It’s IPO season once again, and Pavel Durov, the founder of the messaging app Telegram, is joining the conversation. In a recent interview with the Financial Times, the British financial newspaper, Durov provided fresh insights into the business of the world’s fourth-largest messaging app (trailing behind WhatsApp, WeChat, and Messenger). According to Durov, the company is poised to achieve profitability soon, either by the end of 2024 or in 2025, signaling a favorable time to go public.
Telegram’s optimistic financial outlook is attributed to several factors. Over the past few years, Durov has diversified the messaging app’s revenue streams. Currently, there are five million premium users paying approximately €5 per month for an enhanced version of the app. Recently, similar premium accounts tailored for businesses were introduced, also with a monthly subscription fee. Additionally, Telegram has ramped up its advertising business within channels.
Simultaneously, Telegram is capitalizing on the growing discontent among users of other social media platforms who feel restricted in their freedom of expression, leading them to migrate to the app. The user base is expected to reach 900 million soon, offering ample potential for revenue generation through premium accounts and advertising. Furthermore, the cryptocurrency Toncoin (TON) continues to serve as a means of payment within the app, with Telegram utilizing TON to distribute advertising revenue shares to channel operators.
With a staggering 18 million users per employee, Durov, who co-founded Telegram with his brother Nikolai in 2013, is now the sole shareholder of the company. In 2021, the app raised a substantial $2 billion through bonds to further finance operations and ensure enough runway to reach profitability. Personnel costs remain minimal, with Durov claiming to employ only 50 staff members to support 900 million users, reminiscent of Instagram’s acquisition by Facebook in 2012 for $1 billion, with just 13 employees managing 30 million users.
As for Telegram’s potential valuation upon going public, Durov claims to have received investor offers valuing the company at up to $30 billion. Comparable social media platforms like Pinterest or Snapchat currently boast valuations of approximately $20 to $30 billion, making such a valuation plausible. However, Telegram’s relatively modest revenue may suffice to sustain operations.
Nevertheless, the darker side of the messaging app lies in its numerous groups and channels run by dubious individuals or even criminal organizations, who have turned to Telegram as one of the last platforms to disseminate their messages. For instance, it took significant time for the operators to shut down Hamas channels following terrorist attacks on Israel. Handling hate speech and criminal content will undoubtedly become a central issue in any potential IPO process.
