Elon Musk says Twitter’s cash flow remains negative as ad revenue falls 50%

July 15 (Reuters) – Twitter’s cash flow remains negative due to a nearly 50% drop in advertising revenue and a heavy debt load, Elon Musk said on Saturday, falling short of expectations in March that Twitter could reach positive cash flow by June.

“Must achieve positive cash flow before we have the luxury of anything else,” Musk said in a tweet responding to proposals for a recapitalization.

It’s the latest sign that the aggressive cost-cutting measures since Musk bought Twitter in October alone aren’t enough to make Twitter cash-flow positive, and suggests that Twitter’s ad revenue may not have recovered as quickly as Musk suggested in an interview in April with the BBC that most advertisers had returned to the site.

After laying off thousands of employees and cutting bills for cloud services, Musk had said the company reduced its non-debt spending to $1.5 billion from a projected $4.5 billion in 2023. Twitter also faces annual interest payments of about 1, $5 billion as a result of the debt it took on in the $44 billion deal that took the company private.

It is unclear what timeframe Musk was referring to with the 50% reduction in ad revenue. He has said Twitter was on track to post $3 billion in revenue in 2023, down from $5.1 billion in 2021.

Twitter has been criticized for lax moderation of content, followed by an exodus of many advertisers who did not want their ads appearing next to inappropriate content.

Musk’s hiring of Linda Yaccarino, formerly head of advertising at Comcast’s NBCUniversal, as CEO signaled that ad sales are a priority for Twitter even as it works to grow subscription revenue.

Yaccarino started working at Twitter in early June and has told investors that Twitter plans to focus on video, creator and commerce partnerships and is in early talks with politicians and entertainment figures, payment services and news and media publishers.

On Thursday, Twitter said select content creators would be eligible to receive a share of the ad revenue the company earns in an effort to attract more content creators to the site.

Reporting by Jahnavi Nidumolu in Bengaluru; editing by Grant McCool

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