October 04, 2013, 4:58 PM — Twitter doesn't seem to have a problem attracting users in international markets, but it definitely has problems making money off them.
More than 75 percent of Twitter's 218 million "monthly active users" reside outside the U.S., the company revealed in its IPO documents made public on Thursday.
International revenue, however, made up only 25 percent of Twitter's total revenue for the three months ended June 30, 2013, the company said. That's a big gap Twitter wants to fill.
To make more money, Twitter has good reasons to look across the pond -- compared to the U.S., the number of its users is growing at a faster rate in many international markets, Twitter said in its documents. Among them: Argentina, France, Japan, Russia, Saudi Arabia and South Africa, the company said.
In those markets and others, Twitter's user base may grow more quickly than the company's revenue. As a result, Twitter said it needs to increase its revenue from the activity generated by its international users in order to grow its business.
That will be hard though, given numerous issues around Internet blackouts, privacy, smaller competitors and differences in advertiser expectations, Twitter said in its IPO filing.
For starters, Twitter is a service based on having Internet access. In some ways, therefore, Twitter is at the mercy of private and government owned service providers who hold the keys to that access. Access to Twitter is blocked in China, for instance, and other countries like Iran, Libya and Syria have intermittently restricted access, primarily for political reasons, Twitter said.
"Governments in other countries may seek to restrict access to our products and services if they consider us to be in violation of their laws," to the detriment of Twitter's users and operating results, the company said.
And in countries where Internet access simply is not all that great, people may not take advantage of certain Twitter features, like rich media in tweets, Twitter said. This could cause problems if Twitter wants to do more overseas with advertising products offered through, say, its Amplify program. Amplify lets broadcasters like ESPN and BBC America place video clips in users' feeds.
And then there are emerging markets like India, where people access Twitter through basic "feature phones" instead of smartphones or the Web. That's not good, Twitter said, because it "limits our ability to deliver certain features to those users and may limit the ability of advertisers to deliver compelling advertisements."