WhatsApp Ireland, the Meta-owned messaging app company’s main European corporate entity, swung into a more than €2.4 million operating loss last year.
The Dublin-registered company’s expenses surged after it set aside more money to deal with potential regulatory fines.
The Irish company, which the Irish Data Protection Commission (DPC) in 2021 fined €265 million over various breaches of European privacy laws, is responsible for managing the data of its more than 500 million customers across the EU.
WhatsApp Ireland has appealed the DPC’s fine in the High Court, which adjourned the matter earlier this year pending a decision of the Courts of the Justice of the European Union.
Accounts recently filed in Dublin reveal the company sank to a more than €2.4 million operating loss last year from operating profits in excess of €40 million in 2022. Administrative expenses at the company climbed by €42.2 million in the year from €15.8 million in 2022 to €58 million, eclipsing the messaging giant’s revenues of €55.3 million.
In a report attached to the accounts, the directors of WhatsApp Ireland said the sharp uptick in expenses was “driven by the impact of measuring regulatory compliance provisions at the present value of the best estimate in the current year compared to prior year”.
The accounts note the company set aside an additional €4.3 million to discharge any potential fines “due to changes in estimates and assumptions”. Overall, the company had a more than €203 million war chest to discharge any fines at the end of last year, up from €193.4 million at the end of 2022, an increase of some €9.7 million.
This included the €4.3 million set aside in 2023 and an additional €5.4 million as it reversed previous reductions in the size of its reserve, which shrank by €45.3 million in 2022 by way of discounting.
The provisions “represent the present value of the best estimate of the expenditure required to discharge these obligations,” the company said in the filings.
“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.”
WhatsApp Ireland also noted there is “uncertainty…as to when these matters will be resolved”.
Losses after tax at WhatsApp Ireland plunged to €8.2 million last year from profits of more than €41 million in 2022.
The company said it had no further comment on the results.