Twitter’s earnings and revenue in December dropped about 40% from the previous year, The Wall Street Journal reports(Opens in a new window), citing “people familiar with the matter.”
Twitter is currently faced with annual interest payments estimated at over $1 billion. Since Elon Musk acquired it in October, the company has also struggled to retain advertisers amid recession fears and industry leaders expressing concern about lackluster content moderation.
More than 70 of Twitter’s top 100 advertisers prior to the takeover weren’t spending any money on ads(Opens in a new window) as of Feb. 25, Reuters reports. This includes ketchup maker Heinz and food company Nestle, which reportedly pulled all advertising from the platform. In 2019, the last year Twitter booked an annual profit(Opens in a new window), and 2022, ad 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 carries an annual interest rate of almost 15%. Its 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, which 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. But 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, the Journal says.
Musk has embarked on a massive cost-cutting operation in the last few months. Its total staff count is now less than a quarter of what it was before he became CEO after layoffs that are still ongoing(Opens in a new window). In another reported move to cut costs, Twitter employees lost access to Slack, 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.
