X tells bankers that advertisers are back but spending less

Elon Musk’s X Corp., giving bankers an update on efforts to reinvigorate growth, said that advertisers are returning to the social media platform formerly known as Twitter – but with smaller budgets than before.

Roughly 90% of the company’s top 100 advertisers have returned, up from 75% in June, Chief Executive Officer Linda Yaccarino told debt holders during the briefing Thursday, according to a person who dialed into the call. Ad spending isn’t at historical levels, though, and companies are ramping up budgets more conservatively.

Yaccarino gave a generally upbeat view of the company, which she joined in June. Revenue is growing in the high single digits quarter-over-quarter across advertising, data licensing, and subscriptions, she said. Not including the cost of servicing debt, the company already is cash flow positive, Yaccarino said. And it should reach that milestone even when including debt by the back half of 2024, the executive said.

Musk’s US$44bil (RM207.5bil) takeover of Twitter saddled the San Francisco-based company with US$13bil (RM61.3bil) in debt, and his erratic decision making and looser content-safety rules have spooked some advertisers. Before he bought the company and rechristened it as X, Twitter was generating about US$5bil (RM23.5bil) in annual sales, almost 90% from advertising. Now it has to win back that revenue, and X owes about US$1.2bil (RM5.6bil) in interest payments per year on its debt, Bloomberg earlier estimated.

X likely still faces an uphill battle to placate lenders. After the takeover, some banks tried to offload the debt for just 60 cents (RM2.80) on the dollar. Earlier this year, the company’s value had dropped to just a third of its purchase price, according to Fidelity.

Since Musk’s October 2022 purchase, the social network has shed more than 75% of its staff, discontinued services, and launched a premium subscription in an attempt to restore financial health. Musk has been vocal about turning X into an “everything app” that could generate revenue from features like shopping and payments.

Yaccarino was formerly the ad chief at NBCUniversal Media LLC, giving her experience courting big brands. Over the summer, she and Musk presented plans to investors to bring celebrities and political figures to the platform and to facilitate more commerce and payments between users, the Financial Times reported.

The CEO’s efforts helped X ink a new deal with Paris Hilton and 11:11 Media this week to promote the company’s live shopping and video products. – Bloomberg