 |
| Musk expects Twitter to improve its financial position over the next year |
Elon Musk said Twitter is now on track to break even next year as the company's new owner defended his controversial cost-cutting moves at the social media company.
The cash flow break-even point is the point at which a company's cash flow from operating activities equals the cash flow from financing and investing activities.
It is important for a company to understand cash flow equivalents because it indicates the point at which a business is no longer dependent on outside sources of financing to continue operations.
Before the cost cut, Twitter was heading toward a "negative cash position of $3 billion a year," Musk said Wednesday during a Twitter Spaces audio conference call.
Since the completion of the Twitter acquisition in late October last year, Musk has quickly laid off about 50% of the company's employees and required the remaining employees to commit to long hours and intensive work or vacation, which has led to the departure of more employees from Twitter. .
In addition to content moderation policies, sweeping and accelerating changes to Twitter's structure and operations have attracted the attention of advertisers, who generate 90% of Twitter's revenue.
Musk has defended his actions over the past few weeks, saying the company is in a state of emergency. Before the acquisition, he said, Twitter was on track to spend $5 billion over the next year.
According to Musk, Twitter will generate about $3 billion in revenue next year and net cash outflow of $6.5 billion, which translates to a negative cash flow of $3 billion.
During the conference call, Musk said his "top priority" is increasing subscriber revenue, which is a huge part of Twitter's business, as the company decided to cut its advertising budget due to the weak economy. Musk added that Twitter currently has just over 2,000 employees.
It's worth noting that Musk's statement was combined with an analysis by Insider Intelligence, which said his forecast for Twitter ad revenue growth over the next two years has fallen to a "flat percentage" rather than growth, especially since several large advertiser-owned companies have deviated from their ads. Removed from the platform.