Shortly before media startup The Messenger launched last year, the company’s president said the company planned to generate more than $100 million in revenue in 2024. To reach that point, a major change in fate will be necessary.
The site generated about $3 million in revenue last year, according to two people familiar with the company’s financial results. And the company told potential investors it had only $1.8 million in cash on hand at the end of December, after losing about $38 million last year and putting itself under severe financial strain.
Messenger’s results, which have not been fully disclosed until now, highlight the difficulties facing the company. The founders, who raised $50 million to launch the website, initially said their goal was to change the way American politics, culture and sports are covered. However, it faced editorial and financial problems.
The company will lay off about 24 employees this week, including those covering national politics and science and technology. It is raising money from investors to keep the business afloat through this year. On Tuesday, founder Richard Beckman, a longtime executive at magazine company Condé Nast, announced he was leaving the company.
Messenger spokeswoman Kimberly Barnhart rejected the idea that the company was under “dire” financial strain, adding that Messenger reported about the same amount of revenue in January as it did all of last year.
Bernhardt said the company has already raised more than $10 million in its latest funding round. He added that the company “also plans to introduce events and Messenger TV” and expects to reach financial break-even later this year.
“Messenger’s revenue will continue to grow and spending will continue to shrink throughout the year,” she said.
Messenger’s problems highlight the difficulty of starting a media company that relies on digital advertising, which is the company’s main source of revenue.
The site has struggled despite having a longtime media executive as its founder. Deep-pocketed backers include Josh Harris, co-founder of private equity firm Apollo Global Management. Journalist with experience in top publications.
The company also has some editorial issues. Greg Birnbaum, a widely respected political editor, resigned in May after clashing with the site’s audience editor. Some staff members are upset that they are being asked to create a slew of articles based on articles published by rivals.
But it’s starting to gain traction among readers, according to figures from measurement firm ComScore. Messenger told potential investors that it attracted 24 million visitors in December, a 24 percent increase from the previous month.
As of last year, Messenger expected revenue of just $75 million in 2024, according to two people familiar with the company’s finances. About $10 million of that projection will come from the television division, which has not yet begun.
The company’s costs last year exceeded $40 million, two people said. Many of these costs (more than $8 million) were incurred from office building lease obligations. Messenger has offices in New York, Washington and West Palm Beach, Florida.
The company’s valuation in the ongoing funding round is unclear, two people said. Axios reported early Thursday The company was reportedly looking to raise $20 million.
After hearing news of the newsroom cuts, many of the company’s employees called for more transparency from Mr. Finkelstein on Slack, an internal messaging system, and called for a staff meeting to discuss the company’s financial situation. requested.
Finkelstein said in an internal memo Wednesday that the decision to lay off the employees was “tough.”
“I know this is a difficult time and I am truly sorry to those affected,” he wrote.