Shortly after Twitter fired the majority of its employees here under its new owner Elon Musk, the company’s Indian subsidiary filed its annual financial results, throwing a light on the costs the company was incurring in the country. Twitter Communications India Pvt Ltd’s revenues scaled around 82% in FY22; however, the company slipped into losses.
Twitter India’s revenue from operations grew 81.5% to Rs 156.75 crore during the fiscal year ending March 2022 from Rs 86.36 crore in FY21, the company’s standalone annual financial statement with the Registrar of Companies (RoC) shows. It’s worth noting, however, that this income includes very little of its ad revenue, which has generally accounted for the majority of Twitter’s income.
The subsidiary provides services to the holding company (Twitter International Unlimited Company, Ireland) and a fellow subsidiary (Twitter Asia Pacific Pte. Limited, Singapore). Around 58% of the total operating revenue was generated in Ireland which ballooned 2.5X to Rs 90.5 crore in FY22 while the remaining Rs 66.23 crore was from Singapore which surged 30% during the same period.
Importantly, the company has not disclosed its domestic revenue and booked all of its operating income for providing support services to its group entities.
Collection from research and development activities contributed 52% of overall operating revenue and shot up 2.4X to Rs 81.62 crore followed by marketing support services which formed over 42% of the revenue during FY22. Collection from this vertical grew 30% to Rs 66.23 crore. The company also collected Rs 8.9 crore via user support services during the same period.
On the expense side, employee benefit costs accounted as the single largest element, forming 75% of the total expenditure. This cost jumped over 3X to Rs 136.8 crore in FY22 from Rs 43.3 crore in FY21. Importantly, this cost also includes Rs 44.31 crore expense on the employee stock option scheme and employee stock purchase plan.
Spends on rent, advertising cum promotional expenses, and legal professional fees stood at Rs 10.7 crore, Rs 6.9 crore, and Rs 4 crore respectively during FY22. The company also incurred Rs 2.7 crore on outsourced support services which shrank over 55% from Rs 5.9 crore booked in FY21.
Following the revenue, the total expenses of the company also jumped 2.4X to Rs 182 crore in FY22 as compared to Rs 75.8 crore in FY21. Despite a noticeable growth in revenue, the company slipped into the red and booked a loss of Rs 31.84 crore in FY22 against Rs 7.76 crore profits reported in the preceding financial year.
During FY22, the EBITDA margin of the company also worsened to -12.13% which could be ascribed to the over 2X jump in employee benefits expense. On a unit level, the company spent Rs 1.16 to earn a rupee of operating revenue.
After the layoffs, which globally included over half its employees, Twitter has seen activity on its platform soar to an all-time high; however, advertisers have reservations about plans like the blue tick-for-$8 offering, which has already started on a bad note with imposters misusing the facility to create fraud accounts for brands and politicians. While these accounts were suspended in the space of a few hours, the stock of at least one company, the pharmaceutical company Eli Lilly, reportedly dropped over 4% after an impersonator handle said it would start providing insulin for free to patients.
While the India operations, like all its major markets, will continue to be roiled by new owner Elon Musk’s ‘eccentric’ style, it does look like both costs and revenues will drop going ahead, as the firm recalibrates its operations under new ownership.