- Twitter CEO Elon Musk said the company has “a shot” at becoming cash-flow positive next quarter.
- Twitter has been hit by declining advertising revenues since Musk’s acquisition.
- Musk said the social-media platform is working to improve ad spend on the platform.
Despite being hit by declining advertising revenues, Twitter CEO Elon Musk said the social media platform has “a shot” at being cashflow-positive the next quarter.
“It’s been a very difficult four months, but I’m optimistic about the future,” Musk said at a live streamed Morgan Stanley conference 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 last October, said Twitter got hit by a “massive decline in advertising” due to the cyclical nature of the business and by “political” reasons. Musk did not elaborate on these comments.
However, Musk did say it was “startling” how poorly monetized Twitter is. He added Twitter earns 5 to 6 cents per hour even though users spend a total of 130 million hours of their time per day on the platform. Twitter is now working to serve “relevant and useful” ads to users and aiming to get ad spend up to 15 to 20 cents per hour, he said.
Musk’s comments followed a Friday The Wall Street Journal report that Twitter’s revenues and adjusted profits slumped 40% in December as advertisers avoided the social media platform after Musk’s chaotic acquisition of the company.
After Musk’s takeover of Twitter, he instituted sweeping changes to cut costs, including mass layoffs and scaling back on 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 for each person per day for breakfast and lunch.
Musk had said in November 2022 that Twitter was losing $4 million a day.
Musk is working to ways monetize Twitter
Musk said on Tuesday Twitter cut non-debt expenditures to $1.5 billion from a projected $4.5 billion in 2023 — in part, by cutting its cloud services bill by 40% and by shutting one data center. The company also faces annual interest payments of about $1.5 billion on the $13 billion debt incurred for the acquisition deal, he added.
Twitter doesn’t release its earnings publicly anymore because it’s 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’s acquisition. Despite the rise, the 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 a year earlier.
Musk is now working to ways 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 if purchased via a web browser, and more if purchased via the Apple and Android app stores.
About 290,000 users globally were paying for Twitter subscriptions as of mid-January, The Information reported on February 6. This is expected to contribute $28 million in annual revenue this year, per the media outlet.
Musk said in February he plans to appoint a new CEO for Twitter near the end of 2023. He added Tuesday at the Morgan Stanley conference he expects to take a few years to build a management team at the company.
Twitter and Musk did not immediately respond to Insider’s requests for comment sent outside regular business hours.