Twitter picks NYSE for IPO even as losses widen

Credit: Reuters/Robert Galbraith

A worker tends to the lawn on the roof of Twitter headquarters in San Francisco, California October 4, 2013.

In an amended IPO filing on Tuesday, Twitter also showed that it sustained its pace of revenue and user expansion in the just-ended third quarter, affirmation for investors hoping to capitalize on the sizzling growth of the messaging service.

The eight-year-old company is now expected to kick off its investor roadshow in coming weeks before starting trade in November.

Among the biggest winners of a successful IPO would be co-founder Evan Williams with a 12 percent stake and CEO Dick Costolo with 1.6 percent currently. Rizvi Traverse, run by Hollywood and Silicon Valley financier Suhail Rizvi, and its affiliates hold 17.6 percent, as the largest institutional holder.

Rizvi and his investors paid more than $1 billion for his stake, Reuters reported in October.

Twitter's debut will be the culmination of a journey from side-project to sociocultural phenomenon, one that has become a communications channel for everyone from the Pope to President Barack Obama.

The company more than doubled its third quarter revenue to $168.6 million. But net losses widened to $64.6 million in the September quarter compared with $21.6 million a year earlier.

And in the three months ended September, Twitter grew its monthly active users 39 percent to 231.7 million on average. That figure was up from about 218 million when the company first disclosed its S-1 filing on Oct 3.

Those losses were driven partly by a 158 percent surge in sales and marketing spending, as the company ramped up its sales forces in offices around the world to push its advertising platform. Sales and marketing costs rose to $61.2 million from $23.7 million a year earlier.

Twitter said its revenue is increasingly coming from mobile devices, the preferred way for most users to log on. In the three months ending through September, over 70 percent of advertising revenue came from phones and tablets versus 65 percent in the prior quarter.

EXCHANGE WARS

Twitter represents the latest loss for the Nasdaq in recent years. The NYSE's aggressive campaigning helped snag LinkedIn Corp and Pandora Inc, amongst other high-profile consumer-tech debutantes.

Both bourses vied fiercely for the prestige of hosting Twitter. But analysts had predicted that Facebook's debut, marred by a series of technical glitches that delayed the start of trading, could weigh against the Nasdaq.

Nasdaq CEO Robert Greifeld flew to Twitter's San Francisco headquarters as recently as Oct 4 to make one last unsuccessful pitch for listing on his exchange, a person close to Twitter said.

'This is a decisive win for the NYSE. We are grateful for Twitter's confidence in our platform and look forward to partnering with them,' said Scott Cutler, head of NYSE's listings business.

In a statement, the Nasdaq said it 'wished Twitter well.'

(Additional reporting John McCrank in New York, Editing by Edwin Chan and Richard Chang; Editing by Bob Burgdorfer)