Twitter released its S-1 document on Thursday, giving potential investors and members of the media their first look at the numbers behind the popular micro-blogging site.
As journalists and potential investors flock toward the company's user figures and reported revenues, it's easy to overlook another aspect of the S-1 which may pose some food for thought: Twitter's self-identified risk factors.
For Twitter, the biggest risk to the company's longterm viability seems to be the potential loss of user retention. Twitter has seen substantial user growth over the past few years, going from 167 million monthly actives last September to 218 million at the time of the filing, a growth of more than 30% in the past year. But the fear is that this growth will start to slow, ultimately leading to a plateau.
"We anticipate that our user growth rate will slow over time as the size of our user base increases," Twitter stated in the S-1. The company will need to rely on growth in foreign markets to make up for slowed growth here in the United States, the document continues.
It's only natural that user growth will slow, especially in the United States where adoption is already high. The key for Twitter will be increasing engagement with the users it already has, a task much easier said than done.
Twitter has spent the last several months working to build up that engagement, particularly around the area known as second-screen viewing. When television viewers aren't watching the game or their favorite TV show, Twitter wants to be their second screen, prompting conversation and discussion about those shows on the platform.
To ensure that this happens, Twitter has brought on a number of advertising partners in the last few months, including major partnerships with CBS and the NFL last week that will keep nearly-live television content on users' Twitter streams.
Another potential risk to the company: driving users away with an influx of ads and spam. Twitter will need to bring in revenue from somewhere, and ads already accounted for 87% of the company's revenues for the first six months of 2013.
"Twitter will be most successful if nothing changes from its user experience," Nate Elliott, VP and principal analyst at Forrester Research told Mashable last month. It'll be interesting to see whether or not the company is able to meet Wall Street expectations without negatively altering the user experience.
Twitter also mentioned that continued consolidation by competitors like Facebook, Google, LinkedIn and Yahoo could reduce Twitter's functionality with other apps, citing Instagram as a primary example. When Facebook bought Instagram last year, Twitter users were no longer able to embed photos within tweets. Instagram photos now shared on Twitter contain a link that send users back to Instagram.
"Any similar elimination of integration with Twitter in the future, whether by Facebook or others, may adversely impact our business and operating results," according to the S-1.
As journalists and potential investors flock toward the company's user figures and reported revenues, it's easy to overlook another aspect of the S-1 which may pose some food for thought: Twitter's self-identified risk factors.
For Twitter, the biggest risk to the company's longterm viability seems to be the potential loss of user retention. Twitter has seen substantial user growth over the past few years, going from 167 million monthly actives last September to 218 million at the time of the filing, a growth of more than 30% in the past year. But the fear is that this growth will start to slow, ultimately leading to a plateau.
"We anticipate that our user growth rate will slow over time as the size of our user base increases," Twitter stated in the S-1. The company will need to rely on growth in foreign markets to make up for slowed growth here in the United States, the document continues.
It's only natural that user growth will slow, especially in the United States where adoption is already high. The key for Twitter will be increasing engagement with the users it already has, a task much easier said than done.
Twitter has spent the last several months working to build up that engagement, particularly around the area known as second-screen viewing. When television viewers aren't watching the game or their favorite TV show, Twitter wants to be their second screen, prompting conversation and discussion about those shows on the platform.
To ensure that this happens, Twitter has brought on a number of advertising partners in the last few months, including major partnerships with CBS and the NFL last week that will keep nearly-live television content on users' Twitter streams.
Another potential risk to the company: driving users away with an influx of ads and spam. Twitter will need to bring in revenue from somewhere, and ads already accounted for 87% of the company's revenues for the first six months of 2013.
"Twitter will be most successful if nothing changes from its user experience," Nate Elliott, VP and principal analyst at Forrester Research told Mashable last month. It'll be interesting to see whether or not the company is able to meet Wall Street expectations without negatively altering the user experience.
Twitter also mentioned that continued consolidation by competitors like Facebook, Google, LinkedIn and Yahoo could reduce Twitter's functionality with other apps, citing Instagram as a primary example. When Facebook bought Instagram last year, Twitter users were no longer able to embed photos within tweets. Instagram photos now shared on Twitter contain a link that send users back to Instagram.
"Any similar elimination of integration with Twitter in the future, whether by Facebook or others, may adversely impact our business and operating results," according to the S-1.
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