Twitter shuts down IPO talk, instead focused on growing users and international ad base


Twitter today is unrecognizable when compared to its former self, and for all fallout about its new, stricter, throwing-developers-under-the-bus image, the company is making money and even expected to generate at least $1 billion in ad revenue sales by 2014. But while the one question that many investors have on their minds is whether or not the company will file its IPO, Twitter CEO Dick Costolo has assured Wall Street that going public is not within the scope of his vision for the company. Instead Twitter is honed in on its international ad strategy and building out new features for users.

Given Facebook’s IPO performance, there’s been an assumption that Twitter might shy away from going public. After all, other companies are cautious about investors’ bearish sentiments toward the social tech industry and it’s delayed or postponed their own IPOs. Despite this, Costollo stressed in an interview with CNBC that five years from now Twitter will remain an independent company and that Facebook’s IPO debacle has not influenced Twitter’s decision to avoid going public.

“Nothing external to the company has had any bearing on how I think about when to take Twitter public or not to,” Costollo said.

Costolo noted that Twitter’s focus instead is elsewhere, concentrated on growing its users and advertising base. Twitter currently generates revenue through two products that both rely on advertising, and that’s through Promoted Tweets and Promoted Trends.

These two revenue strategies alone have led Twitter to, projectedly, break the $1 billion hurdle in 2014, and have also helped the platform crack mobile advertising challenges. Reports indicate the company is sitting comfortably with mobile; in fact, Twitter garnered more revenue from its Promoted Tweets program on mobile than on its desktop app within two weeks of launching the function for its mobile app.

Facebook, on the other hand, has yet to find a mobile strategy that fits seamlessly with its mobile platform. It also prefers to keep its portfolio of ad products diversified. Recently there have been reports that Facebook may target mobile ads based on apps that a user has downloaded onto their smartphone. Whatever Facebook’s strategy turns out to be, one thing is clear: Twitter’s mobile advertising revenue has surpassed Facebook’s mobile ad revenue this year.

According Costollo, the latest challenge has been Twitter’s efforts to grow its international advertising base, with its Tokyo and London offices dedicated for its international growth.

“Our biggest advertising challenge is making sure our revenue reflects the percentage of users that exist and use Twitter in these various countries,” Costollo said. “The user base is growing globally quit fast and we need to expand our advertising platform globally beyond the couple of countries we’re in now.”

In addition to advertising, Twitter is also flirting with the idea of e-commerce and may one day implement a system for serving “perishable inventory,” like tickets. 

For now, Twitter appears to be comfortable with its domestic and mobile strategy as it turns its attention abroad. Despite the personality change we’re all seeing play out through its new API restrictions, Twitter’s new focus could very well pay off.