(This story was updated April 29, 2015)
In 2007, Twitter Inc. (NYSE: TWTR) hosted 20,000 tweets per day. By 2010 that figure jumped to 50 million.
Now in 2015 it has more than 302 million monthly active users sending more than 500 million tweets per day.
But those numbers don't mean anything to investors if they can't answer this more important question first: How does Twitter make money?
The short answer: Most of Twitter's revenue comes from advertising - a revenue stream that's benefitted from Twitter's explosive growth.
Here's a closer look for investors at how Twitter operates.
How Twitter Makes Money
Twitter, founded in 2006 in San Francisco, allows users to send 140-character text messages (tweets) to their list of followers. The service is available in 35 languages.
The microblogging service sees massive spikes in tweets during global events or major breaking news stories. During the FIFA World Cup in 2014, more than 652 million tweets were sent. More than 28.4 million tweets mentioning Super Bowl XLIX were sent on Feb.1.
TWTR's last earnings report released April 28, 2015 showed its user base totaled 302 million people at the end of Q1.
That user growth figure is crucial for investors because advertising accounts for 89% of Twitter's revenue. In Q1 2015, Twitter reported its advertising business brought in $388 million in revenue. That was a 74% increase from the previous year.
Roughly 89% of that advertising revenue comes from mobile.
Twitter offers three major advertising methods for reaching its growing user base.
The most popular method is promoted tweets. These allow marketers to buy tweets that show up in users' timelines like any ordinary tweet.
Twitter uses an algorithm that puts these promoted tweets on the timelines of the most appropriate users. For example, if Twitter knows someone is a sports fan, they will place a promoted tweet from a sports apparel retailer on that user's timeline.
Promoted accounts are another way Twitter makes money. This places paid accounts in users' "Who to Follow" section or on users' timelines. Essentially, advertisers pay Twitter to promote them as a desirable account to follow.
Finally, the third advertising method Twitter uses is "Promoted Trends." Here's how those work...
"When a user clicks on a Promoted Trend, search results for that trend are shown in a timeline and a Promoted Tweet created by the advertiser is displayed to the user at the top of those search results," Twitter officials said in 2014.
There is a concern though in how much Twitter will make because its user growth rate has slowed. In Q1, worldwide user growth was 18% year over year. In the previous four quarters it had been 20%, 22%, 24%, and 25%.
Twitter's user growth is important because advertising accounts for the lion's share of Twitter's revenue. The company does, however, generate 11% of revenue from another source - one that can grow Twitter's top line in coming years...
Where the Rest of Twitter's Money Comes From
In Q1, TWTR reported $48 million in revenue from its "data licensing" business. Essentially, Twitter sells the content of tweets to third-party buyers, mostly marketers.
Data licensing may only account for 11% of Twitter's revenue, but that $48 million was a 95% increase from the previous year.
Money Morning's Defense and Tech Specialist Michael A. Robinson thinks Twitter's data licensing or "Big Data" business could play a key role in the company's future.
"One area that will be interesting is the Big Data aspect," Robinson said. "Twitter is a goldmine for data with the number of users and tweets they have. Twitter has tons and tons of data, almost an incomprehensible amount."
Twitter has made nine acquisitions totaling nearly $470 million in the Big Data industry. Its most recent acquisition came in April when it bought Gnip, a company that packages and sells massive amounts of data from large companies.
While data licensing will grow in importance, Twitter's overall revenue growth will still rely heavily on user growth. As the MAU figure grows, Twitter will have a larger group to advertise to and a larger pool of data to draw from for its data licensing business.
For the second quarter of 2015, Twitter expects revenue between $470 million and $485 million. For the full year 2015, the company projects between $2.17 billion and $2.27 billion.
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