Facebook earnings: $232M loss for WhatsApp, breakdown of WhatsApp purchase, and lots of mobile users
When it comes to Facebook and WhatsApp, it can actually be somewhat difficult to tell the story much beyond financials. The acquisition of WhatsApp only finalized earlier this month, so the two companies are still relatively independent. Now, were getting a bit more info on the money side of things, including a big loss for WhatsApp and a breakdown of why Facebook paid so much for the app. Facebook also announced that it had 456 million mobile-only daily active users, and over 1.1 billion daily active users on a mix of mobile and web.
The financial side of things aren't actually as bad as they look for WhatsApp. The $232 million net loss for the first 6 months of 2014 includes $206.5 million in share-based compensation expenses and issuance of common stock at below fair value. If you take that out of the equation, WhatsApp spent $13.5 million in net cash for operating expenses, and brought in $15.921 million in revenue. Although, it should be noted that about $16 million in revenue is surprisingly low for WhatsApp, which has close to 600 million users and supposedly charges a $1 per year subscription fee. Those numbers don't seem to add up, even for a 6 month span.
Another interesting part of the earnings report was the breakdown of how much Facebook paid for WhatsApp. This included $2 billion for WhatsApp's user base, $448 million for the brand name, $288 million for technology, and $21 million for "other". You may notice that doesn't add up to anywhere near the final price. That's because Facebook also added in $15.3 billion for "goodwill", which is said to be the value "from future growth, from potential monetization opportunities, from strategic advantages provided in the mobile ecosystem from expansion of our mobile messaging offerings." We would also say that the "goodwill" number is reflective of how much people love the app. That's quite a lot.