To Get Personalised contents and be able to add items to your favourites, please Sign In or Sign Up          
 

Facebook’s $22 Billion WhatsApp Deal Buys $10 Million in Sales


News » Technology/Innovation
Nigeria

IMAGE: Jan Koum, WhatsApp’s CEO »

October.29.2014

The numbers are in for Facebook Inc.’s acquisition of mobile-messaging application WhatsApp Inc.: The social network paid $22 billion for a startup that generated $10.2 million in revenue last year.

In a regulatory filing yesterday, Facebook disclosed WhatsApp’s financial results for 2012 and 2013. The messaging service, which reached 400 million active users in December, generated less than 3 cents in revenue for each one last year. By comparison, Facebook paid $55 per user when it acquired the company. WhatsApp’s net loss was $138.1 million for 2013.

The valuation of the deal was already regarded as lofty, at 19 times projected sales. Still, the results illustrate how far Facebook has to go to get its money’s worth for the app, which generates revenue by charging 99 cents for subscriptions after a user’s first year. Chief Executive Officer Mark Zuckerberg said he’s in no rush to make money from WhatsApp, or Facebook’s other growing applications, until they reach 1 billion users.

“The right strategy is to focus on connecting the people before aggressively turning them into businesses,” he said yesterday on a conference call to discuss Facebook’s third-quarter earnings. “Once we get to that scale, then we think they will start to become meaningful businesses in their own right.”

WhatsApp’s growth is going in the right direction -- sales more than doubled last year from $3.82 million in 2012. Its loss widened from $54.7 million, the filing showed. The app now has more than half a billion users.

Chatting App

Facebook already had a product for chatting, Messenger, when it acquired WhatsApp. Zuckerberg said that the purpose for Facebook’s Messenger is different than for WhatsApp. People use Messenger to communicate with their Facebook friends, while WhatsApp is more of a text-messaging replacement that people might use with those who aren’t their friends on social media. The two products are seeing growth in some of the same countries, he said.

The world’s largest social network paid for WhatsApp mostly with equity, boosted by a rise in its stock price. Those who praised the acquisition said Facebook was knocking out a major competitor by bringing it into the company.

“For the next few years our focus is going to continue to be on growth,” Jan Koum, WhatsApp’s CEO, said yesterday at Re/code’s mobile conference in Half Moon Bay, California. “We’re going to focus on growth and not do any kind of experimentation with monetization today.”

Article Credit: Bloomberg

Updated 2 Years ago
 

Find Us On Facebook

Tags:     Facebook Inc.     WhatsApp     Mark Zuckerberg     Messenger     Jan Koum    

RELATED