By Jahnavi Nidumolu and Krystal Hu
(RockedBuzz via Reuters) – Twitter’s cash flow remains negative on a nearly 50% drop in advertising revenue and a heavy debt load, Elon Musk said on Saturday, disappointing his expectations in March that Twitter could reach a positive cash flow by June.
“We need to achieve positive cash flow before we splurge on anything else,” Musk said in a tweet in response to the recapitalization suggestions.
This is the latest sign that aggressive cost-cutting measures since Musk single-handedly acquired Twitter in October aren’t enough to drive Twitter to positive cash flow, and it suggests that Twitter’s ad revenue may not have recovered as of yet. as fast 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 cutting cloud service bills, Musk said the company has cut its non-debt spending to $1.5 billion from a forecast of $4.5 billion in 2023. Twitter must also pay interest annual payments of about $1.5 billion owed on debt took part in the $44 billion deal that took the company private.
It’s unclear what time period Musk was referring to for the 50% drop in ad revenue. He said Twitter was on track to post $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 didn’t want their ads to appear alongside inappropriate content.
Musk’s hiring of Linda Yaccarino, Comcast’s former head of advertising at NBCUniversal as CEO, signaled that ad sales are a priority for Twitter even as it works to grow subscription revenue.
Yaccarino began working on Twitter in early June and told investors that Twitter plans to focus on video, creator and commercial partnerships and is in initial talks with entertainment and political figures, payment services and news and media publishers.
On Thursday, Twitter said selected content creators will be eligible to get a portion of the ad revenue the company earns in an effort to attract more content creators to the site.
(Reporting by Jahnavi Nidumolu in Bangalore; Editing by Grant McCool)