- Twitter CEO Elon Musk said the company has “a shot” to be cash-flow positive next quarter.
- Twitter has been hit by declining advertising revenue since Musk’s acquisition.
- Musk said the social-media platform is working to improve ad spending on the platform.
Despite being hit by declining advertising revenues, Twitter CEO Elon Musk said the social media platform has “a shot” to be cashflow positive next quarter.
“It’s been a very difficult four months, but I’m optimistic about the future,” Musk said in a live-streamed conference call at Morgan Stanley in San Francisco on Tuesday. He was interviewed by Michael Grimes, the head of global technology investment banking at Morgan Stanley.
Musk, who acquired Twitter for $44 billion in October, said Twitter had been hit by a “huge decline in advertising” due to the cyclical nature of the business and “political” reasons. Musk did not elaborate on these comments.
However, Musk said he was “shocked” by how poorly monetized Twitter was. He added that Twitter earns 5 to 6 cents per hour even though users spend a total of 130 million hours of their time each day on the platform. Twitter is now working to serve “relevant and useful” ads to users and is targeting ad spending of up to 15 to 20 cents per hour, he said.
Musk’s comments followed a Friday report by The Wall Street Journal that Twitter’s revenues and adjusted earnings fell 40% in December as advertisers shunned the social media platform after the tumultuous Musk claims to the company.
After Musk’s takeover of Twitter, he initiated a slew of changes to cut costs, including massive layoffs and scaling back employee benefits like free lunches — which he said cost $400 per meal because there was hardly anyone in the office at the time – but the claim was later disputed by a former employee who said the company spent $20 to $25 per person per day for at breakfast and lunch.
Musk said in November 2022 that Twitter lost $ 4 million a day.
Musk is working on ways to monetize Twitter
Musk said Tuesday that Twitter is cutting non-debt spending by $1.5 billion from a projected $4.5 billion in 2023 — in part, by cutting its cloud services bill by 40% and by closing a data center. The company also faces annual interest payments of about $1.5 billion on $13 billion in debt incurred for the acquisition agreement, he added.
Twitter no longer releases its earnings publicly because it is a private company. It reported a 2% increase in advertising revenues to $1.08 billion for the second quarter of 2022 – which was the company’s last earnings release before Musk was acquired. Despite the increase, ad revenues missed Wall Street expectations of $1.22 billion, per Refinitiv. Twitter also posted a net loss of $270 million in the quarter, reversing a $65.6 million profit in the same period last year.
Musk is now working on ways to monetize the platform. Twitter introduced the Blue subscription program in November 2022 to generate revenue for the social media platform. The program costs $8 a month in the US when purchased through a web browser, and more when purchased through the Apple and Android app stores.
About 290,000 users worldwide paid for Twitter subscriptions in mid-January, The Information reported on February 6. It is expected to contribute $28 million in annual revenue this year, according to media outlets.
Musk said in February that he plans to appoint a new CEO for Twitter near the end of 2023. He added on Tuesday at a Morgan Stanley conference that he expects to spend several years building a team of company management.
Twitter and Musk did not immediately respond to Insider’s requests for comment sent outside regular business hours.