By Carmen Arroyo | Bloomberg
Elon Musk’s X Holdings Corp. evolves from a social media platform powered by traditional advertisers to a bet on dollars generated from artificial intelligence and subscriptions – a change that seems to have supported its income in recent times.
The platform, formerly known as Twitter Inc., recorded $ 91 million in income licenses and subscriptions in February, an increase of 30% compared to the previous year, according to documents shared with investors linked to a new sale of debts. Advertising income has also increased, although a 4%more modest clip, the materials indicate.
An X representative refused to comment.
It is a contrast to when Musk bought X almost three years ago. The platform strongly depended on the advertisements of conventional first-rate companies, but saw this type of income erode under his direction while the billionaire implemented serious modifications to his business model.
Advertising income has since stabilized, although a lower level, while income from data licenses and subscriptions increased, according to documents shared with investors. Meanwhile, Musk’s decision to combine X with his artificial intelligence company XAI last month only made its objective more reshaped.
Twitter published advertising revenues of $ 4.5 billion in 2021, its last full year as a listed entity before the acquisition of Musk. It is expected to generate $ 2.26 billion in global advertising sales this year, up 16.5%, according to Emarketer, said Bloomberg.
However, with X revenues on the connection, its costs are highly lower and its leader closely linked to the American president Donald Trump, investors felt more optimistic. Morgan Stanley launched on Thursday a sale of the final debt linked to the redemption of Musk in 2022 of society after a living feeling of feeling about its prospects.
In its financial disclosure, X had nearly $ 1.5 billion in annual profits before interest, taxes, depreciation and damping, a common benefit metric known as “Ebitda” in Wall Street.
Its improvement of the measures has enabled the company to remove nearly $ 900 million in a new capital cycle of Musk and other investors who appreciated the company at $ 44 billion – approximately the same assessment as it bought it – Bloomberg previously reported.
The X’s assessment is also improving, according to finances recently shared with investors. The company now has nearly $ 1.1 billion in cash, compared to around $ 120 million at around $ 320 million it has maintained from the year to January. It expects to use some of these funds to reimburse the expensive $ 12.5 billion in debt that it still owes or finance technological investments and use it for other purposes.
Debt cost
Debt still weighs on Musk’s business.
In March alone, X paid about $ 200 million in debt service costs linked to his acquisition, said people familiar with the case who were not authorized to speak publicly. The annual interest of the company by the end of 2024 exceeded more than $ 1.3 billion, they added.
The debt offer led by Morgan Stanley launched on Thursday is intended to refinance a final and costly part of X redemption financing which carries an interest rate of 14%. Banks market debt with a fixed coupon of 9.5%, which would help reduce the costs for the company. X plans to reduce its annual interests by $ 43 million, people said.
The heavy debt burden of X was a problem not only for the company, but for the banks that helped Musk buy the business. Landers had kept around $ 12.5 billion in this debt, unable to sell it to investors until January and February this year when they discharged around $ 11.2 billion for three sales.
A month ago, Musk said that XAI, Musk’s artificial intelligence startup, had acquired X.
The information shared with investors show that he has created a Holding company, nicknamed Xai Holdings, which has both X and XAI. In the sales of previous debts, banks and corporate management had praised X’s relationship with Musk’s startup as a edulcoator to arouse the interest of investors.
–Aude the help of Kurt Wagner.
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