Photo: Matt Rosoff Business Insider
Gawker’s report that Twitter’s Q1 2011 revenue was just $23.8 million on operational costs of $49.2 million is interesting because of how closely the anonymously sourced data tracks previous estimates of Twitter’s ad revenue.It also suggests that the microblogger has a ways to go before its ad business—96 per cent of its revenue—generates enough money to make it profitable.
It’s a challenge—because Twitter’s advertisers don’t spend very much compared to how much the company spends in operating costs per employee—but it’s doable, the back-of-the-envelope maths suggests.
Based on the new numbers, Twitter probably spends about $233,644 per employee, annually, including salaries, healthcare, IT and overhead, in operating costs.
Its advertisers, however, spend only about $56,000 per client (that number comes from dividing its estimated annual revenue (about $140 million) by its total number of advertisers, about 2,400. Twitter is trying to get its advertisers to spend more than $15,000 per campaign.
Put another way, because Twitter’s operating costs are about double its revenues, the combined work of each Twitter employee needs to generate at least five average advertisers annually, or at least 16 low-end advertisers.
Here’s my maths. The obvious caveat is that these numbers are based on observers’ estimates and on Gawker’s leaked numbers, which are old:
- Gawker said Q1 2011 revenue was $23.8 million.
- eMarketer previously estimated annual 2011 revenue at $140 million.
- Assuming a growth rate, the Gawker Q1 number could easily dovetail with the eMarketer annual estimate.
- Twitter appears to have 856 employees, according to its employee page.
- Gawker says Twitter’s quarterly operational expenses are $49.2 million. Multiply that by four quarters = ~$200 million, with no growth rate. That’s about $60 million more than its estimated revenues.
- Divide $20 million by 856 = $233,644 per employee in costs.
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