Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
Telegram has told investors that the arrest of Chief Executive Pavel Durov by French police has not had a “material impact” on the messaging app’s operations, the company said in a financial disclosure as the value of its cryptocurrency holdings soared. It has been shown that the company is increasingly supporting the business of
Unaudited financial statements obtained by the Financial Times (which had not been previously reported) show that Telegram saw a significant increase in the value of its digital assets in the first half of 2024, reaching nearly $400 million at year-end. However, it was reported that the amount had increased to $1.3 billion. last year.
The rally, along with proceeds booked from the sale of Toncoin, a cryptocurrency closely tied to the company, and further Toncoin-related transactions, helped the Dubai-based company’s financials after being rocked by the crisis, according to filings. This suggests that it helped create a buffer. Mr. Durov’s legal problems.
Telegram was rocked in August when its founder was detained by French authorities in Paris. He faces a number of preliminary charges against Telegram for failing to address alleged crimes on its platform. One of the charges carries a maximum penalty of 10 years in prison, and Durov remains on bail in the country.
The company said in an Oct. 22 investor disclosure document that the incident “did not have a material impact on Telegram’s operations or the group’s business activities,” and that the allegations targeted the founder rather than the company itself. He pointed out that there was.
Telegram declined to comment on the disclosure.
According to its financial statements, Telegram generated $525 million in revenue in the six months to the end of June, an increase of 190% compared to the same period in 2023.
Almost half of the revenue, or $225 million, came from a one-time contract with an unnamed entity, the documents said. Under the terms of the agreement, Telegram “received compensation” in exchange for allowing the cryptocurrency Toncoin to be the exclusive means for small and medium-sized businesses to purchase advertising on the app. The exclusive agreement ended on October 1, according to the document.
Toncoin was originally developed in-house at Telegram. However, in 2020 the project ran into regulatory issues with the US Securities and Exchange Commission, so it is now being developed by the open source community.
Currently, the group’s ecosystem is built on the Ton blockchain or invested in Ton-related ventures, some of which have close ties to Telegram and Durov.
Telegram said in a disclosure statement that the company “holds large amounts of Toncoin and is exposed to fluctuations in the Toncoin market price,” acknowledging that the price has fluctuated since Durov’s arrest. . Toncoin has fallen by about 10% since Durov was detained.
The company made $353 million in revenue from the sale of digital assets in the first half of this year through June, and has since sold $348 million in Toncoin.
In the first half of this year, after-tax profit was $335 million. This figure dwarfs full-year 2023 sales of $342 million, which resulted in a loss of $173 million, and puts Telegram on track for its first full-year profit before Durov’s arrest. It shows.
Experts say Telegram, which is incorporated in the British Virgin Islands, may struggle to generate advertising revenue in the future given its links to child sex abuse allegations and terrorist content. He warns.
The company said in a disclosure document that it “strictly complies with applicable French law and supports content moderation practices and cooperation with law enforcement authorities,” but that it has improved its content review practices. , also said it is expanding its moderation team.
Telegram, which is wholly owned by Durov, who has billions of dollars in crypto assets, has raised about $2.4 billion in debt financing that matures in 2026. Telegram used a portion of the overall proceeds in September 2024, according to the document. The company will buy back a portion of its bonds for $124.5 million.
Telegram’s bonds still trade below par, but have recovered from the initial sell-off after Durov’s arrest, trading at 95 cents on the dollar in August and falling to low 87 cents on the dollar. did.
Recommended
Durov told the Financial Times earlier this year that Telegram, which has just about 50 employees, is ramping up its monetization efforts through advertising and subscriptions. It follows the typical business model of rival social media and messaging platforms such as Meta and X, with the founders suggesting the company could emerge in 2026.
Telegram’s financial disclosures show that advertising revenue nearly doubled to $120 million in the first half of this year, a record high, and premium subscriptions brought in $119 million, up from $32 million in the same period last year. .
One of the people said the company took advantage of favorable market conditions to sell some of its crypto reserves for a profit.
But the person said this is tactical and not part of a long-term monetization strategy that will continue to sell advertising and premium subscriptions.
