Telegram's "Encrypted Accounting": Net Loss Behind Surge in Revenue and the $450 Million Token Sale Controversy

Author: Zen, PANews

Telegram has recently come back into the spotlight due to a financial report directed at investors: while revenue is on the rise, net profit has taken a downturn. The key variable here is not a slowdown in user growth, but rather the decline in the price of TON, which has "penetrated" the profit and loss statement through asset volatility.

The sale of over $450 million worth of TON tokens has prompted the outside world to reassess its interests and boundaries with the TON ecosystem.

Telegram's Revenue Soars Amidst Low TON Prices, Yet Still Reports Net Loss

According to an FT report, Telegram achieved a significant revenue surge in the first half of 2025. The unaudited financial report shows that the company generated $870 million in revenue in the first half of the year, a 65% year-on-year increase, far exceeding the $525 million from the first half of 2024; it achieved nearly $400 million in operating profit.

In terms of revenue structure, Telegram's advertising revenue grew by 5% to $125 million; premium subscription revenue skyrocketed by 88% to $223 million, nearly double that of the same period last year. However, the key driver of Telegram's revenue growth primarily comes from an exclusive agreement signed with the TON blockchain—TON has become the exclusive blockchain infrastructure for Telegram's mini-program ecosystem, bringing in nearly $300 million in related revenue.

Overall, Telegram continued to experience strong growth from the mini-game craze that began in 2024—during that year, Telegram achieved its first annual profit of $540 million, with total annual revenue reaching $1.4 billion, far exceeding the $343 million from 2023.

Of the $1.4 billion in revenue for 2024, about half came from its so-called "partnerships and ecosystem," roughly $250 million from advertising, and $292 million from its premium subscription services. Clearly, Telegram's growth is partly due to the surge in paid users, but more so from the revenue generated by its cryptocurrency-related partnerships.

However, the high volatility of cryptocurrencies also poses risks for Telegram. Even though it achieved nearly $400 million in operating profit in the first half of 2025, Telegram still reported a net loss of $222 million. Insiders indicate that this is because the company had to revalue its holdings of Ton token assets. Due to the continued slump of altcoins in 2025, the price of Ton tokens fell continuously, dropping more than 73% at its lowest point.

Selling $450 Million Worth: Cashing Out or Upholding Decentralization Principles?

Having witnessed the prolonged slump in altcoin prices and the significant losses of many DAT-listed companies, retail investors are not particularly surprised by Telegram's losses due to the depreciation of virtual assets. What has surprised and displeased the community more is the FT report that Telegram has sold a large amount of TON tokens, with sales exceeding $450 million. This figure surpasses 10% of the current circulating market value of the token.

As a result, the price of TON continued to decline, and combined with Telegram's sale of a large amount of tokens, it sparked doubts and controversies among some members of the TON community and investors regarding its "selling tokens for cash" and betraying Ton investors.

According to a public statement by Manuel Stotz, chairman of the TONStrategy (NASDAQ: TONX) board, all TON tokens sold by Telegram are subject to a four-year vesting schedule. This means that these tokens cannot circulate in the secondary market in the short term, preventing immediate selling pressure.

Furthermore, Stotz stated that the main buyers Telegram is dealing with are long-term investment entities like his own TONX company. They are purchasing these tokens for long-term holding and staking. Stotz emphasized that the TONX, as a publicly listed investment company focused on the TON ecosystem in the U.S., intends to use the tokens acquired from Telegram primarily for long-term strategic purposes, rather than for speculative trading.

Stotz also stressed that the number of Ton tokens held by Telegram did not significantly decrease after the transaction and may have even increased. This is because Telegram exchanged part of its existing holdings for the distribution of locked tokens and can continue to generate new TON revenue through advertising revenue sharing and other business activities, maintaining a high level of holdings overall.

Telegram's long-term business model of acquiring TON tokens has also raised concerns among some community members—specifically, that the company holds too high a proportion of tokens, which is detrimental to the decentralization of TON. Telegram founder Pavel Durov has taken this concern seriously, stating as early as 2024 that the team would keep Telegram's holdings of TON below 10%. If holdings exceed this standard, the excess will be sold to long-term investors to ensure a broader distribution of tokens while also raising development funds for Telegram.

Durov emphasized that these sales would occur at a slight discount to the market price and would include lock-up and vesting periods to avoid short-term selling pressure and ensure the stability of the TON ecosystem. This plan aims to prevent concerns about price manipulation due to the concentration of TON tokens in Telegram's hands and to uphold the project's decentralization principles. Therefore, Telegram's token sales appear more like a part of asset structure adjustment and liquidity management rather than a simple high-price sell-off for profit.

It is worth noting that while the continued decline in TON prices in 2025 has indeed put pressure on Telegram's financial reports, in the long run, the close binding of Telegram and TON has also created a situation of shared prosperity and loss.

By deeply participating in the TON ecosystem, Telegram has gained new revenue sources and product highlights, but it must also bear the financial impacts of cryptocurrency market fluctuations. This "double-edged sword" effect is also a factor that investors must consider when assessing its value as Telegram contemplates an IPO.

Telegram's IPO Prospects

With improved financial performance and business diversification, Telegram's IPO prospects have become a focal point of market attention. The company has raised over $1 billion through multiple rounds of bond financing since 2021; in 2025, it issued $1.7 billion in convertible bonds, attracting participation from internationally renowned institutions such as BlackRock and Abu Dhabi's Mubadala.

These financing initiatives not only provide Telegram with capital but are also seen as preparations for an IPO. However, Telegram's path to going public is not without challenges, as its debt arrangements, regulatory environment, and founder-related factors will all influence the IPO process.

Telegram currently has two main outstanding bonds: one with a 7% coupon maturing in March 2026, and another with a 9% coupon maturing in 2030. Of the second $1.7 billion bond, approximately $955 million is used to refinance old bonds, while $745 million is new funding for the company.

The special feature of the convertible bonds is that they include an IPO conversion clause: if the company goes public before 2030, investors can redeem or convert their bonds at about 80% of the IPO price, equivalent to a 20% discount. In other words, these investors are betting on Telegram's successful IPO and the potential for significant valuation premiums.

Currently, Telegram has used the debt refinancing in 2025 to redeem or repay the vast majority of the bonds maturing in 2026 in advance. Durov has publicly stated that the old debts from 2021 have been largely settled and do not pose a current risk. In response to the impact of the $500 million Russian bond freeze on Telegram, he stated that Telegram does not rely on Russian capital and that there are no Russian investors in the recently issued $1.7 billion bonds.

Therefore, Telegram's main debt now consists of the convertible bonds maturing in 2030, leaving a relatively ample window for an IPO. However, many investors still expect Telegram to seek an IPO around 2026-2027, achieving debt-to-equity conversion and opening new financing channels. If this window is missed, the company will face long-term debt interest pressure and may lose the opportunity to transition to equity financing.

When evaluating Telegram's IPO value, investors are also concerned about its profitability prospects and revenue-sharing model. Telegram currently has about 1 billion monthly active users and an estimated 450 million daily active users, providing a large user base that offers commercial potential. Although the business has grown rapidly in the past two years, Telegram still needs to prove that its business model can achieve sustainable profitability.

The good news is that Telegram currently has absolute control over its ecosystem. Durov recently emphasized that he remains the sole shareholder of the company, and creditors do not involve themselves in corporate governance.

Thus, Telegram may be able to sacrifice some short-term profits for long-term user loyalty and ecosystem prosperity without being constrained by short-sighted shareholders. This "delayed gratification" strategy aligns with Durov's consistent product philosophy and will become a core part of the growth story told to investors along the IPO path.

However, it should be emphasized that the IPO is not solely dependent on financial and debt structures. The FT points out that Telegram's potential IPO plans are currently still affected by legal proceedings against Durov in France, and the related uncertainties make the timeline for the IPO difficult to clarify. Telegram has also acknowledged in its communications with investors that this investigation could pose obstacles.

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