Elon Musk, CEO of Twitter, indicated on Tuesday that the platform could potentially become cash flow-positive in the upcoming quarter, thanks to significant cost-cutting measures implemented by the company.
During a Morgan Stanley investor conference that was streamed online, Musk expressed surprise at Twitter’s previous challenges in generating revenue from its messaging service.
This year, the company has slashed its non-debt expenditures to $1.5 billion (approximately Rs. 12,317 crore), down from an initial forecast of $4.5 billion (around Rs. 36,951 crore). This reduction was aided by a 40 percent decrease in cloud service costs and the closure of one data center. Additionally, Twitter has laid off thousands of its workforce.
Musk, who also holds the CEO role at Tesla, bought Twitter for $44 billion (roughly Rs. 3,37,465 crore) last October. He noted that the platform is burdened with annual interest payments of about $1.5 billion due to the debt from the acquisition.
He pointed out that Twitter has experienced a significant drop in advertising revenue, attributing part of the decline to the cyclical nature of advertising spending, along with some factors being political in nature.
Since Musk’s takeover, Twitter has been characterized by instability and confusion. On Monday, the platform experienced a technical issue that blocked thousands of users from accessing links, marking its sixth major outage this year, according to NetBlocks, an internet monitoring organization.
Musk explained that what was intended as a minor update affecting only one percent of users turned into a widespread “catastrophic” failure. He mentioned that engineers are currently engaged in extensive cleanup of the Twitter software code.
Concerns about Twitter’s operational stability have mounted since Musk’s acquisition, with many engineers responsible for addressing outages departing from the company, sources told Reuters.
Musk acknowledged that building a competent management team at Twitter would take several years. He has faced scrutiny from Tesla investors regarding the time he dedicates to the social media platform and previously mentioned that the end of this year would be an appropriate time to identify a new CEO for Twitter.
The plans for introducing payment functionalities on Twitter were reiterated by Musk. He envisions a system where users could easily transfer money to each other with a single click.
“I think it’s possible to become the biggest financial institution in the world,” he affirmed.
Another priority for the company is to enhance ad relevance on the platform. Some advertisers have withdrawn from Twitter due to the uncertainty surrounding Musk’s approach to content moderation, especially since he has labeled himself a “free speech absolutist.”
On Tuesday, the Financial Times reported that European Union regulators have urged Musk to hire additional content moderators at Twitter to meet the requirements of an upcoming regulatory law.
During the Morgan Stanley event, Musk stated that both Democrats and Republicans now have similar trust levels in Twitter. According to a slide shared during the webcast, the platform had 253 million daily active users classified as “monetizable” in the fourth quarter.
Musk mentioned that Twitter currently generates 5 to 6 cents per hour from users, who collectively spend about “130 million hours of their time per day” on the platform. He expressed confidence that this figure could increase to between 15 and 20 cents.
© Thomson Reuters 2023
