NEW YORK: Twitter’s cash flow remains negative because of a nearly 50% drop in advertising revenue and a heavy debt load, Elon Musk says, falling short of his expectation in March that Twitter could reach cash flow positive by June.
“We need to reach positive cash flow before we have the luxury of anything else,” Musk said in a tweet, replying to suggestions on recapitalisation.
Musk said last 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 not have 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 said the company reduced its non-debt expenditures to US$1.5bil (RM6.8bil) from a projected US$4.5bil (RM20.3bil) in 2023.
Twitter also faces annual interest payments of about US$1.5bil (RM6.8bil) as a result of the debt it took on in the US$44bil (RM199bil) deal that turned the company private.
It is unclear what time frame Musk was referring to with the 50% drop in ad revenue. He has said Twitter is on track to post US$3bil (RM14bil) in revenue in 2023, down from US$5.1bil (RM23bil) in 2021.
Twitter has been criticised for lax content moderation, followed by the 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 chief executive officer signalled 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 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.
Last Thursday, Twitter said that select content creators would be eligible to get a part of the ad revenue the company earns in an attempt to draw more content creators to the site. — Reuters
