X (formerly Twitter) has reported a significant increase in its third-quarter revenue, signaling a potential turnaround and the gradual return of advertisers to the platform. While this marks an improvement, the company's financial performance remains considerably below its pre-Elon Musk acquisition levels. The recent merger with xAI is also fundamentally altering X's financial landscape and strategic direction.
According to a Bloomberg report, X generated $752 million in revenue during the three-month period ending September 30. This represents a substantial increase of over 17% compared to the same quarter one year prior. For the first nine months of the year, X's sales have exceeded $2 billion, as reported by sources familiar with the private figures.
This Q3 performance marks an improvement over the second quarter, where X reported $707 million in revenue, a 2.2% decline from its Q1 figures. The steady, albeit modest, increase in sales suggests a gradual return of advertisers to the platform, despite ongoing controversies surrounding Elon Musk's leadership and policy changes. It also indicates a potential rise in X Premium subscribers, though user subscriptions currently contribute only a small fraction of the platform's overall intake.
Despite the recent upturn, X's projected full-year revenue of $2.9 billion for 2025 remains significantly lower than Twitter's earnings before Musk's acquisition. In 2022, prior to the takeover, Twitter generated $4.4 billion in revenue, predominantly through advertising. This figure dropped to approximately $3.4 billion in Musk's first year (2023) and further to $2.6 billion in total net revenue last year. Even if X achieves its 2025 projection, Musk's changes have still resulted in a roughly 35% reduction in the platform's revenue compared to its pre-acquisition peak.
Furthermore, the platform is burdened with substantial annual debt servicing costs, estimated at around $1.2 billion, alongside its operational expenses. This keeps X near its break-even point, far from the ambitious projections Musk presented to investors during his acquisition of Twitter. His initial pitch deck forecast a staggering $26.4 billion in total revenue by 2028 under his leadership.
Despite the initial backlash and increasing competition from platforms like Meta's Threads, X appears to be recovering. The latest figures suggest that X remains a viable business entity with potential for future growth.
The xAI Merger: A Game Changer for X's Financials
However, X's individual revenue performance is becoming less critical in the broader financial context due to its recent merger with xAI. The AI company views X as a crucial data source for developing Musk's Grok AI tools. This merger allows X, the platform, to share funding with xAI, which is reportedly seeking a new $15 billion funding round at an impressive $230 billion valuation. Consequently, X's own revenue is no longer the sole financial lifeline for the app.
While X continues to pursue revenue streams like X Premium subscriptions, the financial backing from xAI significantly mitigates the existential threat of X's cash flow challenges. The combined entity positions X as an integral part of xAI's valuation and funding, potentially granting Elon Musk greater autonomy to modify content policies without being solely beholden to advertiser preferences. This shift could further enable Musk to implement changes to X as he sees fit, with less concern for immediate revenue impacts, a path he has already largely pursued, contributing to the initial decline in ad revenue.
Despite these strategic shifts, X is still actively working to strengthen its position in the advertising market. The latest financial results indicate that the platform is making some progress, gradually increasing its revenue and demonstrating a slow but steady recovery towards its pre-Musk financial standing.
