Twitter's Cash Flow Remains Negative As Advertising Revenue Declines

Twitter has faced criticism for its lax content moderation, leading to the departure of several advertisers who were concerned about their ads appearing alongside inappropriate content

Twitter's cash flow continues to show negative figures, primarily due to a substantial decline in advertising revenue and a significant debt burden, said Elon Musk on Saturday.

Musk, who acquired Twitter in October, expressed disappointment as the platform fell short of his earlier expectations that it could achieve positive cash flow by June.

He took to Twitter on Saturday to address suggestions on recapitalisation, stating, "Need to reach positive cash flow before we have the luxury of anything else." He further noted on Sunday that Twitter had not witnessed the anticipated increase in advertising revenue during June, although he expressed some optimism for July.

Musk also highlighted that Twitter Spaces, a feature similar to audio chat rooms, has yet to generate revenue and remains a cost-intensive endeavor.

These developments indicate that the aggressive cost-cutting measures implemented since Musk's acquisition of Twitter have not been sufficient to achieve positive cash flow. Additionally, they suggest that Twitter's ad revenue recovery may not be progressing as rapidly as Musk had previously suggested in an interview with the BBC in April, where he stated that most advertisers had returned to the platform.

In his efforts to streamline operations, Musk oversaw significant workforce reductions and negotiated lower cloud service bills. He disclosed that non-debt expenditures had been reduced to USD 1.5 billion, down from the initially projected USD 4.5 billion for 2023. However, Twitter continues to face annual interest payments of around USD 1.5 billion resulting from the debt incurred in the USD 44 billion deal that took the company private. The timeframe for the mentioned 50 per cent drop in ad revenue remains unclear. Musk had previously indicated that Twitter was on track to achieve USD 3 billion in revenue for 2023, down from USD 5.1 billion in 2021.

Twitter has faced criticism for its lax content moderation, leading to the departure of several advertisers who were concerned about their ads appearing alongside inappropriate content. Recognising the importance of ad sales, Musk's appointment of Linda Yaccarino, former ad chief at Comcast's NBCUniversal, as CEO signaled a focus on revitalising advertising revenue. Yaccarino, who joined Twitter in June, has revealed plans to concentrate on video, creator and commerce partnerships, and has initiated discussions with political and entertainment figures, payment services, and news and media publishers.

In an attempt to attract more content creators to the platform, Twitter recently announced that select creators will be eligible to receive a share of the ad revenue earned by the company.