WhatsApp’s First Half Of 2014 Revenue Was $15M, Net Loss Of $232.5M Was Mostly Issuing Stock
In what appears to be Facebook’s first time in doing so, the company has revealed the financials of its popular acquisition of Whatsapp and considering the user base for the app to be 600 million, this profit doesn’t seem to be doing justice. The first six months which ended on June 30th this year, the app had a total revenue of $15.921 million which was certainly not sufficient and it led to a loss of $232.5 million. It is being claimed that a majority of this loss, being $206.5 million, was for share-based compensation expenses and issuance of common stock below fair value.
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The net cash used up in the operating expenses for the first half of this year was $13.5 million and this apparently gives a much more reasonable picture. Consideration the fact that Whatsapp’s valuation had been rising, it seemed fair to use an approach where the share-based compensation was used to attract top talent. And ultimately, the $22 billion acquisition by Facebook would largely make the “expenses” of issuing that stock moot. So basically we can say that Whatsapp wasn’t really burning out any cash, it was only doling out the paper money.
Last year on December 31st, Whatsapp had shown a revenue of $10.2 million which had cost the company a loss of $138.146 million. However, there seems to be a significant change in the net cash used up for the operating expenses as it only appeared to be $9.9 million. On the other hand, the share-based compensation amounted to $98.8 million. This increase in the share based compensation had come from an ordinary $38.2 million in 2012 and at that time the net losses had only been $54.669. The net cash used up for the operating expenses during this year had been $3.5 million.
Now the classification of the money which Facebook has spent on the popular app shows that the social networking giant dug up $448 million for the brand, $288 million for technology, and $21 million for other things. So the remaining $15.314 billion was obviously chalked up as ‘goodwill’ which we can refer to as the value “from future growth, from potential monetization opportunities, from strategic advantages provided in the mobile ecosystem from expansion of our mobile messaging offerings.”
The basic aim of the app is still growth and it certainly isn’t going towards monetization. At the time of the acquisition in February this year, Mark Zuckerberg and WhatsApp CEO Jan Koum had stated that ads werent the best of means to earn money on messaging. However we are still hearing that the app wouldn’t be aggressively pushing the $1 a year subscription fees it sometimes charges.
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