X CEO Yaccarino tells bank lenders that revenue grew by single-digit percentage -source

8:43 pm Thursday, October 05th, 2023

By Sheila Dang

(Reuters) -X Chief Executive Linda Yaccarino laid out plans to grow the social media company’s business during her first meeting on Thursday with X’s banks, according to a person who heard the call, part of an effort to update bankers who lent $13 billion to finance Elon Musk’s acquisition of the platform.

Details shared with Reuters painted a partial picture of the current state of X’s business. Revenue at the company, formerly known as Twitter, grew in the high-single digit percentage during the third quarter compared to the second quarter, the source said.

The size of X’s revenue, which includes money earned through advertising, subscriptions and data licensing, could not be learned.

X declined to comment.

Since acquiring the company in October 2022, Musk has sought to add new ways of generating revenue, including raising the cost of the platform’s data access tool and reserving certain features for paid subscribers.

During a roughly 40-minute meeting with X’s lenders, Yaccarino said the company would test three tiers of its subscription service based on the number of ads shown to the user, the source said.

X’s current paid service costs $8 per month.

But X’s core digital advertising business has struggled as brands have been wary of the number of changes to the platform and Musk’s controversial nature. The company’s U.S. ad revenue has declined each month on a year-over-year basis since Musk’s acquisition, according to data from ad analytics firm Guideline, which tracks ad spending data from major ad agencies.

Separately on Thursday, the U.S. Securities and Exchange Commission sued Musk in an effort to compel him to testify as part of a probe into his takeover of the social media company.

In the meeting, Yaccarino said the company’s revenue drivers would include political ads, as the company lifted a pre-acquisition global ban on such ads, according to the source.

The advertising industry is expected to see an influx of ad spending ahead of several major elections globally next year, including the U.S. presidential election.

X will also focus on serving more small and medium-sized advertisers, which Yaccarino described during the meeting as a major growth opportunity, the source said.

(Reporting by Sheila Dang in Austin; Editing by Sandra Maler)