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Twitter, Snap, Pinterest Chase Profits In Facebook's Long Shadow

Social media advertising has boomed in recent years, but challengers such as Twitter, Snap and Pinterest still face a steep uphill climb in clawing revenues away from Facebook. Facebook did the heavy lifting of proving that free social media services could translate into billions in revenue, with the company hauling in a whopping $55.84 billion in global revenues in 2018, and it has yet to see its growth falter even as rivals have arrived on the scene.

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Facebook's 2004 launch date and sizable head start make direct comparisons challenging, but the rest of the social media pack are on similar arcs. Twitter, Snap and Pinterest each attracted significant venture capital interest and landed huge funding rounds in their early years, enabling each to operate for three to four years before generating any revenues.

Each eventually completed high-profile IPOs that provided funds to scale up operations, with 2018 revenues ranging from $3.04 billion for Twitter to $756.6 million for Pinterest. Looking at total revenues for Year Five of operation for each company, however, shows a much tighter race, with Snap actually outperforming both Twitter and Pinterest.

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Shifting the focus to operating income and loss, Twitter is the only one of the three newer platforms to consistently report positive operating income. After years of operating losses, Twitter reported operating income of $7.3 million in the third quarter of 2017 — about 11 years after it was founded and almost four years after its November 2013 IPO — and saw total annual operating income of $38.7 million in 2017 and $453.3 million in 2018.

Both Snap and Pinterest reported operating losses for 2017 and 2018, with Snap's $3.49 billion operating loss in 2017 significantly inflated by one-time expenses related to its March 2017 IPO. Pinterest's own IPO in April 2019 saw its operating loss balloon in the second quarter of 2019 due to one-time expenses, but the company generated a small amount of operating income in the fourth quarters of 2017 and 2018 and had narrowed its annual operating losses heading into its IPO.

 

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Facebook's dominant share of revenues may be intact, but its ballooning headcount — with Facebook's 35,587 employees as of December 2018 rising 41.8% on an annual basis — and soaring costs associated with U.S. Federal Trade Commission fines and increased regulatory scrutiny could give its smaller rivals a glimmer of hope. Facebook generates far more revenue per employee, but that metric has declined each year since 2016 while Pinterest, Snap and Twitter have steadily improved as revenue gains have outstripped increases in headcount. 

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Facebook, Snap and Pinterest soar while Twitter's growth stumbles

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