Telegram isn’t just a messaging app with over 950 million monthly active users; it’s quietly transforming into a cryptocurrency company. Recently leaked Telegram audit reports reveal more revenue details of this social media giant. According to Telegram’s audit disclosure, in 2023, Telegram sold part of its TON holdings, worth 243 millions USD, but still had nearly 400 millions in crypto assets on its books as of Dec 31, 2023.
Beyond social media, TON props up half of Telegram’s revenue
The audit shows that in 2023, crypto-related business accounted for nearly 50% of Telegram’s revenue, becoming its largest income source.
In this audit, which was personally signed by Telegram founder Pavel Durov and conducted by PWC Dubai branch, Telegram achieved revenue of US$342 million in 2023, but suffered an operating loss of US$108 million during the same period. In addition to operating losses, the statement also separately lists the “Profit and Loss from Crypto Asset Revaluation” project.
In 2023, this project recorded a profit of US$502,000, while in 2022 it suffered a loss of US$2.432 million.
What is even more noteworthy is that under the item “excluding profits and losses”, Telegram’s “digital asset revaluation income” in 2023 is as high as US$85.996 million, far exceeding the US$17.043 million in 2022.
As of the end of 2023, the “digital assets” held by Telegram reached US$399 million, a significant increase from US$106 million in 2022. It is worth mentioning that Telegram has sold some of its TON tokens in 2023, with a sale value of US$243 million.
From the perspective of revenue structure, Telegram’s cryptocurrency-related business performed well. In 2023, the “Integrated Wallet” project contributed $130 million in revenue, accounting for 38% of total revenue. This new business mainly refers to @Wallet, which is widely used by users in the Telegram ecosystem. In addition, the “Sale of collectibles” (such as usernames, virtual phone numbers, etc.) contributed $17.816 million in revenue in 2023. The revenue share of these two crypto-related businesses reached 43%, which is an increase from the 40% share in 2022.
Telegram’s other business revenue is also growing steadily. Paid subscription services generated $94.09 million in revenue in 2023, an increase of more than five times from 2022, accounting for 27.5% of total revenue. Other revenue sources include advertising revenue ($70.572 million) and paid services connected to advertising platforms ($30 million).
The accounting treatment of crypto assets has always been a complex topic in financial reporting. Current accounting standards require these assets to be treated as “intangible assets” and recorded on the balance sheet at cost.
This method requires companies to conduct regular “impairment tests,” evaluating the value of digital assets quarterly. If asset prices fall, companies must reflect this impairment on their books. However, even if asset prices rise, current standards don’t allow companies to increase their book value accordingly.
This accounting method is widely used in the industry. For example, well-known companies like Tesla and MicroStrategy, which hold large amounts of Bitcoin, use this “intangible asset” approach for accounting. While cautious, this practice may not accurately reflect the actual market value of crypto assets, especially given the frequent fluctuations in the crypto market.
The Financial Accounting Standards Board (FASB) issued new guidance in late 2023 aimed at improving the accounting treatment of digital currency assets. This new standard is set to take effect on December 15, 2024, with its core change allowing companies to value crypto assets at fair market value. More importantly, changes in asset value can be directly recorded in the income statement for each accounting period.
Therefore, combining the above disclosures about “crypto assets” in Telegram’s balance sheet and income statement, it can be roughly concluded that Telegram seems to have adopted the latest accounting treatment guidance for digital currency assets issued by the Financial Accounting Standards Board (FASB). Telegram has already reflected this change in its 2023 financial report, with the appearance of the “Gain/loss on revaluation of crypto assets” item.
Considering the above revenue composition, it’s clear that crypto asset-related business has developed into a major pillar for Telegram, contributing nearly half of its revenue. The core of this emerging business segment is undoubtedly centered around the TON ecosystem.