2019 to 2020 and from 2020 to 2021.

Twitter Inc., cost of capital calculations

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	29,015,236)	29,015,236)	÷	34,785,717)	=	0.83	0.83	×	10.86%	=	9.06%
Debt³	4,476,926)	4,476,926)	÷	34,785,717)	=	0.13	0.13	×	0.80% × (1 – 21.00%)	=	0.08%
Operating lease liability⁴	1,293,555)	1,293,555)	÷	34,785,717)	=	0.04	0.04	×	3.40% × (1 – 21.00%)	=	0.10%
Total:	34,785,717)					1.00					9.24%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	57,299,367)	57,299,367)	÷	62,857,629)	=	0.91	0.91	×	10.86%	=	9.90%
Debt³	4,561,367)	4,561,367)	÷	62,857,629)	=	0.07	0.07	×	4.28% × (1 – 21.00%)	=	0.25%
Operating lease liability⁴	996,895)	996,895)	÷	62,857,629)	=	0.02	0.02	×	3.80% × (1 – 21.00%)	=	0.05%
Total:	62,857,629)					1.00					10.19%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	30,329,270)	30,329,270)	÷	33,867,055)	=	0.90	0.90	×	10.86%	=	9.72%
Debt³	2,781,581)	2,781,581)	÷	33,867,055)	=	0.08	0.08	×	4.90% × (1 – 21.00%)	=	0.32%
Operating lease liability⁴	756,204)	756,204)	÷	33,867,055)	=	0.02	0.02	×	4.30% × (1 – 21.00%)	=	0.08%
Total:	33,867,055)					1.00					10.12%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	23,587,523)	23,587,523)	÷	27,242,589)	=	0.87	0.87	×	10.86%	=	9.40%
Debt³	2,884,240)	2,884,240)	÷	27,242,589)	=	0.11	0.11	×	5.33% × (1 – 21.00%)	=	0.45%
Operating lease liability⁴	770,826)	770,826)	÷	27,242,589)	=	0.03	0.03	×	2.12% × (1 – 21.00%)	=	0.05%
Total:	27,242,589)					1.00					9.89%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	24,524,543)	24,524,543)	÷	27,020,252)	=	0.91	0.91	×	10.86%	=	9.85%
Debt³	1,949,284)	1,949,284)	÷	27,020,252)	=	0.07	0.07	×	5.69% × (1 – 35.00%)	=	0.27%
Operating lease liability⁴	546,426)	546,426)	÷	27,020,252)	=	0.02	0.02	×	2.42% × (1 – 35.00%)	=	0.03%
Total:	27,020,252)					1.00					10.15%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Twitter Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in thousands)
Economic profit¹	(1,075,816)	(590,861)	(152,607)	(70,070)	(543,831)
Invested capital²	7,449,784)	5,970,409)	5,287,225)	5,185,025)	4,627,898)
Performance Ratio
Economic spread ratio³	-14.44%	-9.90%	-2.89%	-1.35%	-11.75%
Benchmarks
Economic Spread Ratio, Competitors⁴
Alphabet Inc.	38.38%	19.62%	18.67%	—	—
Comcast Corp.	-1.69%	-3.36%	-1.30%	—	—
Meta Platforms Inc.	28.61%	19.82%	12.93%	—	—
Netflix Inc.	3.40%	-1.99%	-3.81%	—	—
Walt Disney Co.	-11.96%	-14.24%	-4.04%	1.09%	—

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).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,075,816 ÷ 7,449,784 = -14.44%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Twitter Inc. economic spread ratio deteriorated from 2019 to 2020 and from 2020 to 2021.

Twitter Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in thousands)
Economic profit¹	(1,075,816)	(590,861)	(152,607)	(70,070)	(543,831)

Revenue	5,077,482)	3,716,349)	3,459,329)	3,042,359)	2,443,299)
Add: Increase (decrease) in deferred revenue	17,223)	(6,809)	30,051)	11,125)	(5,835)
Adjusted revenue	5,094,705)	3,709,540)	3,489,380)	3,053,484)	2,437,464)
Performance Ratio
Economic profit margin²	-21.12%	-15.93%	-4.37%	-2.29%	-22.31%
Benchmarks
Economic Profit Margin, Competitors³
Alphabet Inc.	22.01%	13.14%	11.59%	—	—
Comcast Corp.	-3.34%	-7.24%	-2.59%	—	—
Meta Platforms Inc.	22.47%	18.65%	11.96%	—	—
Netflix Inc.	3.97%	-2.35%	-4.53%	—	—
Walt Disney Co.	-30.47%	-38.30%	-9.66%	1.47%	—

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).

¹ Economic profit. See details »

² 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × -1,075,816 ÷ 5,094,705 = -21.12%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Twitter Inc. economic profit margin deteriorated from 2019 to 2020 and from 2020 to 2021.

Twitter Inc. (NYSE:TWTR)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin