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Summary:

Twitter’s IPO filing is full of nuggets about the company’s revenue and overall business, including our first real look into the company’s data centers. We still don’t know where they are, but we know what they cost.

Twitter doesn’t have nearly the scalability concerns of its web peers such as Google and Facebook, but its S-1 filing still provides some interesting insights into a company that has been relatively secretive about it data center operations.

Here is a collection of interesting data points relating to how much Twitter is spending on the people and gear that make its service run:

  • Twitter expects to spend “approximately $225 million to $275 million” on capital expenditures in 2013, “a portion of which we will finance through capital leases, as we continue to expand our co-located data centers and our office facilities.”
  • Twitter’s cost of revenue — which “consists primarily of data center costs related to our co-located facilities, which include lease and hosting costs, related support and maintenance costs and energy and bandwidth costs, as well as depreciation of our servers and networking equipment, and personnel-related costs, including salaries, benefits and stock-based compensation, for our operations team” — came to nearly $92 million during the first half of 2013, or 36 percent of the company’s total revenue during that period.
  • Research and development costs — which “consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for our engineers and other employees engaged in the research and development of our products and services” — came to nearly $112 million during the first half of 2013, or 44 percent of the company’s total revenue during that period.

Naturally, Twitter expects both of cost of revenue and R&D costs to rise year over year, although they will vary as a percentage of the company’s total revenue.

By way of comparison, Facebook’s cost of revenue for the year’s first six months was $878 million and it spent $637 million on R&D. It spent $595 million on infrastructure during that time period. Facebook also brought in more than $3.2 billion in revenue during that timeframe, so its costs were considerably less as a percentage of total revenue.

If there’s anything to take away from this comparison, it might be that no matter your business, being a mega web company means spending a lot of money on engineers who can build cutting-edge products and software to run them on. And Twitter’s engineers are keeping plenty busy. Perhaps because of the nature of its business (which is to say it doesn’t store untold petabytes of photos), Twitter is still able to lease data center space, although its costs to run them might go down in the long term if were it to build its own like Facebook has done.

  1. Will you invest in the #TwitterIPO? https://slimsurveys.com/s/062a95ae

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  2. Key takeaway: “If there’s anything to take away from this comparison, it might be that no matter your business, being a mega web company means spending a lot of money on engineers who can build cutting-edge products and software to run them on.”

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  3. A picture is worth a thousand words.

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