- Twitter CEO Elon Musk said the company has “a chance” to become cash flow positive next quarter.
- Twitter has been hit by declining ad revenue since the Musk acquisition.
- Musk said that the social media platform is working to improve ad spend on the platform.
Despite being hit by declining ad revenue, Twitter CEO Elon Musk said the social media platform has “a chance” to be cash flow positive in the coming quarter.
“It has been a very difficult four months, but I am optimistic about the future,” Musk he said at a Morgan Stanley conference broadcast live in San Francisco on Tuesday.. He was interviewed by Michael Grimes, Morgan Stanley’s head of global technology investment banking.
Musk, who acquired Twitter for $44 billion last October, said Twitter was hit by a “massive decline in advertising” due to the cyclical nature of the business and for “political” reasons. Musk did not elaborate on these comments.
However, Musk said it was “surprising” how under-monetized Twitter is. He added that Twitter earns 5 to 6 cents an hour despite users spending a total of 130 million hours of their time per day on the platform. Twitter is now working to show “relevant and useful” ads to users and aims to earn ad spend of up to 15 to 20 cents an hour, he said.
Musk’s comments followed on a Friday The Wall Street Journal report that Twitter’s revenue and adjusted earnings fell 40% in December as advertisers shunned the social media platform after Musk’s chaotic takeover of the company.
After Musk’s acquisition of Twitter, he instituted sweeping changes to cut costs, including layoffs and cutting employee benefits like free lunches, which he said were $400 a meal because there was hardly anyone in the office. 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 breakfast and lunch.
Musk had said in November 2022 that Twitter was losing $4 million a day.
Musk is working on ways to monetize Twitter
Musk said Tuesday that Twitter cut non-debt spending to $1.5 billion from a projected $4.5 billion in 2023, in part, by cutting its bill for cloud services by 40% and closing a data center. data. The company also faces annual interest payments of about $1.5 billion on the $13 billion debt incurred from the acquisition deal, he added.
Twitter no longer publishes its earnings because it is a private company. Reported a 2% increase in ad revenue to $1.08 billion for the second quarter of 2022 – which was the company’s last earnings report before the Musk acquisition. Despite the increase, ad revenue fell short of Wall Street expectations of $1.22 billion, according to Refinitiv. Twitter also posted a net loss of $270 million in the quarter, reversing a gain of $65.6 million in the same period a year earlier.
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 if purchased through a web browser, and more if purchased through the Apple and Android app stores.
Around 290,000 users around the world were paying subscriptions to Twitter in mid-January. information reported on February 6. This is expected to contribute $28 million in annual revenue this year, according to the news outlet.
Musk said in February that he plans to name a new chief executive for Twitter near the end of 2023. He added at a Morgan Stanley conference Tuesday that he expects it to take a few years to build a management team at the company.
Twitter and Musk did not immediately respond to Insider requests for comment sent outside of normal business hours.