undefined | Better HN

0 pointsminimax12y ago0 comments

FWIW Twitter lists GAAP numbers above non-GAAP. They're also pretty up front about the fact that the discrepancy between GAAP and non-GAAP is stock-based compensation.

https://investor.twitterinc.com/releasedetail.cfm?ReleaseID=...

0 comments

6 comments · 2 top-level

pdq12y ago· 2 in thread

Agreed, Twitter at least reported them in the correct order.

Non-GAAP is still a sham in this case, because ignoring employee stock compensation to boost your earnings is like ignoring employee salaries to boost your earnings. It does not make sense for anything other than attempting to deceive investors.

minimaxOP12y ago

Yeah I'm not really sure why that's such a popular thing, but I don't think investor deception is the point of it. I think I could argue that high stock-based compensation charges in the first few quarters after an IPO are an artifact of the way GAAP treats stock-based compensation in the first place.

tanzam7512y ago

But GAAP is handling it correctly. The dilution that stockholders will experience from stock-based compensation is very much real. And the earnings should reflect that.

Non-GAAP numbers are almost always done to deceive investors. In the dot-com days, it was EBITDA. These days, it's earnings before stock-based compensation.

1 more reply

boomzilla12y ago· 2 in thread

what's even more outrageous about this balance sheet is that in 2013, in order to generate 664M revenue, they spent:

1) 266M on content acquisition 2) 600M on R & D 3) 312M on on sales and marketing 4) 123M on general administration

If this is not a Ponzi scheme, I don't know what is.

Oh, by the way, please down vote me for citing these numbers.

minimaxOP12y ago

It's not a Ponzi scheme. A Ponzi scheme requires some element of fraud, yet here you have Twitter's earnings statement and balance sheet right out in the open. There are reasonable people who think investing in a company presently running at a loss but with a potential for generating huge profits is a reasonable thing to do.

Just poking at your numbers a bit, of that 600M in R&D, 379M was from stock based compensation that hit them in the 4th quarter because of the IPO (they had to expense the RSUs at that point). Don't you think it's a little strange that $400M of the $600M in R&D costs were accrued in the 4th quarter?

I'm not advocating buying Twitter stock. Just trying to counter some of the overzealous cynicism in this thread.

steffan12y ago

Your numbers are fine, but I wish I could downvote you for the passive-aggressive “...please down vote me for citing these numbers.”

j / k navigate · click thread line to collapse

0 comments

6 comments · 2 top-level

pdq12y ago· 2 in thread

Agreed, Twitter at least reported them in the correct order.

minimaxOP12y ago

tanzam7512y ago

But GAAP is handling it correctly. The dilution that stockholders will experience from stock-based compensation is very much real. And the earnings should reflect that.

Non-GAAP numbers are almost always done to deceive investors. In the dot-com days, it was EBITDA. These days, it's earnings before stock-based compensation.

1 more reply

boomzilla12y ago· 2 in thread

what's even more outrageous about this balance sheet is that in 2013, in order to generate 664M revenue, they spent:

1) 266M on content acquisition 2) 600M on R & D 3) 312M on on sales and marketing 4) 123M on general administration

If this is not a Ponzi scheme, I don't know what is.

Oh, by the way, please down vote me for citing these numbers.

minimaxOP12y ago

I'm not advocating buying Twitter stock. Just trying to counter some of the overzealous cynicism in this thread.

steffan12y ago

Your numbers are fine, but I wish I could downvote you for the passive-aggressive “...please down vote me for citing these numbers.”

j / k navigate · click thread line to collapse