Twitter Inc (NYSE:TWTR) Earnings Model
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Model Type: Tier 2, Consensus-Based Model.
Financial Statements: Income Statement and Segment Details.
Model Type: Tier 2, Consensus-Based Model.
Financial Statements: Income Statement and Segment Details.
Revenue Modeling Approach: This model breaks down Twitter’s earnings into two segments: United States and International, and forecasts user growth rates and average Revenue per user for each segment.
Expense Modeling Approach: To estimate Cost of Revenue we use forecasts of Gross Margin percentage, including Traffic Acquisition Costs (TAC). We use ratios to project the three primary operating expense line items: Research & Development, Sales & Marketing, and General & Administrative expense. We use historic averages to estimate Interest & Other Income, and apply an effective tax rate to the future projected income to forecast the Provision for Income Tax.
Non-GAAP Adjustments: Non-GAAP adjustments for Twitter include Stock-Based Compensation (SBC), Amortization of Intangibles, and periodic Restructuring Costs. To project future period SBC we use a ratio of SBC-to-Revenue, and base our estimate of Amortization of Intangibles on a historic average. We allocate the non-GAAP adjustments to operating expenses based on the prior quarter’s allocation. We also project Non-GAAP Adjusted EBITDA.
Share Count Forecast: To forecast the future share count we calculate the historic change in share count, and apply similar changes in future periods.
Valuation Approach: We utilize a market multiple based valuation approach, specifically a Price-Earnings Multiple which we apply to the Next Twelve Month consensus EPS estimate, on an exCash basis.
Expense Modeling Approach: To estimate Cost of Revenue we use forecasts of Gross Margin percentage, including Traffic Acquisition Costs (TAC). We use ratios to project the three primary operating expense line items: Research & Development, Sales & Marketing, and General & Administrative expense. We use historic averages to estimate Interest & Other Income, and apply an effective tax rate to the future projected income to forecast the Provision for Income Tax.
Non-GAAP Adjustments: Non-GAAP adjustments for Twitter include Stock-Based Compensation (SBC), Amortization of Intangibles, and periodic Restructuring Costs. To project future period SBC we use a ratio of SBC-to-Revenue, and base our estimate of Amortization of Intangibles on a historic average. We allocate the non-GAAP adjustments to operating expenses based on the prior quarter’s allocation. We also project Non-GAAP Adjusted EBITDA.
Share Count Forecast: To forecast the future share count we calculate the historic change in share count, and apply similar changes in future periods.
Valuation Approach: We utilize a market multiple based valuation approach, specifically a Price-Earnings Multiple which we apply to the Next Twelve Month consensus EPS estimate, on an exCash basis.