The above graph represents the quarterly distribution of Twitter operating costs and expenses by type, from fiscal Q1 2011 to Q2 2021. The company’s expenses includes the cost of revenue, research and development expenses, sales and marketing expenses and general and administrative expenses. Twitter’s total operating costs and expenses totalled $807.37 million during the second quarter of 2020.
|Source||Twitter Quarterly Reports|
|Note||Twitter fiscal year starts from January 1st|
The total cost of revenue, R&D, Sales and Marketing and General and Administrative expenses accounted for 35.7%, 26.7%, 25.7% and 11.9% of the company’s total revenue in Q2 2020, respectively.
As the graph shows, the company has significantly increased its operating costs and expenses over the last 8 years.
Twitter Cost of Revenue
Twitter’s cost of revenue in Q2 2020 increased nearly 3.6% YoY to $288.04 million. The growth was primarily driven by the year-over-year increase in the direct costs and depreciation expenses.
In Q4 2016, the cost of revenue of Twitter reached an all-time high of $305.7 million, with 40.1% YoY increase.
Twitter R&D Expenses
Twitter spent nearly 26.7% of its total revenue generated in Q2 2020 on Research and Development. The total R&D expenses by Twitter increased a strong 35.5% YoY to $215.81 million during the June quarter. Twitter R&D expenses consist primarily of personnel-related costs, which include salaries, benefits and stock-based compensation.
Twitter Sales and Marketing Expenses
The Sales and marketing expenses consist primarily of personnel-related costs (salaries, commissions, benefits and stock-based compensation for employees), advertising costs, market research, trade shows, branding, marketing, public relations costs, amortization of acquired intangible assets, allocated facilities costs, and other supporting overhead costs.
In Q2 2020, Twitter spent an appreciable 25.7% of its total revenue on sales and marketing expenses. The total sales and marketing expenses by Twitter declined from $240.25 million in Q2 2019 to $207.29 million in Q2 2020.
Twitter General and Administrative Expenses
Twitter General and administrative expenses consist primarily of personnel-related costs, fees and costs for professional services, including consulting, third-party legal and accounting services, facilities costs, etc.
The San-Francisco based social media company spent $96.24 million on the General and administrative services, representing over 11.9% of its total revenue in Q2 2020.
About Twitter Inc
Twitter Inc. (NYSE: TWTR) is a global social networking platform, created on March 21, 2006, by Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams. The company is based in San Francisco, California, and has more than 35 offices around the world.
Twitter is a microblogging website/app where people around the world share their thoughts by posting a Tweet which includes text, images, videos, gifs. Initially, the Tweet limit was restricted to 140 characters, but on November 7, 2017, the company doubled its Tweet limit to 280 characters for all languages except Chinese, Japanese, and Korean.
In 2013, Twitter emerged as one of the ten most-visited websites on the Internet and has been described as “the SMS of the Internet”.
On November 6, 2013, Twitter priced its initial public offering (IPO) at $26 per share, which closed at $44.90 next day, giving the company a valuation of over $31 billion.
As of 2019, Twitter is ranked 41 of the top 500 websites on the web, Alexa web traffic analysis.
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