Elon Musk’s X Holdings Corp. is shifting its focus from a social media platform that relied on mainstream advertisers to one focusing on revenue generated from artificial intelligence and subscriptions— a move that has positively impacted its revenue recently.
The platform, previously known as Twitter Inc., reported $91 million in revenue from data licensing and subscriptions in February, a 30% increase from the previous year, as per investor materials related to a recent debt sale. Advertising revenue also saw growth, albeit at a more modest 4% rate, according to the materials shared.
A representative for X declined to comment.
This is a stark contrast from the time Musk acquired X nearly three years ago. The platform heavily relied on ads from traditional blue-chip companies, but under Musk’s leadership, that revenue stream diminished with significant changes to its business model.
While ad revenue has stabilized at a lower level, revenue from data licensing and subscriptions has grown, as per the investor materials. Musk’s decision to merge X with his artificial intelligence company xAI last month further shifted its focus.
Twitter achieved advertising revenue of $4.5 billion in 2021, its last full year as a publicly traded entity before Musk’s acquisition. It is forecasted to generate $2.26 billion in global ad sales this year, a 16.5% increase, according to Emarketer, as previously reported by Bloomberg.
Despite X’s revenue growth, reduced costs, and close ties with US President Donald Trump, investors are feeling more optimistic about the company. Morgan Stanley recently initiated a sale of the final portion of X’s debt related to Musk’s 2022 buyout after a significant improvement in sentiment regarding its future prospects.
Financial disclosures from X revealed an annual earnings before interest, taxes, depreciation, and amortization (commonly referred to as “Ebitda”) of nearly $1.5 billion. This improvement allowed the company to raise close to $900 million in a new equity round from Musk and other investors, valuing the company at $44 billion—around the same valuation at the time of Musk’s purchase, as previously reported by Bloomberg.
X’s balance sheet is also improving, according to the recently shared financials. The company now holds almost $1.1 billion in cash, up significantly from the $120 million to about $320 million it maintained previously. It anticipates using some of these funds to repay the $12.5 billion in remaining debt or fund tech investments and other initiatives.
Debt Costs
Despite its progress, debt remains a burden on Musk’s company.
In March alone, X paid around $200 million in debt-servicing costs related to its buyout, per sources familiar with the matter. By the end of 2024, the firm’s annual interest expense exceeded $1.3 billion.
The debt offering led by Morgan Stanley aims to refinance the final costly part of X’s buyout financing with a fixed coupon rate of 9.5%, reducing costs for the company. The move is intended to cut X’s annual interest expense by $43 million.
Although X’s heavy debt load has posed challenges for the company and the banks involved in Musk’s acquisition, recent efforts have shown promise. The lenders held approximately $12.5 billion in debt, which they struggled to offload until early 2025 when they succeeded in selling about $11.2 billion across three sales.
A month ago, Musk announced that xAI, his artificial intelligence startup, had purchased X.
Information provided to investors reveals that a holding company named XAI Holdings has been created by Musk, owning both X and xAI. In previous debt sales, banks and company management highlighted X’s association with Musk’s startup as a significant incentive to attract investor interest.
This story was originally featured on Fortune.com
