X Sees Quarterly Ad Revenue Drop Amid Content Moderation Concerns

X, the social media platform formerly known as Twitter, is reportedly facing a slump in advertising revenue this year.

The social media platform has been generating about $600 million in ad revenue per quarter this year, a decline from the over $1 billion per quarter it earned in 2022, Bloomberg reported Tuesday (Dec. 12).

Ad sales account for 70% to 75% of X’s total revenue, according to the report.

The decline in ad revenue can be attributed to advertisers’ concerns regarding X’s content moderation practices under its new owner, Elon Musk, the report said.

X executives had initially set a target of $3 billion in revenue from advertising and subscriptions for 2023, but it appears they will fall short of that goal, per the report.

Joe Benarroch, head of business operations for X, told Bloomberg that this information presents an incomplete view of the business, according to the report. He emphasized that X is a global business with multiple revenue streams and should not be evaluated solely based on old Twitter metrics.

Since Musk’s takeover, X’s reliance on advertising has been decreasing, the report said.

In addition to advertising, X also generates revenue from its subscription service, X Premium, and data licensing agreements, per the report. However, external estimates suggest that the subscription business contributes less than $120 million annually.

Musk has expressed his desire for subscription revenue to make up half of X’s total business, according to the report. However, the service has just over 1 million paying subscribers.

To diversify its revenue streams, X has also been targeting small and medium-sized businesses (SMBs) alongside major brand advertisers, the report said.

The decline in ad revenue has raised concerns about X’s future success, per the report. Musk himself has acknowledged the possibility of the company failing due to the decrease in ad revenue.

It was reported Monday (Dec. 11) that X has been laying the groundwork state by state to move further into money movement. Having gained three new money transmitter licenses in the United States at the end of November, the firm now has licenses in a dozen states.