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Twitter vs. Snap vs. Pinterest

Pinterest IPO'd this week, so I thought it would be a good opportunity to compare it to its peers in the space (Digital media? Social network? You decide!). Twitter is, of course, the old dog of the group, having launched in 2006 and IPO'd in 2013. Snap sprouted around the same time as Twitter's IPO, in 2012, and IPO'd in 2017. Pinterest falls somewhere in the middle, having launched in 2010 but taking the now-popular long path, to the public markets.


2017

TwitterSnapPinterest
Revenue:$2,443,299$824,949$472,852
Cost of Rev:$861,242(35%)$717,462(87%)$178,664(38%)
SG&A:$1,001,307(41%)$2,058,200(250%)$224,149(47%)
R&D:$542,010(22%)$1,534,863(186%)$207,973(44%)
$38,740-$3,485,576-$137,934

It's easy to tell that Twitter had the most mature business, in 2017. Cost of revenue came in at 35% of sales (revenue), while R&D came in at 22% of sales. Only SG&A seemed high, at 41%. Snap appears to still be in "startup mode", blowing through money like there's no tomorrow. That's not a good look, for a seven year old company. Pinterest was definitely leaning towards a decent business model, but spending a lot on SG&A and R&D.

At the end of 2017 Twitter had 3,372 employees, which equates to $724,585 of revenue per employee. Snap had 3,069 employees, accounting for $268,801 of revenue per employee. I estimated the number of Pinterest employees in 2017 at 1,361 which equates to $347,430 of revenue per employee. Just for comparison, in 2017 Alphabet Inc. made $1.4 million dollars per employee. Scale is good! And trying to compete when you don't have scale is really, really hard.

2018

TwitterSnapPinterest
Revenue:$3,042,359$1,180,446$755,932
Cost of Rev:$964,997(32%)$798,865(68%)$241,584(32%)
SG&A:$1,070,179(35%)$877,846(74%)$337,407(45%)
R&D:$553,858(18%)$772,185(65%)$251,662(33%)
$453,325-$1,268,450-$74,721

All three companies were looking better in 2018, but as you can see Snap still has a long way to go, in order to bring their spending inline with sales (or grow sales to support their spending?). Twitter grew its headcount 16%, to 3,920 employees and made $776,112 of revenue per person. Snap reduced its headcount 6% to 2,884 employees and generated $409,309 per person. Pinterest grew its headcount 32% to 1,797 employees and generated $420,663 per person.

I think the takeaway from this is that Twitter has a healthy business and deserves a higher multiple than either Snap or Pinterest. For its part, I do think Pinterest has the discipline to continue growing the business without breaking the bank. For the right price, I wouldn't mind owning some shares.

-- Scrib