Elon Musk says Twitter's cash flow still negative as ad revenue drops
50%
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[July 17, 2023] By
Jahnavi Nidumolu and Krystal Hu
(Reuters) -Twitter's cash flow remains negative because of a nearly 50%
drop in advertising revenue and a heavy debt load, Elon Musk said on
Saturday, falling short of his expectation in March that Twitter could
reach cash flow positive by June.
"Need to reach positive cash flow before we have the luxury of anything
else," Musk said in a tweet replying to suggestions on recapitalization.
Musk said on Sunday in another tweet that Twitter did not see the
increase in advertising revenue that had been expected in June, adding,
"July is a bit more promising." Twitter Spaces also hasn't generated
revenue yet and is "all-cost", Musk said.
This is the latest sign that the aggressive cost-cutting measures since
Musk acquired Twitter in October alone are not enough to get Twitter to
cash flow positive, and suggests Twitter's ad revenue may have not
recovered as fast as Musk suggested in an interview in April with the
BBC that most advertisers had returned to the site.
After laying off thousands of employees and cutting cloud service bills,
Musk had said the company reduced its non-debt expenditures to $1.5
billion from a projected $4.5 billion in 2023. Twitter also faces annual
interest payments of about $1.5 billion as a result of the debt it took
on in the $44 billion deal that turned the company private.
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It is unclear what time frame Musk was referring to by the 50% drop
in ad revenue. He has said Twitter was on track to post $3 billion
in revenue in 2023, down from $5.1 billion in 2021.
Twitter has been criticized over lax content moderation, followed by
an exodus of many advertisers who did not want their ads appearing
next to inappropriate content.
Musk's hiring of Linda Yaccarino, former ad chief at Comcast's
NBCUniversal as CEO, signaled that ad sales are a priority for
Twitter even as it works to increase subscription revenue.
Yaccarino started working at Twitter in early June and has told
investors Twitter plans to focus on video, creator and commerce
partnerships and is in early talks with political and entertainment
figures, payments services, and news and media publishers.
On Thursday, Twitter said that select content creators will be
eligible to get a part of the ad revenue the company earns in an
attempt to draw more content creators to the site.
(Reporting by Jahnavi Nidumolu and Lavanya Ahire in Bengaluru;
editing by Grant McCool and Sandra Maler)
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