Twitter Inc. reported lower revenue and adjusted earnings for the month of December after many advertisers abandoned the social media platform following the Elon Musk takeover, according to people familiar with the matter.
In an update to investors, Twitter reported a roughly 40% year-over-year drop in adjusted revenue and earnings for the month, the people said.
Chief executive Mr Musk, who completed his acquisition of Twitter last October, is working to stabilize the company’s finances, which have also been strained by high-cost debt. Twitter is responsible for repaying some $13 billion in debt that helped pay for Mr. Musk’s purchase of the company, with annual interest payments estimated at more than $1 billion.
The company recently made an initial interest payment to a group of banks that lent the $13 billion, the sources said.
One of the ways Mr. Musk intends to increase Twitter’s revenue is by selling paid subscriptions to users, which allows them to edit tweets and access subscriber-only features on Twitter. the platform. Mr Musk’s new subscription plan was relaunched on December 12 after a failed initial rollout in November.
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As a public company in December 2021, Twitter has not publicly released its monthly financials. For the fourth quarter that ended December 31, 2021, Twitter reported revenue of $1.57 billion, with net income of $182 million.
Twitter did not immediately respond to a request for comment.
The company recently said some advertisers were returning to the platform, the Journal previously reported. Last year also saw a downturn in online marketing which affected many digital advertising platforms as people spent less time online than at the start of the pandemic and advertisers concerned about a possible economic downturn curbed their spending.
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Mr. Musk said he expects Twitter to break even in 2023. “Twitter still has challenges, but now tends to break even if we continue,” he said. in a tweet in February.
Banks such as Morgan Stanley, Barclays PLC and Bank of America Corp. who loaned Mr. Musk the $13 billion he used to buy Twitter have been unable to sell that debt to third-party investors, a common practice when banks help fund big takeovers. The rise in so-called stranded debt parked on banks’ balance sheets has tied up some of their firepower to support other big M&A deals, a factor in the current deal drought.
Mr Musk’s team had explored the possibility of raising additional capital, which could be used to help pay off some of the most expensive debt it borrowed as part of its purchase of the company, previously reported reported the Wall Street Journal. Some of Twitter’s debt bears an annual interest rate of almost 15%.
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Shortly after Mr. Musk took over Twitter, many advertisers suspended spending on the platform, a cause for concern as advertising accounted for nearly 90% of Twitter’s revenue in 2021. As she sought To bolster its most critical source of revenue, the company has taken several steps with advertisers to get them back on the platform.
More than 70 of Twitter’s top 100 advertisers before Mr. Musk’s takeover were not spending on the platform as of the end of the week of February 25, according to analysis by research firm Pathmatics, part of SensorTower.
Mr. Musk is also taking steps to control costs. He said in December that Twitter’s staff had fallen to about 2,000 from nearly 8,000 before acquiring the company and that it was “cutting costs like crazy.” The company made further layoffs over the weekend, but declined to disclose the number of layoffs.
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Twitter posted a net loss in eight of the 10 years from 2012 to 2021 and hasn’t posted a yearly profit since 2019.
—Patience Haggin contributed to this article
Write to Alexander Saeedy at alexander.saeedy@wsj.com, Laura Cooper at laura.cooper@wsj.com and Alexa Corse at alexa.corse@wsj.com