Twitter makes IPO filing public with implied $12.8 billion value

Company seeking to raise $1 billion

War Chest

The IPO gives Twitter’s backers and early employees a chance to cash in shares, and will supply the company with a war chest to use on acquisitions and international expansion. The funds will also help the company forge stronger ties with advertisers and media businesses who want to reach Twitter’s growing audience.

Twitter said it intends to use the IPO proceeds “to increase our capitalization and financial flexibility, create a public market for our common stock and enable access to the public equity markets for us and our stockholders.” The company said it anticipates capital expenditures this year of $225 million to $275 million.

Twitter said its biggest shareholders include co-founder Evan Williams, with a 12 percent stake; venture capital firm Benchmark and partner Peter Fenton with 6.7 percent; co-founder and chairman Jack Dorsey, with a 4.9 percent slice and CEO Costolo with 1.6 percent.

Governance Structure

The S-1 also revealed Twitter is different from other Internet companies in its governance structure. Unlike the boards of Facebook, LinkedIn Corp. and Google Inc., which created multiple classes of stock to give extra voting power to their founders, Twitter has just one class.

“Here you have a company that is probably going to be more democratic than some of those other businesses may be,” said Charley Moore, founder of Rocket Lawyer Inc., a startup that provides legal service for customers, including Twitter employees. “They don’t have any special rights for their major shareholders.”

Twitter has rapidly expanded revenue since introducing advertising in 2010. The company now lets marketers pay to give their posts prominent placement on timelines, where people get updates from the accounts they follow. The company also lets advertisers pay to be placed next to a list of popular topics on Twitter in different geographies.

Costs have soared as Twitter invests in infrastructure and hiring, totaling $316.5 million in the first six months of this year, up 87 percent from the same period in 2012.

“They are building their company for the long term and they have to spend money to do that,” said Gartner’s Blau.

Twitter has struck deals with video-content owners from the National Football League to Viacom Inc., seeking to get users spending more time on the site and watching more ads. It also bought Bluefin Labs, a Cambridge, Massachusetts-based startup that monitors social-media comments about TV shows, and partnered with Nielsen Holdings NV to measure the amount of online discussion being generated by TV programs.

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