X, formerly Twitter, has reported a 2.2% drop in ad revenue for the three months ending June 30, 2025, pulling in $707 million. While the platform still saw a roughly 20% year-over-year increase, the quarter-on-quarter decline signals a slowdown in momentum that began earlier in the year. The news comes amid ongoing financial pressures, including substantial debt and fierce competition in the social media landscape.
A Roller-Coaster Quarter
The second quarter’s revenue dip follows a surge in advertiser interest during the first quarter of 2025. Many brands and investors were drawn back to the platform following the 2024 U.S. election and the perception that it would become more politically influential.
However, that renewed enthusiasm was not sustained, with the Q2 intake suggesting a struggle to retain ad spending. This was compounded by Elon Musk’s public fallout with then-President Donald Trump and his subsequent announcement to “swear off politics,” which dissipated some of the initial momentum.
Subscription Efforts Fall Short
Part of X’s strategy to reduce its dependency on advertising has been to pivot toward subscription services and other non-ad revenue streams. However, these efforts have not scaled quickly enough to offset the slipping ad sales.
While X Premium is bringing in some revenue, it is not at the level needed to fill the financial gap. Other initiatives, such as the “X Money” payments feature, have been held up by regulatory approvals, further delaying diversification efforts.
Mounting Financial Pressures
With an estimated $2.9 billion in total revenue projected for 2025 and about $1.2 billion in annual debt servicing costs, X is under intense pressure to perform. The company’s recent merger with xAI, which is reportedly burning through $1 billion per month on infrastructure, adds another layer of financial risk. Meanwhile, Meta’s Threads continues to grow, posing a significant threat to X’s mobile app user base and potentially siphoning away ad dollars.
What’s Next for X
For X to navigate its financial challenges, regaining advertiser confidence will be crucial. This will likely depend on maintaining policy consistency and ensuring user growth in the face of stiff competition. The performance of its non-ad revenue streams will be under scrutiny, as their success is vital for the platform’s long-term sustainability.
The outcome of X’s AI ambitions, particularly its integration with xAI, will also play a significant role in its future trajectory. Ultimately, the platform’s ability to balance its transition toward an AI-centric model with the demands of a volatile ad market will determine its success in the coming years.