(Bloomberg) — Elon Musk’s X Holdings Corp. is evolving from a social media platform powered by mainstream advertisers to one betting on dollars generated from artificial intelligence and subscriptions — a change that appears to have buoyed its revenue lately.
The platform, formerly known as Twitter Inc., posted $91 million in revenue tied to data licensing and subscriptions in February, a 30% increase from a year earlier, according to materials shared with investors related to a new debt sale. Advertising revenue also grew, though at a more modest 4% clip, the materials show.
A representative for X declined to comment.
It’s a contrast from when Musk bought X nearly three years ago. The platform was heavily reliant on ads from conventional blue-chip companies, but saw that kind of revenue erode under his leadership as the billionaire implemented severe changes to its business model.
Ad revenue has since stabilized, albeit at a lower level, while revenue from data licensing and subscriptions has grown, according to the materials shared with investors. Meanwhile, Musk’s decision to combine X with his artificial intelligence company xAI last month only further reshaped its focus.
Twitter posted advertising revenue of $4.5 billion in 2021, its final full year as a publicly traded entity before Musk’s acquisition. It is projected to generate $2.26 billion in global ad sales this year, up 16.5%, according to Emarketer, Bloomberg previously reported.
Still, with X’s revenue on the mend, its costs sharply lower and its leader tied closely to US President Donald Trump, investors have been feeling more optimistic. Morgan Stanley launched a sale on Thursday of the final bits of debt related to Musk’s 2022 buyout of the company after a sharp turnaround in sentiment about its prospects.
In its financial disclosures, X boasted nearly $1.5 billion in annual earnings before interest, taxes, depreciation and amortization, a common earnings metric known as “Ebitda” on Wall Street.
Its improving metrics allowed the company to raise almost $900 million in a new equity round from Musk and other investors that valued the company at $44 billion — around the same valuation he bought it at — Bloomberg previously reported.
X’s balance sheet is improving as well, according to the financials recently shared with investors. The company now has almost $1.1 billion of cash on hand, up from the roughly $120 million to about $320 million it maintained during the year through January. It expects to use some of those funds to either repay the $12.5 billion in expensive debt it still owes or else fund tech investments and use it for other purposes.
