Twitter Sells $1.3B In Bonds To Fund Future Acquisitions

It looks like Twitter is preparing to do some early Christmas shopping.

Marking its first debt offering, the microblogging giant is selling $1.3 billion in convertible bonds, which will likely go to future investments and acquisitions.

In a filing released Wednesday, Twitter would only say that it planned to use the bulk of the funds “for general corporate purposes.” A company spokesperson declined to comment on the transaction on Thursday.

Two separate debt offerings of $650 million include potential increases of $100 million each, which could ultimately add up to a total of $1.5 billion.

Not afraid to spread its wealth around, Twitter already snatched up Namo Media and TapCommerce this year -- both intended to improve Twitter’s mobile ad efforts. TapCommerce reportedly had a price tag of about $100 million.

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For undisclosed sums, Twitter also recently bought security software start-ups Mitro and Madbits -- a “deep learning” entity that boasts the ability to “understand” the content of an image, whether or not there are tags associated with that image.

The move also comes about two months after Twitter brought in Anthony Noto as its new CFO. Formerly managing director in the Technology, Media and Telecom Investment Banking Group at Goldman Sachs, Noto helped the company go public last year. With the switch -- which moved its then CFO Mike Gupta to the role of senior vice president of strategic investments  -- Twitter was clearly hoping to improve its relationship with Wall Street.

During the first quarter of the year, the company beat analysts’ earnings estimates, but slower user growth continued to cloud its outlook. (During the first quarter, monthly active users rose about 25% to roughly 255 million -- down from the 30% user growth that Twitter reported the previous quarter.)

More recently, Twitter saw revenue surge 124% to $312 million in the second quarter. The company also posted adjusted earnings of 2 cents a share -- compared to a loss of 12 cents a share year-over-year. Critical to many investors, the number of monthly active users also grew by 24% to 271 million, which was faster than some analysts expected.

Citing a number of factors -- from a brighter ad industry outlook to the addition of TapCommerce to Twitter’s ad technology stack -- UBS analyst Eric Sheridan upgraded Twitter’s stock from Neutral to Buy, this week.

As of June 30, Twitter already had cash, cash equivalents and marketable securities totaling about $2.1 billion -- down from $2.2 billion at the end of March.

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