Performing a decrease in its cash flow, Twitter plans to focus on video, creator, and commerce partnerships to boost its advertising and subscription revenue.
Heaptalk, Jakarta — The CEO of Twitter, Elon Musk, revealed that the company is still experiencing negative cash flow due to a nearly 50% drop in advertisement revenue and a heavy debt burden, falling short of his expectation in March that Twitter could reach positive cash flow by June.
“We are still negative cash flow due to a 50% drop in advertising revenue plus a heavy debt load. Need to reach positive cash flow before we have the luxury of anything else,” The CEO said in a post.
This outcome reveals that aggressive cost-cutting measures since Musk acquired Twitter last October 2022, with a value of US$44 billion, including its debt worth US$13 billion, must be more adequate to allow Twitter to achieve positive cash flow. The result also indicates the advertising income of this social media platform still needs to recover fully.
In Early January 2023, hundreds of advertisers reduced their advertising spend on Twitter as their response to the company’s efficiency decision towards its employee Musk performed. Besides, the CEO of Twitter also implemented changes to the platform, especially in the recovery account that was previously banned, and changed his approach to content moderation.
As an effect, Twitter has been criticized over lax content moderation, followed by the exits of numerous advertisers who disagreed with their advertisements appearing next to inappropriate content.
After laying off thousands of its workforce and reducing cloud service bills, Musk affirmed that the company had diminished its non-debt expenditures to US$1.5 billion from a projected US$4.5 billion in 2023. On the other hand, this text-based conversation platform encounters an interest payment of about US$1.5 billion due to the debt it took on in the US$44 billion deal that turned the company private. However, Musk claimed that Twitter is on track properly to record revenue of US$3 billion this year, representing a decrease from US$5.1 billion in 2021.
To boost its advertising and subscription revenue, Musk has appointed a Former Head of Advertising at Comcast’s NBCUniversal, Linda Yaccarino, as CEO of Twitter as of June 2023. Yaccarino has explained to the investors that this earlier Threads rival platform focuses on video, creator, and commerce partnerships and is in early talks with political and entertainment figures, payment services, news, and media publishers. This appointment indicates that advertising selling would become the primary priority of Twitter.
