C O M PA N Y N O T E

December 2, 2021

Twitter, Inc. (TWTR) Neutral

Twitter Survey Highlights User Growth Challenge; Better Ad Quality

CONCLUSION
PRICE: US$42.82
This week, we conducted a survey of ~1,500 people in the United States to better
TARGET: US$54.00
understand Twitter usage, and across the following areas: i) user gross adds and churn, 5-year DCF using a 10% discount rate and 4%
ii) ad relevancy, and iii) willingness to pay for extra features. Overall, user growth in terminal growth
the US may be hampered by churn while ad relevancy turned out better than expected.
Thomas Champion
Subscriptions look appealing to a narrow audience. PT moves to $54 from prior $70,
Sr. Research Analyst, Piper Sandler & Co.
reiterate N. 212 284-6132, tom.champion@psc.com
James Callahan, CPA
• US Growth Opportunity Remains; Churn May Be an Issue: Despite outsized cultural Research Analyst, Piper Sandler & Co.
impact, our survey results suggest a user growth opportunity in the US remains. The 212 284-9586, james.callahan@psc.com
majority of respondents (60%) have not used the platform. Within the balance, usage
was evenly split between current users and former users. Churn for the most recent Changes Previous Current
cohort (last 6 months) did improve versus the initial COVID cohort, but remains above Rating — Neutral
pre-COVID levels. With gross adds and churn evenly matched in the most recent period, Price Tgt US$70.00 US$54.00
the set-up for growth looks challenging (and reflected in recent results). FY22E Rev (mil) — US$6,178.2
FY23E Rev (mil) — US$7,522.6
FY22E EBITDA — US$1,435.1
• Consensus Reflects Skepticism on 2023E User Targets: The Street has not yet given
FY23E EBITDA — US$2,100.2
TWTR credit for user targets from Investor Day last February. The Street is modeling
291MM mDAUs for 2023E, 8% below targets (LINK). The picture in the US is more 52-Week High / Low US$80.75 / US$42.80
unclear: Street 2023 user estimates of 45MM are down from 51MM in April and below Shares Out (mil) 798.0
Market Cap. (mil) US$34,169.7
pre-Investor day levels (46MM). 2023E targets were re-affirmed this week after Jack
Avg Daily Vol (000) 14,619
Dorsey stepped down as CEO to be succeeded by former CTO Parag Agrawal (LINK).
Div Yield 0.00%
Fiscal Year End Dec
• Ad Relevancy Better than Expected: As for ad quality, 44% of users deem TWTR ads
to be high quality / relevant, while 25% find them to be medium quality / semi-relevant. On Price Performance - 1 Year
the negative side, roughly a third of users (31%) find ads to be of low quality / not relevant.
USD
80
Results may be partly impacted by the platform's slant toward brand ads (~85%), which 75

are less targeted than performance ads. 70

65

• Subscription Products Have Some Promise: Twitter recently unveiled a subscription 60

55
product with Twitter Blue. The majority of respondents (84%) said they would not pay for
50
features. However, 14% would pay $3/month for additional features and our subscription
45
analysis implies possible 3% upside to 2022E revenue estimates. The most popular
40
features include the ability to edit sent tweets (10%) and better bookmarking (4%). The Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct -21 Dec-21

note provides more detail on Twitter Blue as well as new CEO Agrawal's background, Source: Bloomberg
which includes work with TWTR's decentralized social media initiative Bluesky.

• Price Target: Estimates remain, while discount rate increases to reflect more challenging
operating environment. DCF-based PT moves to $54 from $70 prior, reiterate N.
R I S K S TO A C H I E V E M E N T O F P T & R E C O M M E N D AT I O N
Re-opening of the economy, regulatory risk, execution risk.
C O M PA N Y D E S C R I P T I O N
Twitter is a social networking service where users post messages knows as 'tweets'.
REVENUE (US$ m) EBITDA (US$)
YEAR
Mar Jun Sep Dec FY FY RM Mar Jun Sep Dec FY
2021E 1,036.0A 1,190.4A 1,283.8A 1,579.1 5,089.4 6.7x 294.1A 343.3A 321.2A 449.8 1,408.4
2022E 1,225.1 1,443.8 1,583.7 1,925.6 6,178.2 5.5x 279.7 344.0 325.5 486.0 1,435.1
2023E 1,495.9 1,757.3 1,935.0 2,334.4 7,522.6 4.5x 401.0 502.3 502.1 694.8 2,100.2

Piper Sandler does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only
a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information,
including an attestation under Regulation Analyst Certification, found on pages 10 - 12 of this report or at the following site:
http://www.pipersandler.com/researchdisclosures.
Twitter, Inc. Page 1 of 12
 COMPANY NOTE
December 2, 2021

PSC Proprietary Twitter Survey

We conducted a survey of ~1,500 people in the United States to better understand Twitter usage,
and specifically the following areas: i) gross user adds and churn, ii) ad relevancy, and iii)
willingness to pay for extra features. Overall, user growth in the United States appears to be an
issue while ad relevancy turned out better than we had expected. Also, the majority of users are
not willing to pay for features, but PSC’s calculation suggests a potential 3% upside to 2022
revenue estimates for Twitter Blue.

Majority in United States Do Not Use Twitter

Despite having an outsized cultural impact, Twitter still has an opportunity for user growth. The
majority of respondents (60%) to our PSC Twitter survey have never used the platform. For those
who have used the platform, churn is relatively high: of respondents that used the platform at
some point, there was an even split between current users (20%) and those who have churned
(20%).

Exhibit 1
PSC Twitter Survey: User Cohorts
If you use Twitter (or used to), how long have you used the platform?

Never Been a User 60%

20% Current User 20%

Former User 20%

20% 60%

Never Been a User Current User Former User

Source: PSC, Google Surveys; n=~1500

User Adds: a Tale of Three Cohorts

While current and former users were roughly evenly split, differences arise when looking by
cohort. Answer choices for respondents that started or stopped using the platform fall within the
following timeframes: i) the last 6 months, ii) the last year, and iii) the last 2+ years.

Users in the last 2+ years cohort have the lowest churn of the group, with 25% that started using
2+ years ago versus 20% that have stopped. Users that started within the last year had the
highest churn of the group, with 18% stopping usage in the past year and just 12% that continue to
use. Usage for the last 6 months cohort was roughly even at 13%. It makes sense to us that
churn is highest within the 1-year cohort. These users are more likely to have joined as a result of
COVID lockdowns and less likely to stay longer term. However, churn in the past 6 months cohort
being higher than pre-COVID suggests that retention issues have not yet improved to pre-COVID
levels.

Twitter, Inc. Page 2 of 12

 COMPANY NOTE
December 2, 2021

Exhibit 2
PSC Twitter Survey: User Churn
If you use Twitter (or used to), how long have you used the platform?

25%

20%
18%

13% 13%
12%

Yes, I started using 2+ No, I stopped using 2+ Yes, I started using 1 No, I stopped using 1 Yes, I started using 6 No, I stopped using
years ago years ago year ago year ago months ago Twitter 6 months ago

Yes, I started using 2+ years ago No, I stopped using 2+ years ago Yes, I started using 1 year ago
No, I stopped using 1 year ago Yes, I started using 6 months ago No, I stopped using Twitter 6 months ago

Source: PSC, Google Survey; n=~600

Implied Monthly Churn Relatively High at ~4%

By comparing respondents that stopped using Twitter in the past 6 months to the EOP user base,
we calculate a monthly churn of ~4.3%. This suggests the average life of a Twitter user is ~23
months, a relatively high churn rate. Given this is a simplistic analysis, we wouldn’t overstate the
conclusions. However, over half the user base churning each year demonstrates the challenges
associated with user growth.

Exhibit 3
PSC TWTR Churn Calculation

Recent Churn (last 6 months) 78.0

/ EOP User base 299.0
/ 6 months 6.0
= Im plied churn 4.3%
memo: User life (months) 23.0

Source: PSC, Google Survey

Consensus Reflects Skepticism on Twitter 2023E User Targets

At Twitter’s investor day in February (LINK), management announced medium-term targets of
$7.5BN in revenue and 315MM Global mDAUs by 2023. While Consensus 2023 Street mDAU
estimates did improve from ~250MM in January to ~280MM post-Investor Day, the Street remains
skeptical and has not yet given management full credit for the target. Estimates today of 291MM
mDAUs by 2023 have held steady since March but remain 8% below 2023 Investor Day targets.

Twitter, Inc. Page 3 of 12

 COMPANY NOTE
December 2, 2021

Exhibit 4
Consensus Global & International mDAU Estimates 2023 (MM, mDAU)
November ’20 – November ‘21

340
Street Global mDAU 2023E
320
estimates of ~291MM still
below TWTR 2023E targets
300

280

260

240

220 TWTR announces 2023E

Global mDAU target of 315MM
200 at Investor Day in February
180

Global mDAUs International mDAUs

Source: VisibleAlpha, PSC

United States mDAU Estimates below Pre-Investor Day Levels

After improving initially to a peak of ~51MM users, Consensus 2023 US mDAU estimates have
now dipped to 45MM, below pre-Investor day levels of ~46MM. User growth domestically appears
to be a greater challenge than anticipated as user growth has stayed roughly flat since 4Q20.

Exhibit 5
Consensus US mDAU Estimates 2023 (MM, mDAU)
November ’20 – November ‘21

54

Consensus 2023E US mDAU

52 estimates now below pre-
Investor Day levels
50

48

46 TWTR announces 2023E

Global mDAU target of 315MM
at Investor Day in February
44

42

Source: VisibleAlpha, PSC

Twitter, Inc. Page 4 of 12

 COMPANY NOTE
December 2, 2021

Ad Relevancy a Modest Positive

In our view, results were a positive read on ad relevance and quality. When asked about overall ad
quality and relevance, responses indicate that 44% of Twitter users find the ads to be high quality /
relevant, while 25% of users find the ads to be medium quality / semi-relevant. Roughly a third of
users (31%) of users find ads to be of low quality or not relevant. The result can be partly
explained by Twitter’s slant toward hosting a majority of brand advertising (85%) which might feel
less ‘relevant’ than a targeted performance advertisement.

Exhibit 6
PSC Twitter Survey: Ad Relevancy
Do you find the advertisements on Twitter to be relevant or useful?

44%

31%

25%

Yes, are are high quality / Yes, ads are low quality / not Yes, ads are medium quality /
relevant relevant semi-relevant

Source: PSC, Google Survey; n=~450

Majority of Users Content with Free Version

The majority of respondents (84%) that use Twitter would not pay for features. However, 10%
would pay for the ability to undo or edit sent tweets. Roughly 4% of Twitter users would pay for
improved threads, and 2% would pay for ad-free articles.

Exhibit 7
PSC Twitter Survey: Extra Features (Twitter Blue)
If you are a Twitter user, would you pay $3/month for extra features?

84%

10%
4% 2% 0% 0%

I use Twitter but Yes, to undo/edit Yes, for improved Yes, for ad-free Yes, for better Yes, for custom app
wouldn't pay for tweets threads articles bookmarking icons
features

Source: PSC, Google Survey; n=~75

Twitter, Inc. Page 5 of 12

 COMPANY NOTE
December 2, 2021

Twitter Blue Shows Potential

Our first impression is that Twitter Blue features could be useful and $3 per month may be money
well spent for a power user. There is also a Labs feature that allows Twitter Blue users early
access to product testing and beta launches. While this is likely not a big monetization driver in the
near-term, in our view this is a smart move if Twitter continues to test and build products
specifically for a cohort of power users.

Features included with Twitter Blue:

 Ad-free viewing of articles for publishers within Twitter Blue publisher’s network
 Reader turns threads into better viewing experience
 Bookmark folders: users can move bookmarked tweets and organize into different folders
(i.e. one for e-commerce, advertising, etc.)
 Top articles shows tweets most re-tweeted by a network
 Undo tweet gives users the option of editing / deleting within 60 seconds of posting

Twitter Blue Could Add ~3% Upside to 2022 Revenue Estimates

Results from our survey demonstrates that ~14% of Twitter users in the United States would be
willing to pay $3 per month for Twitter Blue. Using the 14% across 37MM mDAUs in the United
States and a ~$36 annual subscription would bring ~$186MM in revenue, or 3% upside to our
2022 revenue estimates.

Exhibit 8
Twitter Blue Revenue Estimates
2022E

3Q21 US mDAU (MM) 37

% Willing to Pay 14%
Annual Subscription $36
Est. Tw itter Blue Revenue (MM) $186
memo: Upside to 2022E US Ad Revenue 6.4%
memo: Upside to 2022E Total Revenue 3.0%
Source: PSC, Google Survey

Mr. Agrawal’s Work at Twitter Includes Decentralized Applications

Mr. Agrawal joined Twitter in 2011, working his way from a Product Manager to becoming Chief
Technology Officer in October 2017. In December 2019, Mr. Agrawal also began to oversee
‘Bluesky’, an initiative started within Twitter and announced by Mr. Dorsey in 2019. The goal of
Blusesky is to develop an “open and decentralized standard for social media” that would have its
own systems of content moderation and allow different social networks to communicate with each
other through an open standard. A decentralized protocol could limit the need for centralized
responsibility with regards to controversial topics like content moderation. Twitter is also building
out a crypto team (Twitter Crypto) that will begin working with Bluesky team members.

New Private Media Policy Creates Complications

This week Twitter also announced an update to its private information policy, to now include
media. Going forward users will not be allowed to share private media such as images or videos
without their consent. This is an update from the current policy, which does not allow the posting
(or encouraging others to do so) of people’s private information. In theory this would create a
‘safer’ platform for advertising but will likely come with consumer backlash.

Twitter, Inc. Page 6 of 12

 COMPANY NOTE
December 2, 2021

Changes to Price Target

New estimates flow into our DCF. We’ve increased our discount rate to 10% from 9% to reflect a
more challenging operating environment in the short-term. PT moves to $54 from $70 prior;
reiterate Neutral. At this point, we’d recommend to investors allocating toward top picks GOOGL
and SNAP in the digital ad space. That said, our preliminary post-IDFA work is suggesting clear
benefits from scale. This perhaps favors FB (in addition to GOOGL) at this time.

Exhibit 9
DCF
2021E 2022E 2023E 2024E 2025E 2026E TV
Revenues $5,089 $6,178 $7,523 $9,116 $10,527 $12,045 $13,782
- Cash Opex (3,681) (4,743) (5,422) (6,115) (6,711) (7,361) (7,994)
Adj EBITDA $1,408 $1,435 $2,100 $3,001 $3,816 $4,684 $5,788
- Depreciation 533 557 645 743 815 885 1,034
= EBIT $875 $878 $1,455 $2,258 $3,002 $3,799 $4,755
- Tax 175 176 291 452 600 760 951
+ Depreciation 533 557 645 743 815 885 1,034
- Capex 982 896 903 985 966 940 1,034
- Net Working Capital 887 321 140 213 203 190 0
= Unlevered FCF ($635) $43 $767 $1,351 $2,047 $2,794 $3,804
/ Discount factor 1.1 1.2 1.3 1.5 1.6 1.8
= Discounted Cash Flow ($578) $36 $576 $923 $1,271 $1,577

memo: Capex / revenues 19.3% 14.5% 12.0% 10.8% 9.2% 7.8% 7.5%
memo: Depreciation / Capex 54.3% 62.2% 71.4% 75.4% 84.3% 94.2% 100.0%
memo: Revenue grow th - Y/Y 21.4% 21.8% 21.2% 15.5% 14.4% 14.4%
memo: EBITDA grow th - Y/Y 1.9% 46.3% 42.9% 27.2% 22.8% 23.6%
memo: Capex grow th - Y/Y (8.8%) 0.8% 9.1% (1.9%) (2.7%) 10.0%
memo: UFCF grow th - Y/Y NMF 1676.4% 76.3% 51.4% 36.5% 36.1%
memo: EBITDA margin 27.7% 23.2% 27.9% 32.9% 36.3% 38.9% 42.0%

Per-Share Calculation
Terminal FCF 3,804
/ (r - g) 6%
= Term inal Value $63,397
/ Discount rate 1.8
= PV Term inal Value 35,786
+ PV FCF 3,805
= PV FCFs 39,591
- Debt 3,557
+ Cash 7,411
+ Adjustments 0
= Equity Value $43,446
/ Shares Outstanding 798.0
= $ / Share Value $54
memo : % Upside to Current Price 24%

Drivers
Discount rate 10%
Tax rate 20%
Terminal grow th 4%

Source: PSC

Twitter, Inc. Page 7 of 12

 COMPANY NOTE
December 2, 2021

We rate GOOGL ($2,821.03) Overweight with a $3,150 price target based on 5-year DCF using a
10% discount rate and 3% terminal growth rate. Risks: Regulatory and anti-trust risk, re-opening of
the economy, and execution risk.

We rate SNAP ($47.26) Overweight with a $75 price target based on 5-year DCF using a 9%
discount rate and 4% terminal growth rate. Risks: Re-opening of the economy, regulatory risk,
valuation.

We rate FB ($310.60) Neutral with a $385 price target based on 5-year DCF using a 9% discount
rate and 2% terminal growth rate. Risks: Our forecasts will prove too conservative if user growth or
monetization materially exceeds our forecast. Alternatively, downside risks include lower user
growth and competition.

Twitter, Inc. Page 8 of 12

 TWTR Tom Champion
Income Statement 212-284-6132
$, 000 tom.champion@psc.com
Last updated: 10/26/2021 2021E 2022E 2023E
2018 2019 2020 1Q 2Q 3Q 4Q 2021E 1Q 2Q 3Q 4Q 2022E 1Q 2Q 3Q 4Q 2023E 2024E 2025E 2026E

Revenue $3,042,359 $3,459,329 $3,716,349 $1,036,018 $1,190,427 $1,283,817 $1,579,090 $5,089,352 $1,225,135 $1,443,774 $1,583,709 $1,925,622 $6,178,239 $1,495,885 $1,757,339 $1,935,000 $2,334,420 $7,522,644 $9,116,286 $10,526,563 $12,044,817
Costs and expenses
Cost of revenue 964,997 1,137,041 1,366,388 381,008 416,932 484,479 552,682 1,835,101 461,822 518,305 612,592 690,817 2,283,535 530,050 593,020 673,627 774,663 2,571,360 2,804,483 3,157,374 3,576,637
Research and development 553,858 682,281 873,011 250,709 299,859 324,252 327,661 1,202,481 303,886 372,767 409,995 409,556 1,496,204 341,126 418,579 462,239 449,813 1,671,757 1,924,616 2,000,117 2,059,736
Sales and marketing 771,361 913,813 887,860 234,592 301,902 301,078 355,295 1,192,867 284,350 375,307 380,693 444,097 1,484,447 329,831 411,136 441,880 511,457 1,694,304 2,001,904 2,253,806 2,514,402
General and administrative 298,818 359,821 562,432 117,527 141,482 916,556 201,334 1,376,899 142,455 175,882 190,045 251,655 760,037 165,240 203,377 220,590 289,825 879,033 1,011,990 1,110,116 1,206,717
Total costs and expenses 2,589,034 3,092,956 3,689,691 983,836 1,160,175 2,026,365 1,436,972 5,607,348 1,192,513 1,442,261 1,593,325 1,796,124 6,024,222 1,366,247 1,626,112 1,798,335 2,025,758 6,816,453 7,742,993 8,521,413 9,357,492
Income (loss) from operations 453,325 366,373 26,658 52,182 30,252 (742,548) 142,118 (517,996) 32,622 1,513 (9,616) 129,498 154,017 129,638 131,227 136,665 308,661 706,191 1,373,293 2,005,150 2,687,325
Interest expense (132,606) (138,180) (152,878) (13,185) (13,893) (13,284) (15,791) (56,153) (14,367) (15,406) (14,803) (17,331) (61,907) (16,046) (16,995) (16,152) (18,675) (67,868) (273,489) (315,797) (361,345)
Interest income 111,221 157,703 88,178 11,001 9,202 8,125 15,791 44,119 12,251 14,438 15,837 19,256 61,782 14,959 17,573 19,350 23,344 75,226 91,163 105,266 120,448
Other income (expense), net (8,396) 4,243 (12,897) 6 55,739 20,625 (3,948) 72,422 (3,063) (3,609) (3,959) (4,814) (15,446) (3,740) (4,393) (4,838) (5,836) (18,807) (22,791) (26,316) (30,112)
Income (loss) before income taxes 423,544 390,139 (50,939) 50,004 81,300 (727,082) 138,170 (457,608) 27,444 (3,064) (12,542) 126,610 138,447 124,811 127,412 135,026 307,494 694,743 1,168,177 1,768,303 2,416,317
Provision (benefit) for income taxes (782,052) (1,075,520) 1,084,687 (18,001) 15,651 (190,325) 31,582 (161,093) 18,377 21,657 23,756 28,884 92,674 22,438 26,360 29,025 35,016 112,840 136,744 157,898 180,672
Net income (loss) 1,205,596 1,465,659 (1,135,626) 68,005 65,649 (536,757) 106,589 (296,514) 9,067 (24,721) (36,297) 97,725 45,773 102,373 101,052 106,001 272,478 581,904 1,031,432 1,610,404 2,235,644
7.4%
Earnings per basic share $1.60 $1.90 ($1.43) $0.09 $0.08 ($0.67) $0.13 ($0.37) $0.01 ($0.03) ($0.05) $0.12 $0.06 $0.13 $0.13 $0.13 $0.34 $0.73 $1.29 $2.02 $2.80
Earnings per diluted shares $1.56 $1.87 ($1.39) $0.08 $0.08 ($0.67) $0.13 ($0.37) $0.01 ($0.03) ($0.05) $0.12 $0.06 $0.13 $0.13 $0.13 $0.34 $0.73 $1.29 $2.02 $2.80

Basic shares 754,326 770,729 793,789 795,633 796,472 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985
Diluted shares 772,686 785,531 816,386 872,187 869,180 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985 797,985

Adjusted EBITDA $1,200,796 $1,209,730 $1,146,767 $294,107 $343,266 $321,195 $449,837 $1,408,405 $279,692 $343,992 $325,457 $485,983 $1,435,124 $401,018 $502,253 $502,068 $694,823 $2,100,161 $3,000,799 $3,816,013 $4,684,269
memo: EBITDA Margin 39.5% 35.0% 30.9% 28.4% 28.8% 25.0% 28.5% 27.7% 22.8% 23.8% 20.6% 25.2% 23.2% 26.8% 28.6% 25.9% 29.8% 27.9% 32.9% 36.3% 38.9%
Change - Y/Y 0.7% (5.2%) 39.3% 158.5% 9.2% (11.6%) 22.8% (4.9%) 0.2% 1.3% 8.0% 1.9% 43.4% 46.0% 54.3% 43.0% 46.3% 42.9% 27.2% 22.8%
11.0% 44.8% 50.5% 50.3% 51.1% 49.5% 56.5% 57.8% 57.2%
Change - Y/Y
Revenues 13.7% 7.4% 28.3% 74.2% 37.1% 22.5% 36.9% 18.3% 21.3% 23.4% 21.9% 21.4% 22.1% 21.7% 22.2% 21.2% 21.8% 21.2% 15.5% 14.4%
Cost of revenue 17.8% 20.2% 34.1% 44.7% 34.1% 27.7% 34.3% 21.2% 24.3% 26.4% 25.0% 24.4% 14.8% 14.4% 10.0% 12.1% 12.6% 9.1% 12.6% 13.3%
Research and development 23.2% 28.0% 25.1% 38.9% 55.2% 32.2% 37.7% 21.2% 24.3% 26.4% 25.0% 24.4% 12.3% 12.3% 12.7% 9.8% 11.7% 15.1% 3.9% 3.0%
Sales and marketing 18.5% (2.8%) 6.0% 45.6% 39.9% 45.6% 34.4% 21.2% 24.3% 26.4% 25.0% 24.4% 16.0% 9.5% 16.1% 15.2% 14.1% 18.2% 12.6% 11.6%
General and administrative 20.4% 56.3% 7.5% (42.5%) 869.1% 79.4% 144.8% 21.2% 24.3% (79.3%) 25.0% (44.8%) 16.0% 15.6% 16.1% 15.2% 15.7% 15.1% 9.7% 8.7%
Total costs and expenses 19.5% 19.3% 20.7% 21.2% 130.2% 38.6% 52.0% 21.2% 24.3% (21.4%) 25.0% 7.4% 14.6% 12.7% 12.9% 12.8% 13.2% 13.6% 10.1% 9.8%
Income (loss) from operations (19.2%) (92.7%) (801.1%) (111.0%) (1423.4%) (43.6%) (2043.1%) (37.5%) (95.0%) (98.7%) (8.9%) (129.7%) 297.4% 8572.4% (1521.2%) 138.4% 358.5% 94.5% 46.0% 34.0%

% of Revenue
Cost of revenue 31.7% 32.9% 36.8% 36.8% 35.0% 37.7% 35.0% 36.1% 37.7% 35.9% 38.7% 35.9% 37.0% 35.4% 33.7% 34.8% 33.2% 34.2% 30.8% 30.0% 29.7%
Research and development 18.2% 19.7% 23.5% 24.2% 25.2% 25.3% 20.8% 23.6% 24.8% 25.8% 25.9% 21.3% 24.2% 22.8% 23.8% 23.9% 19.3% 22.2% 21.1% 19.0% 17.1%
Sales and marketing 25.4% 26.4% 23.9% 22.6% 25.4% 23.5% 22.5% 23.4% 23.2% 26.0% 24.0% 23.1% 24.0% 22.0% 23.4% 22.8% 21.9% 22.5% 22.0% 21.4% 20.9%
General and administrative 9.8% 10.4% 15.1% 11.3% 11.9% 71.4% 12.8% 27.1% 11.6% 12.2% 12.0% 13.1% 12.3% 11.0% 11.6% 11.4% 12.4% 11.7% 11.1% 10.5% 10.0%
Total costs and expenses 85.1% 89.4% 99.3% 95.0% 97.5% 157.8% 91.0% 110.2% 97.3% 99.9% 100.6% 93.3% 97.5% 91.3% 92.5% 92.9% 86.8% 90.6% 84.9% 81.0% 77.7%
Income (loss) from operations 14.9% 10.6% 0.7% 5.0% 2.5% (57.8%) 9.0% (10.2%) 2.7% 0.1% (0.6%) 6.7% 2.5% 8.7% 7.5% 7.1% 13.2% 9.4% 15.1% 19.0% 22.3%
Interest expense (4.4%) (4.0%) (4.1%) (1.3%) (1.2%) (1.0%) (1.0%) (1.1%) (1.2%) (1.1%) (0.9%) (0.9%) (1.0%) (1.1%) (1.0%) (0.8%) (0.8%) (0.9%) (3.0%) (3.0%) (3.0%)
Interest income 3.7% 4.6% 2.4% 1.1% 0.8% 0.6% 1.0% 0.9% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Other income (expense), net (0.3%) 0.1% (0.3%) 0.0% 4.7% 1.6% (0.3%) 1.4% (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%) (0.3%)
Income (loss) before income taxes 13.9% 11.3% (1.4%) 4.8% 6.8% (56.6%) 8.8% (9.0%) 2.2% (0.2%) (0.8%) 6.6% 2.2% 8.3% 7.3% 7.0% 13.2% 9.2% 12.8% 16.8% 20.1%
Provision (benefit) for income taxes (25.7%) (31.1%) 29.2% (1.7%) 1.3% (14.8%) 2.0% (3.2%) 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%

Current disclosure information for this company is located at: http://www.pipersandler.com/researchdisclosures

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IMPORTANT RESEARCH DISCLOSURES

Rating and Price Target History for: Twitter, Inc. (TWTR) as of 12-01-2021
01/20/21 02/09/21 02/25/21 04/29/21 07/22/21 10/26/21
I:N:$45 N:$61 N:$71 N:$66 N:$76 N:$70
80
70
60
50
40
30
20
Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

Created by: BlueMatrix

Rating and Price Target History for: Alphabet, Inc. (GOOGL) as of 12-01-2021
01/20/21 02/02/21 04/27/21 07/27/21 10/26/21
I:OW:$2056 OW:$2250 OW:$2635 OW:$3034 OW:$3150
3,500
3,000
2,500
2,000
1,500
1,000
500
Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

Created by: BlueMatrix

Rating and Price Target History for: Snap, Inc. (SNAP) as of 12-01-2021
01/20/21 02/23/21 07/22/21 10/22/21
I:OW:$66 OW:$83 OW:$85 OW:$75
100

80

60

40

20

0
Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

Created by: BlueMatrix

Rating and Price Target History for: Facebook, Inc. (FB) as of 12-01-2021
10/31/18 01/31/19 03/26/19 12/03/19 03/20/20 01/20/21 01/27/21 04/29/21 07/28/21
OW:$190 OW:$195 DOC:NA I:OW:$230 SUS:NA I:N:$275 N:$285 N:$335 N:$385
400
350
300
250
200
150
100
Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

Created by: BlueMatrix

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Notes: The boxes on the Rating and Price Target History chart above indicate the date of the fundamental Equity Research Note, the rating and the price
target. Each box represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the
first Note written during the past three years.
Legend:
I: Initiating Coverage
R: Resuming Coverage
T: Transferring Coverage
D: Discontinuing Coverage
S: Suspending Coverage
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Distribution of Ratings/IB Services

Piper Sandler

IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [OW] 672 66.60 293 43.60
HOLD [N] 333 33.00 72 21.62
SELL [UW] 4 0.40 0 0.00

Note: Distribution of Ratings/IB Services shows the number of companies currently covered by fundamental equity research in each rating category from
which Piper Sandler and its affiliates received compensation for investment banking services within the past 12 months. FINRA rules require disclosure
of which ratings most closely correspond with "buy," "hold," and "sell" recommendations. Piper Sandler ratings are not the equivalent of buy, hold or sell,
but instead represent recommended relative weightings. Nevertheless, Overweight corresponds most closely with buy, Neutral with hold and Underweight
with sell. See Stock Rating definitions below.

Analyst Certification
The analyst Thomas Champion, primarily responsible for the preparation of this research report, attests to the following:

The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my
compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Piper Sandler research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

Time of dissemination: 2 December 2021 03:26EST.

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Research Disclosures
Piper Sandler will buy and sell the securities of Twitter, Inc. on a principal basis.
Piper Sandler will buy and sell the securities of Alphabet, Inc. on a principal basis.
Piper Sandler will buy and sell the securities of Snap, Inc. on a principal basis.
Piper Sandler will buy and sell the securities of Facebook, Inc. on a principal basis.

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