How Telegram made over half a billion dollars thanks to crypto?

by

As a seasoned crypto investor with a knack for spotting profitable opportunities, I’ve been closely watching Telegram’s impressive financial growth over the past couple of years. The surge in their revenue and digital assets has caught my attention, and I can’t help but be intrigued by this dynamic company. However, the recent arrest of its founder, Pavel Durov, on some rather serious charges has cast a shadow over its bright future.

In the initial six months of 2024, Telegram’s earnings reached an impressive $525 million. However, shortly after, its creator, Pavel Durov, was apprehended due to allegations involving illegal activities on the platform.

As reported by Financial Times, Telegram informed its investors that Durov’s arrest by French authorities hasn’t significantly affected their app. The company’s financial records indicate an increase in the worth of its cryptocurrency assets, which strengthens the overall performance of the business.

In the initial half of 2024, Telegram’s digital assets surged to an impressive $1.3 billion, marking a significant growth from approximately $400 million at the year’s end in the preceding year. This upward trend can be attributed mainly to the increase in capital and the earnings from selling Toncoin (TON), as suggested by unaudited financial reports.

In August, the company’s founder faced a difficult turn as they were apprehended by French officials and indicted on multiple counts.

In a recent investor report dated October 22nd, the company stated that the arrest of its founder did not significantly hinder their operations because the allegations were solely against the individual and not the company itself. The messaging service, Telegram, also disclosed a revenue growth of $525 million for the first half of the year, marking a 190% increase compared to the same period last year. Notably, about $225 million of this sum was generated from a unique agreement with an unidentified partner, where Telegram provided Toncoin exclusive advertising privileges for small businesses within its app.

As part of the agreement, Telegram was compensated by accepting Toncoin as the exclusive payment method for small businesses to purchase ads within the app.

Although the price of Toncoin experienced some ups and downs following Durov’s arrest, Telegram managed to keep earning money through crypto asset sales. In the first six months of 2024 alone, the company reported a staggering $353 million in cryptocurrency transactions and ended up with a net profit of $335 million after taxes, showcasing its robust financial health.

Although the company is currently experiencing financial success, there are potential challenges ahead regarding future advertising income, as it’s associated with sexual misconduct and extremist material. To address this, Telegram acknowledges the importance of tightening content oversight and enhancing its moderation processes.

Although Durov wholly owns Telegram, he has also raised about $2.4 billion in debt financing, which must be repaid by 2026. This September, the company used some of its proceeds to buy back $124.5 million in bonds.

How Telegram is growing revenue through advertising and subscriptions

Previously, Durov discussed how Telegram intends to boost income through advertising and subscription services, much like other platforms do. In the first six months alone, ad revenue hit a high of $120 million, and premium subscriptions generated an impressive $119 million.

Based on various reports, it appears the company successfully cashed in its cryptocurrency holdings during advantageous market periods. However, its main approach still revolves around marketing and subscription-based services.

According to a Financial Times report, Telegram managed to secure around $2 billion in 2021 through the issuance of bonds worth $1 billion. The company had previously hinted at an upcoming Initial Public Offering (IPO), but when speaking with the FT, Durov remained tight-lipped about the specifics regarding timing and location for the IPO. If these bond placements are finalized before March 2026, holders of these bonds will have the opportunity to exchange them for shares at a discount of between 10% and 20%.

In essence, an Initial Public Offering (IPO) is beneficial because it helps make Telegram’s worth accessible to a wider group of people.

Durov discussed ambitions for expanding Telegram’s ad platform, along with the goal to share 50% of ad earnings with content creators on their respective channels. Additionally, the firm plans to establish business accounts and a fresh feature enabling users to connect with locals in their area.

Durov’s arrest

Despite Durov’s recent legal issues stemming from Telegram’s lack of effective moderation and resistance to cooperate with authorities, which made him a suspect in spreading child pornography, fraud, and other illicit activities, his business income remains robust. On August 24, he was arrested at the Paris airport, later being granted €5 million bail and required to report to a police station twice weekly.

As a diligent analyst, I can affirm that the company adheres meticulously to its content moderation practices and collaborates closely with French legal authorities, ensuring compliance with all relevant laws. Moreover, we’re continuously refining our content verification strategies for enhanced efficiency. Lastly, we’re expanding our team of moderators to manage this critical aspect more effectively.

In 2020, Belgium began looking into the matter of Telegram, and by then, they were prepared to collaborate with their French counterparts on this investigation.

As a crypto investor, I’ve learned that the two nations have formed a joint task force. This allows us, the relevant authorities from each country, to share our findings from independent investigations and collaborate on coordinated actions.

Read More

2024-11-26 18:24