How did Telegram make more than half a billion dollars thanks to cryptocurrencies?
Telegram's revenue surged to $525 million in the first half of 2024 before its founder, Pavel Durov, was arrested on charges of criminal activity on the platform.
According to Financial Times, Telegram has informed investors that Durov's arrest by French police has not had a 'material impact' on the app. Financial reports showed that the value of the company's cryptocurrency holdings was on the rise, bolstering the business.
Telegram's digital assets increased to $1.3 billion in the first half of 2024, up from nearly $400 million at the end of the previous year, according to unaudited financial reports. The increase in capital and revenue from the sale of Toncoin (TON).
The situation worsened in August when the company's founder was detained by French authorities and charged with a number of offenses.
However, in an investor report dated October 22, the company stated that the arrest had not significantly impacted its business, as the charges were only against its founder. Telegram also reported revenue of $525 million for the six months ending in late June, a 190% increase compared to the same period the previous year. Almost half of that, $225 million, came from a one-off deal with an unnamed partner in which Telegram granted Toncoin exclusive status for small businesses to purchase advertising on the app.
Under the terms of the agreement, Telegram 'received compensation' in exchange for allowing the cryptocurrency Toncoin to be the exclusive method for small businesses to purchase advertising on the app.
Despite some fluctuations in the price of Toncoin following Durov's arrest, Telegram has continued to generate revenue from cryptocurrency asset sales. In the first half of 2024, the company recorded $353 million in cryptocurrency transactions and reported a post-tax profit of $335 million, demonstrating its financial strength.
Despite the current successful financial situation, experts warn that the company could face difficulties in future advertising revenues due to its links to sexual violence and terrorist content. Telegram has confirmed the need to maintain control over content and improve its moderation system.
Although Durov is the sole owner of Telegram, he has also raised around $2.4 billion in debt financing, which must be repaid by 2026. This September, the company used part of its revenue to repurchase $124.5 million in bonds.
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How Telegram is increasing revenue through advertising and subscriptions
Previously, Durov spoke about Telegram's plans to increase revenue from advertising and subscriptions, similar to the business models of competing platforms. In the first half of the year, advertising revenue was a record $120 million, while premium subscriptions generated $119 million.
Sources indicate that the company collected its cryptocurrency assets profitably using favorable market conditions, but the main strategy remains tied to advertising and paid subscriptions.
Thanks to the placement of $1 billion in bonds in 2021, Telegram raised around $2 billion, writes FT. Companies predicted an imminent IPO, but in a conversation with FT, Durov declined to comment on the potential timeline and platform for the listing. If the placement is completed before the end of March 2026, bondholders will be able to convert them into shares at a 10-20% discount.
In general terms, we see value in [an IPO] as a means to democratize access to the value of Telegram.
Durov also spoke about plans to expand Telegram's advertising platform and the intention to offer content creators 50% of the advertising revenue from their channels. The company will also introduce business accounts and a new feature that will allow users to meet people nearby.
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Durov's arrest
Telegram's revenue is solid despite Durov's recent legal troubles. He was detained on August 24 at Paris airport due to insufficient moderation of Telegram and his refusal to cooperate with authorities, making him a suspect in the distribution of child pornography, fraud, and other crimes. The businessman was released on bail of 5 million euros and was required to report to the police station twice a week.
The company stated in its report that it maintains its content moderation practices and cooperation with judicial authorities in strict compliance with applicable French legislation, is improving its content verification methodology, and is expanding its moderation team.
It was later revealed that Belgium had been investigating Telegram since 2020 and would cooperate with French authorities.
According to De Standaard, countries have created a research group through which the competent authorities of both countries will exchange the results of their investigations and be able to carry out joint actions.