© Reuters. A promoted tweet is shown on the Twitter app on a mobile phone near the Twitter logo, in this illustration photo taken Sept. 8, 2022. REUTERS/Florence Lo/Illustration
Written by Jahnavi Nidumulo and Crystal Ho
(Reuters) – Elon Musk said on Saturday that Twitter’s cash flow remains negative due to a nearly 50 percent drop in advertising revenue and a heavy debt burden, which fell short of his prediction in March that Twitter could reach positive cash flow by June.
“We need to get to positive cash flow before we can have the luxury of anything else,” Musk said in a tweet responding to suggestions of a recapitalization.
It’s the latest sign that aggressive cost-cutting measures since Musk acquired Twitter in October alone aren’t enough to make Twitter positive cash flow, and suggests that Twitter ad revenue may not have recovered as quickly as Musk suggested in an April interview with the BBC that most advertisers. They returned to the site.
After laying off thousands of employees and cutting bills for cloud services, Musk said the company cut its non-debt expenses to $1.5 billion from the $4.5 billion projected in 2023. Twitter also faces annual interest payments of about $1.5 billion as a result of debt it took on in the $44 billion deal it took on. Made the company special.
It’s unclear what time frame Musk was referring to by the 50% drop in advertising revenue. He said Twitter is on track to generate $3 billion in revenue in 2023, down from $5.1 billion in 2021.
Twitter was criticized for lax content moderation, followed by an exodus of many advertisers who did not want their ads to appear alongside inappropriate content.
Musk’s appointment of Linda Iaccarino, the former head of advertising at Comcast subsidiary NBCUniversal (NASDAQ :), as CEO has signaled that ad sales are a priority for Twitter even as it works to grow subscription revenue.
Yaccarino started working at Twitter in early June and told investors that 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 selected content creators will be eligible for a portion of the advertising revenue the company earns in an effort to attract more content creators to the site.
