The Irish unit of WhatsApp recorded a pre-tax loss of €7.34m last year, mainly driven by an increase in company estimates of the impact of regulatory administrative fines on the firm.
New accounts for the Meta-owned firm, WhatsApp Ireland Ltd, show that the company recorded the pre-tax loss of €7.34m last year compared to a pre-tax profit of €40.8m in the prior year – a negative swing of €48.14m.
The social media messaging platform firm recorded the losses as revenues dipped by €470,000 from €56.07m to €55.6m and the directors state that the decrease in turnover was driven by a decrease in service fees received from another group company.
The principal activity of the company is acting as the data controller for European users of the WhatsApp service and the provision of services to WhatsApp LLC.
WhatsApp Ireland is appealing a January 2023 decision where the Data Protection Commission (DPC) fined the firm an additional €5.5m over breaches of Europe’s data protection framework.
In 2021, the DPC initially fined WhatsApp Ireland €225 million for various related breaches of GDPR and that fine is also under appeal.
The WhatsApp Ireland accounts show that the company’s provision for regulatory compliance provisions last year increased to €203.2m.
The firm last year recorded the losses as administrative expenses increased by 267% or €42.2m from €15.8m in 2022 to €58m last year.
The directors state that the increase “is driven by the impact of measuring regulatory compliance provisions at the present value of the best estimate in the current year”.
A note attached to the regulatory compliance provision states that “regulatory compliance provisions relate to amounts identified for administrative fines arising from various ongoing regulatory compliance investigations or decisions by relevant data protection supervisory authorities”.
The note states that “the provisions recorded represent the present value of the best estimate of the expenditure required to discharge these obligations”.
The note adds that the best estimate “is based on the advice from outside legal counsel, regulatory correspondence received to date including final decisions, relevant mitigating factors, comparison with similar matters and other factors, which under the relevant legislation may impact any final fine amounts”.
The note further states that “uncertainty exists as to when these matters will be resolved. Where a regulatory decision has been made, the timing of the outflow may be impacted by any appeal”.
The note states that regulatory compliance fines are remunerated by the company’s parent under an inter-company service agreement.
Numbers employed by WhatsApp Ireland last year decreased from 80 to 74 as staff costs increased from €12.43m to €13.73m. Staff costs included “severance expenses” of €300,000 impacted by a decision to reduce headcount.
Staff costs are made up of €9.97m in salaries, wages and bonus along with €2m under ‘shared based payment’.
Directors’ pay almost doubled from €315,000 to €618,000 made up of €225,000 in pay, €15,000 in pension contributions and €379,000 in benefits under long term incentive schemes.
At the end of December last, the company had shareholder funds of €13.45m. Cash funds amounted to €28.65m.
Reporting by Gordon Deegan
