Jul.15 (Reuters) – Twitter’s cash flow remains negative due to a nearly 50% fall in ad revenue and heavy debt, Elon Musk said on Saturday.
“We need to get to positive cash flow before we have the luxury of anything else,” Musk said in a tweet in response to recapitalization suggestions.
Musk said in another tweet on Sunday that Twitter didn’t see the increase in ad revenue it expected in June, adding, “July is a little more promising.” Twitter Spaces has also not yet generated any revenue and is “all expenses,” Musk said.
This is the latest sign that the aggressive cost-cutting measures since Musk’s acquisition of Twitter in October alone aren’t enough to drive Twitter to positive cash flow, and suggests Twitter’s ad revenue may not have recovered as quickly as Musk suggested in an April interview with the BBC that most advertisers had returned to the site.
After laying off thousands of employees and slashing cloud services bills, Musk had said the company cut its non-debt spending to $1.5 billion from a projected $4.5 billion by 2023. Twitter also faces annual interest payments of about $1.5 billion due to the debt it took part in the $44 billion deal that took the company private.
It’s unclear what time frame Musk was referring to with the 50% drop in ad revenue. He has said Twitter is on track to generate $3 billion in revenue by 2023, up from $5.1 billion in 2021.
Twitter has been criticized for lax content moderation, followed by an exodus of many advertisers who didn’t want their ads to appear next to inappropriate content.
Musk’s appointment of Linda Yaccarino, former advertising chief at Comcast’s NBCUniversal as CEO, indicated 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, maker and commerce partnerships and is in early talks with political and entertainment figures, payment services and news and media publishers.
On Thursday, Twitter said certain content creators would be eligible for a share of the ad revenue the company earns in an effort to attract more content creators to the site.
Reporting by Jahnavi Nidumolu and Lavanya Ahire in Bengaluru; edited by Grant McCool and Sandra Maler
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