Twitter - Is It Really A Business?

Today Twitter published its 2Q 2015 results. Below I put three charts showing the basic measures.

Firstly, a chart showing revenue and operating losses incurred by the company.

Note: operating loss for 2015 is calculated as: 2014 operating loss - 1H 2014 operating loss + 1H 2015 operating loss.

As the chart shows, although revenue generated by the company had been in a rapid increase since 2011, Twitter has not been able to make any profit on its core business.

Another chart - this time it shows revenue and cash flow from core business operations (excluding working capital issues):

Well, this time it looks much better. It seems that the Twitter's core business brings some cash to the company.

Unfortunately, since 2011 Twitter has been reporting a negative free cash flow. Please, look at the chart below:

Free cash flow is calculated using the following formula:

Free Cash Flow = Cash Flow From Operations (including working capital issues) - Investment Expenditures

Investment expenditures contain purchases of property and equipment plus spending on business combinations.

Free cash flow is one of the most important financial measures - if a company is not able to report free cash flow in the long term it's future does not look bright (at least).