Elon Musk expects Twitter to be 'cash flow break-even' next year
Technology
Since taking over Twitter on Oct. 27, Musk has laid off 50% of the company's employees.
(Reuters) - Elon Musk said Twitter Inc is now on track to be "roughly cash flow break-even" next year, as the billionaire owner defended his deep cost-cutting measures at the social media platform.
Twitter was previously tracking toward a "negative cash flow situation of $3 billion per year" before the cost cuts, Musk said on Wednesday in a Twitter Spaces audio chat.
Since taking over Twitter on Oct. 27, Musk has laid off 50% of the company’s employees and demanded remaining staff commit to long hours and a "hardcore" culture, prompting more employee departures. The controversial moves have rattled advertisers, who contribute 90% of Twitter’s revenue.
"We have an emergency fire drill on our hands," Musk said. "That’s the reason for my actions."
Twitter currently has a little over 2,000 employees, Musk said on Wednesday.
Musk said Twitter was previously on track to spend $5 billion next year. With $12.5 billion in debt due to the acquisition, Twitter was facing a net cash outflow of $6.5 billion with revenue of about $3 billion next year. That amounted to negative cash flow of $3 billion, Musk said, adding that Twitter has $1 billion in cash.
Twitter’s annual revenue in 2021 was $5 billion and in February, the company forecast that 2022 revenue would grow in the low-to-mid 20% range.
During the Spaces session, Musk said his "number one priority" was to grow subscriber revenue so it becomes a meaningful part of Twitter’s business. Currently, companies are cutting advertising budgets in a weak economy.
Musk, who also runs Tesla Inc (TSLA.O), said major advertisers have told him Twitter ads have the lowest return on investment out of all social media platforms.
