‘We have a truckload of cash’ so don’t expect IPO, says Twitter chief

Speaking at the the company’s San Francisco headquarters, he said the online messaging service had brought in more management talent and upgraded its operations so it could handle big spikes in activity.,

Twitter is ready to get more serious about building a successful business, Costolo said, but added that goal should not be interpreted as a sign that the five-year-old company is poised to pursue an initial public offering of stock – a move that would require the company to reveal for the first time how much money it is making.

Twitter does not need the money because it has just raised $400 million (£250m) from venture capitalists and other investors. With such a large financial cushion, Costolo indicated Twitter is unlikely to pursue an IPO next year.

“We now have what can only be referred to as a truckload of money in the bank,” Costolo said. “We did that because we want to be in control of our destiny and grow the company the way we want to.”

The best way to do that, Costolo argued, is to show more adverts to Twitter’s worldwide audience of some 100 million active users. About half of those users log on to Twitter each day, a sign that the service is becoming addictive.

Twitter is becoming such a rich source of information and entertainment, Costolo said, that roughly 40 million active users log into the service without ever posting a tweet.

This group of so-called “lurkers” just read what’s going on among the people they are following or use the site to search for something. Even with so many users staying silent, Twitter says it processes about 230 million tweets per day, more than doubling its volume since the beginning of this year.

With so many people immersing themselves on Twitter, the company thinks the timing is right for more advertisements.

Twitter began showing adverts last year, but limited them to promotions from companies that users had chosen to track.

Now Twitter’s users will gradually start seeing ads from companies they aren’t following. In an effort to avoid alienating its audience, the internet service will strive to show ads likely to appeal to each user’s interests.

The company thinks it can do this by analysing whom users follow. For instance, a person who follows 30 professional athletes might be likely to see ads about sports equipment or clothing. All ads, known as “promoted tweets,” must comply with Twitter’s 140-character limit.

Twitter is expected to generate about $150m in ad revenue this year, up from $45m last year, according to eMarketer.