Before CEO Pavel Durov was detained for alleged platform crimes, revenue in the first half of 2024 soared to $525 million.
Telegram told investors that the detention of CEO Pavel Durov by French police did not have a "substantial impact" on the operation of the messaging app, as financial disclosures show that the surge in its cryptocurrency holdings is increasingly supporting its business.
According to previously unreported unaudited financial statements seen by the UK's Financial Times, Telegram reported that the value of its digital assets grew significantly in the first half of 2024, rising from nearly $400 million at the end of last year to $1.3 billion. The documents show that this stock price increase, along with the proceeds from the sale of the closely related cryptocurrency Toncoins, and another transaction related to Toncoin, helped the Dubai-based company establish a financial buffer after being impacted by Durov's legal disputes.
In August this year, the founder of Telegram was detained by French authorities in Paris, which shook Telegram. He faces several preliminary charges, with one charge carrying a maximum sentence of 10 years in prison, and Durov is currently on bail in France.
The company disclosed to investors that this incident "has no significant impact on Telegram's operations and the group's business activities," noting that these charges target its founder, not the company itself. Telegram declined to comment on the disclosure. According to its financial statements, Telegram's revenue for the six months ending in June was $525 million, a 190% increase from the same period in 2023.
The documents show that nearly half of the revenue ($225 million) came from a one-time transaction with an unnamed party. According to the terms of the transaction, Telegram "received compensation" in exchange for making cryptocurrency Toncoin the exclusive method for small businesses to purchase advertising on the app.
The exclusive agreement ended on October 1. Toncoin was initially developed internally by Telegram. However, after the project encountered regulatory issues with the US Securities and Exchange Commission in 2020, it is now developed by an open-source community.
Currently, an ecosystem consisting of multiple groups is building or investing in businesses related to Ton on the blockchain, some of which are closely linked to Telegram and Durov. Telegram stated in the disclosure that it "holds a large amount of Toncoin and is affected by changes in the market value of Toncoin," acknowledging that the price of Toncoin has been volatile since Durov's detention.
Since Durov's detention, the trading price of Toncoin has fallen by about 10%. As of June, the company earned $353 million from the sale of digital assets in the first half of the year, and since then, the company has sold $348 million worth of Toncoin.
In the first half of this year, the company also announced a post-tax profit of $335 million. This figure is significantly higher than the full-year revenue of $342 million in 2023 (a loss of $173 million), indicating that Telegram had begun to achieve its first annual profit before Durov's detention.
Experts warn that due to current associations with suspected child sexual abuse material and terrorism content, this company, registered in the British Virgin Islands, may struggle to obtain advertising revenue in the future. The company stated in the disclosure documents that "its content moderation practices and cooperation with judicial authorities strictly comply with applicable French law," but also stated that it is upgrading its content review practices and expanding its review team.
Telegram is wholly owned by Durov, who has a cryptocurrency fortune worth billions of dollars, but the company has raised about $2.4 billion in debt financing, which will mature in 2026. According to the documents, in September 2024, Telegram used part of its total revenue to repurchase some of its own bonds for $124.5 million.
Earlier this year, Durov told the Financial Times in an interview that Telegram has only about 50 employees and is increasing its profitability through advertising and subscriptions. This follows the typical business model of competitor social media and messaging platforms like Meta and X, and the founder indicated that the company might go public in 2026.
According to Telegram's financial disclosures, advertising revenue approximately doubled in the first half of this year, reaching a record $120 million, while premium subscription revenue was $119 million, compared to $32 million in the same period last year.
An informed source stated that the company took advantage of favorable market conditions to strategically divest some of its cryptocurrency reserves.
However, the person stated that this is just a strategy and not part of its long-term profitability strategy, which still relies on selling advertising and premium subscriptions.
