Twitter Revenue, Adjusted Earnings Drop Around 40% In December

Twitter’s earnings and revenue in December dropped about 40% year-on-year, The Wall Street Journal reported(Opens in a new window) Friday.

The sizeable earnings drop was cited by sources at the company who spoke to the Journal. Twitter, which is currently paying annual interest payments estimated at over $1 billion after Elon Musk acquired it in October, has been battling with a massively reduced advertising pool amid recession fears and industry leaders expressing concern about lackluster content moderation.

According to research firm Pathmatics, more than 70 of Twitter’s top 100 advertisers prior to the takeover weren’t spending any money on adverts(Opens in a new window) as of Feb. 25. These include ketchup maker Heinz and food company Nestle, who have reportedly pulled all advertising from the platform. In 2019, the last year that Twitter booked an annual profit(Opens in a new window), and in 2022, advertising sales made up more than 90%(Opens in a new window) of the company’s revenue.

Per the Journal, some of the company’s debt mountain carries an annual interest rate of almost 15%. The company’s financial troubles are further affected by lower-than-expected(Opens in a new window) subscribers to its paid verification system Twitter Blue, with 180,000 US subscribers two months after its November relaunch.

Twitter, who did not immediately respond to a request for comment, recently completed the first interest payment to a group of banks that loaned $13 billion for Musk’s acquisition. As the Journal notes, the banks, which include Morgan Stanley, Barclays PLC, and Bank of America Corp, have been unable to get third-party investors to buy the debt, which is a typical strategy in the case of a major buyout like this one. 

Tweet(Opens in a new window)

Despite the earning troubles, in a February tweet, Musk said he expects Twitter’s finances to improve and for the company to ultimately break even this year. He tweeted(Opens in a new window): “Twitter still has challenges, but is now trending to breakeven if we keep at it.”

Musk has embarked on a massive cost-cutting operation since taking on the social media company in October. Its total staff count is now less than a quarter of what it was before he became CEO after massive layoffs that are still ongoing(Opens in a new window). 

In another reported move to cut costs, Twitter employees lost access to Slack after the company manually switched it off last month, while Musk has moved to shut down a Sacramento data center, lay off janitorial and cleaning staff at its various US buildings, and close its Seattle office.