Elon Musk's X is placing a high-stakes bet on AI and subscriptions to forge its post-Twitter identity, as new financials reveal surging growth in these areas while its legacy advertising engine continues to sputter. The platform, now formally housed under Musk’s xAI Holdings, appears to be re-engineering its business model, hoping data and AI can succeed where traditional ads have faltered. 

Shifting revenue streams: Financial materials shared with investors for a new debt sale show X generated $91 million from data licensing and subscriptions in February 2025, a significant 32% jump from the previous year, Bloomberg first reported. Advertising revenue, historically the company's lifeblood, grew a modest 4% year-over-year to $146 million in the same period, signaling a clear pivot in where X sees its future growth. 

The xAI integration: This shift aligns with Musk’s move last month to combine X and xAI under the XAI Holdings umbrella, a deal reportedly valuing xAI at $80 billion and X at $33 billion—down from the $44 billion Musk paid in 2022. The merger formalizes an already close relationship, leveraging X’s vast data trove to train AI models like Grok, which is already integrated into X’s premium subscription tiers. The strategy aims to create "smarter, more meaningful experiences," according to Musk, while embedding AI deeper into the platform's functionality and value proposition.

Advertising headwinds persist: Despite the modest February uptick, X's advertising business remains a shadow of its former self. The company pulled in $4.5 billion in ad revenue in 2021, its last full year before Musk's takeover. While AdAge reports Emarketer projects a 16.5% rise to $2.26 billion in global ad sales for 2025, this recovery is slow and faces significant hurdles. Advertiser concerns about brand safety and content moderation persist since Musk's acquisition, contributing to an initial exodus and subsequent lawsuits, though X recently reached a settlement with Twitch over alleged boycott claims. Meanwhile, competition intensifies, with rivals like Meta's Threads rolling out advertising globally. 

Stabilizing the ship: The growth in subscriptions and data, combined with sharply lower costs post-acquisition, has helped stabilize X's financial picture, boosting investor confidence. The company boasted nearly $1.5 billion in annual earnings before interest, taxes, depreciation, and amortization (EBITDA) in recent financial disclosures, according to Bloomberg.

The company's cash position has also improved substantially, rising to nearly $1.1 billion from lows of around $120 million to $320 million during the previous year. This improving outlook enabled banks led by Morgan Stanley to successfully offload the bulk of the risky $12.5 billion in buyout debt earlier this year—boosting the bank's own earnings—and to launch a sale this week for the final, most expensive $1.23 billion tranche. A recent equity round also reportedly raised nearly $900 million, valuing the company around the original $44 billion purchase price. 

Debt burden remains: Despite the progress, X still operates under a heavy debt load from the 2022 buyout. The company faced over $1.3 billion in annual interest expenses by the end of 2024 and paid roughly $200 million in debt-servicing costs in March 2025 alone, people familiar with the matter told Bloomberg. Refinancing the final debt portion at a lower interest rate is expected to save X about $43 million annually, but the sheer size of the remaining debt continues to weigh on the company's finances as it navigates its strategic transformation.