The social media platform would have faced a negative cash flow situation of $3 billion a year if it wasn't for Musk's cost-cutting efforts, according to the CEO.
The billionaire who bought the social networking company for $44 billion in October gave a snapshot of the company's dire finances during a forum on Wednesday.
He said that the company has an emergency fire drill on its hands. That might be the reason for my actions.
He said that the platform would spend $5 billion in the next five years. The company made a net loss of $221 million during the last annual period that it reported before being taken private.
If no changes are made, the net cash outflow will be between $6 billion and $6.5 billion next year. He said that the company has a lot of debt to help fund his acquisition, which required about 1.5 billion a year in debt servicing payments.
He said that it wasn't good since there was $1 billion in cash on the site. I cut costs like crazy over the last five weeks.
The company is expected to make $3 billion in revenues next year, according to his remarks. It's possible that the company's revenues will be as low as $2 billion in 2023, compared to $5 billion in 2021. Since Musk took over, many marketers have stopped using the platform.
AdvertisementConcerns about whether the company is adequately staffed in areas such as content moderation and compliance have arisen after Musk fired half of its workforce and stripped employees' benefits.
It has been in the fast lane to bankruptcy since May.
The company would hit cash flow break-even, according to Musk.
"With the changes we are making here on reducing the burn rate, and building subscriber revenue, I now think that Twitter will be okay next year," Musk said, adding that he had spoken to advertisers who were urging him to show how Twitter could provide a return on their investment
In an effort to generate new revenue streams, the chief executive of both companies has indicated that he plans to transform the social network into an "everything app."
However, an attempt to launch a new premium subscription service, Twitter Blue, has been rife with challenges after some users used the offer of blue tick verification in order to impersonate others.
After conducting a poll of the platform's users at the weekend, Musk said he would leave as soon as he could find a suitable replacement.
After stepping down, Musk indicated he would remain involved in day-to-day operations and product development at the social networking site.
Richard Waters reports in San Francisco.
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