Twitter losing $4 million a day, India revenue a small percentage

The microblogging site's business in the country has managed to make a profit for the past seven fiscal years

Many people expected Elon Musk, the newly self-minted chief executive officer (CEO) of Twitter, to shake up things at the social media firm. But the speed and scale have taken most by surprise. According to reports, over half the global employees were fired.
 

India was no exception. The lay-offs in India were across segments such as policy, communication, engineering and development, as a majority of people lost their jobs, according to sources in the know. 
 

While Musk has defended the mass layoffs, saying the microblogging site was losing $4 million a day, the reason for the scale of firings in India can be gleaned off by taking a look at its financials.
 

Twitter’s India business reported a net profit for the past seven financial years, but its revenue remained minuscule compared with global operations.
 

Twitter Communications India Private Limited, the registered entity of Twitter in India, recorded Rs86.39 crore as revenue in the financial year ended March 31, 2021 (FY21). But, this was just 0.23 per cent of the global revenue.
 

This is not an anomaly. For the past seven years, the firm’s India business has contributed less than 1 per cent to parent Twitter Inc in terms of revenue, according to the company’s regulatory filings reviewed by Business Standard.
 

Twitter Inc clocked in $5.07 billion of global revenue in FY21. An email sent to the company about the layoffs and the company’s financial details for FY22 did not elicit any response.

Twitter India’s employee benefits also continued to balloon. Twitter India’s employee expenses increased faster than its profits, from Rs4.9 crore in FY15 to Rs43.25 crore in FY21. The share of employee benefits in Twitter India’s total expenses has also grown over time, and stood at two-thirds of the total in FY21.
 

Under Schedule 3 of the Companies Act, employee benefit expenses include the cost incurred on salaries and wages, contribution to provident fund (PF) and other funds, employee stock ownership plan (ESOP), staff welfare expenses, etc.

In FY21 alone, Twitter India’s employee expense grew 53.7 per cent, while its net profit dipped 9.4 per cent year-on-year.

Lagging its peers 
 

With a user base of 24 million, India is the third-largest market for Twitter in terms of users. According to its most recent financial statement, Twitter India’s profit after tax rose to Rs7.03 crore in FY21 from Rs1.07 crore in FY15, up 557 per cent. The revenue too jumped around six-and-a-half times during the period, from Rs13.26 crore to Rs86.39 crore.
 

For Twitter India, like in the US, revenue came from ads, and the highest jump in revenue happened in 2020, when the pandemic began, and brands and users adopted online platforms in a big way. But, this wasn’t enough.
 

“Twitter as a medium of advertisement hasn’t yet scaled up compared to other platforms like Facebook or Instagram, which are more user-oriented. Primarily in India, Twitter is not a very consumer-facing platform and is still confined to people who have opinions to share. For instance, I can find many of my friends from the media and very few business CXOs using Twitter,” said Faisal Kawoosa, founder and chief analyst at market research firm Techarc.

The company did try to draw advertisers to its platform. In 2021, it strengthened its India engineering team and hired ex-Uber executive Apurva Dalal as director of engineering. But the firm has not tasted much success compared to its peers.

Harish Bijoor, brand guru and founder, Harish Bijoor Consultants, believes that the kind of verve, vigour, and life that Twitter enjoys in the US was not replicated in India because involvement in the medium was an issue. “Another thing is that the restrictive algorithm the brand started following in the country put a lot of advertisers off,” he added.

As far as corporate brands are concerned, Indians jumped on earlier mediums like Facebook, and then Google. “Therefore, Twitter became yet another medium, which could not gain traction in the country as the number of followers were not growing as significantly and dramatically as one would expect. So in the pecking order of social media vehicles, Twitter was far away in the advertising bucket,” said Bijoor.
 

Challenges abound
 

Musk is trying to change a lot in terms of how the platform will earn money. The first is $8 for verification. Musk said that those who sign up now will get a blue checkmark. He is trying to broaden monetisation opportunities for the platform rather than just relying on advertisement. But, in India, which has just seen a rise in numbers, whether users will fork out that much money remains to be seen.
 

What also remains unclear is the role and road map that Twitter will have for India, considering Musk has sacked most of the employees in the country.
 

“Woke up to no slack/Gmail/office access and laptop remotely wiped out. Got fired without even a confirmation email while sleeping? There is always a new low,” Jaseem Abid, a software engineer at Twitter India, said in a tweet.  

Many of the workers laid off by Twitter took to social media complaining about the lack of adequate notice period. A class-action lawsuit has also been filed by sacked employees in the San Francisco Federal Court, according to a Bloomberg report.

“Regarding Twitter’s reduction in force, unfortunately, there is no choice when the company is losing over $4 million/day. Everyone exited was offered three months of severance, which is 50 per cent more than legally required,” Musk tweeted to defend the company’s decision.