Although Twitter no longer reports its earnings publicly, it informed its investors of a decline.
Twitter’s revenue and adjusted earnings decreased by approximately 40 percent compared to the previous year in December 2022 due to a significant number of advertisers leaving the platform after Elon Musk’s takeover.
Following its acquisition by Musk and subsequent privatization in late October, Twitter no longer discloses its earnings publicly. However, according to “people familiar with the matter” cited in a Wall Street Journal report on Friday, Twitter updated investors on the declines in revenue and earnings for December 2022.
After Musk’s acquisition, numerous prominent companies reduced their advertising spending on Twitter due to concerns about content moderation. Despite Twitter’s attempts to lure advertisers with special deals in December 2022, the company experienced a 40 percent decline in both revenue and earnings.
In mid-December, approximately 70% of Twitter’s top 100 advertisers who spent heavily on the platform before the Musk acquisition had stopped advertising. However, some advertisers have since returned, possibly due to deals offered for the Super Bowl in February. Therefore, there is potential for improved revenue numbers during the early months of 2023.
The specific revenue and earnings figures for December 2021 and December 2022 are uncertain as Twitter only reported its earnings on a quarterly basis during its time as a public company. However, it is known that Twitter earned $1.57 billion in revenue and had a net income of $182 million during Q4 of 2021. Despite this profitable quarter, Twitter experienced a net loss of $221 million over the entirety of 2021.
According to the WSJ, Twitter has reported a net loss in eight of the ten years between 2012 and 2021, and has not recorded an annual profit since 2019. Following Musk’s acquisition of the company, Twitter’s most recent public earnings report was for Q2 2022, in which it reported revenue of $1.18 billion and a net loss of $270 million.
Musk said he saved Twitter from bankruptcy
Musk reported that Twitter was experiencing a daily loss of over $4 million a week following his buyout. To address this issue, he implemented cost-cutting measures such as laying off 50% of Twitter’s staff, terminating thousands of contractors, and issuing an ultimatum that prompted many employees to resign. Despite facing significant challenges, Musk managed to steer the company away from bankruptcy over a grueling three-month period. As of early February, Twitter was showing signs of improvement and was on track to reach breakeven with continued efforts.
According to a WSJ article, Musk financed his takeover using $13 billion of debt, resulting in an annual interest payment of approximately $1.5 billion. Twitter reportedly made its initial interest payment of around $300 million in January. The article further stated that some of Twitter’s debt carries an annual interest rate of nearly 15 percent.
It appears that Musk has intentions of introducing payment features on Twitter to rival services like PayPal in the long run. However, at present, Twitter depends on advertising and subscriptions as its primary sources of income. Despite the relaunch of Twitter Blue, the service has not garnered significant paying subscribers, which has left Twitter significantly behind Musk’s objective of having “approximately 50% of our revenue generated from subscriptions.”
A further issue is maintaining the smooth functioning of Twitter with a significantly reduced workforce as a result of Musk’s budget cuts. This issue became evident today when an alteration to the API appeared to have disrupted all links on Twitter for approximately 45 minutes. Musk stated that a “minor API change” had significant consequences and argued that Twitter’s “code stack is incredibly fragile for no justifiable reason” and will require a comprehensive overhaul.