FINANCIAL STATEMENTS
WhatsApp Inc.
Years Ended December 31, 2013 and 2012
With Report of Independent Auditors
|
December 31,
|
||||||
2013
|
2012
|
|||||
Assets
|
||||||
Current assets:
|
||||||
Cash
|
$
|
45,542
|
|
$
|
6,558
|
|
Accounts receivable
|
2
|
|
2,161
|
|
||
Prepaid expenses and other current assets
|
2,866
|
|
933
|
|
||
Total current assets
|
48,410
|
|
9,652
|
|
||
Restricted cash
|
1,800
|
|
–
|
|
||
Property and equipment, net
|
281
|
|
186
|
|
||
Other assets
|
295
|
|
1,112
|
|
||
Total assets
|
$
|
50,786
|
|
$
|
10,950
|
|
Liabilities, redeemable convertible preferred stock, and stockholders’ deficit
|
||||||
Current liabilities:
|
||||||
Accounts payable
|
$
|
3,983
|
|
$
|
1,125
|
|
Accrued liabilities and other current liabilities
|
5,810
|
|
445
|
|
||
Early exercise liabilities, current portion
|
548
|
|
33
|
|
||
Deferred revenue, current portion
|
16,247
|
|
5,119
|
|
||
Total current liabilities
|
26,588
|
|
6,722
|
|
||
Early exercise liabilities, non-current portion
|
332
|
|
43
|
|
||
Deferred revenue, non-current portion
|
33,129
|
|
24,243
|
|
||
Total liabilities
|
60,049
|
|
31,008
|
|
||
Commitments and contingencies
|
||||||
Redeemable convertible preferred stock:
|
||||||
Redeemable convertible preferred stock, par value of $0.000001 per share; 100,644,440 and 42,222,220 shares authorized as of December 31, 2013 and 2012, respectively; and 49,885,055 and 42,222,220 shares issued and outstanding with aggregate liquidation preference of $58,250 and $8,250 as of December 31, 2013 and 2012, respectively
|
420,281
|
|
8,250
|
|
||
Stockholders’ deficit:
|
||||||
Common stock, par value of $0.000001 per share; 300,000,000 Class A and 300,000,000 Class B shares authorized as of December 31, 2013 and 250,000,000 Class A and no Class B legally shares authorized as of December 31, 2012; 169,396,000 Class A and 250,000 Class B issued and outstanding, including 8,436,347 outstanding shares subject to repurchase as of December 31, 2013 and 159,034,940 Class A and no Class B legally issued and outstanding, including 4,590,062 outstanding shares subject to repurchases as of December 31, 2012
|
–
|
|
–
|
|
||
Additional paid-in capital
|
–
|
|
43,486
|
|
||
Accumulated deficit
|
(429,544)
|
|
(71,794)
|
|
||
Total stockholders’ deficit
|
(429,544)
|
|
(28,308)
|
|
||
Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit
|
$
|
50,786
|
|
$
|
10,950
|
|
Year Ended December 31,
|
||||||
2013
|
2012
|
|||||
Revenue
|
$
|
10,210
|
|
$
|
3,821
|
|
Costs and expenses:
|
||||||
Cost of revenue
|
52,867
|
|
18,858
|
|
||
Research and development
|
76,911
|
|
34,487
|
|
||
General and administrative
|
18,870
|
|
6,035
|
|
||
Sales and marketing
|
30
|
|
17
|
|
||
Total costs and expenses
|
148,678
|
|
59,397
|
|
||
Loss from operations
|
(138,468)
|
|
(55,576)
|
|
||
Other income (expense), net
|
(264)
|
|
8
|
|
||
Loss before benefit from income taxes
|
(138,732)
|
|
(55,568)
|
|
||
Benefit from income taxes
|
586
|
|
899
|
|
||
Net loss
|
$
|
(138,146
|
)
|
$
|
(54,669
|
)
|
Redeemable Convertible Preferred Stock
|
Common Stock
(Class A and B)
|
Additional Paid-in |
Accumulated
|
Total Stockholders’ |
|||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Deficit
|
|||||||||||||
Balance as of December 31, 2011
|
42,222,220
|
|
$
|
8,250
|
|
146,250,000
|
|
$
|
—
|
|
$
|
5,198
|
|
$
|
(17,125
|
)
|
$
|
(11,927
|
)
|
Issuance of common stock upon exercise of stock options
|
–
|
|
–
|
|
12,784,940
|
|
–
|
|
23
|
|
–
|
|
23
|
|
|||||
Vesting of early exercise of stock options
|
–
|
|
–
|
|
–
|
|
–
|
|
6
|
|
–
|
|
6
|
|
|||||
Share-based compensation to nonemployees
|
–
|
|
–
|
|
–
|
|
–
|
|
23,148
|
|
–
|
|
23,148
|
|
|||||
Share-based compensation to employees
|
–
|
|
–
|
|
–
|
|
–
|
|
15,111
|
|
–
|
|
15,111
|
|
|||||
Net loss
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(54,669
|
)
|
(54,669
|
)
|
|||||
Balance as of December 31, 2012
|
42,222,220
|
|
8,250
|
|
159,034,940
|
|
–
|
|
43,486
|
|
(71,794
|
)
|
(28,308
|
)
|
|||||
Issuance of Series B redeemable convertible preferred stock for cash, net of issuance costs of $198
|
7,662,835
|
|
49,802
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
|||||
Deemed dividend to Series B redeemable convertible preferred stockholders
|
–
|
|
362,229
|
|
–
|
|
–
|
|
(142,625
|
)
|
(219,604
|
)
|
(362,229
|
)
|
|||||
Issuance of common stock upon exercise stock options, net of repurchases
|
–
|
|
–
|
|
10,611,060
|
|
–
|
|
301
|
|
–
|
|
301
|
|
|||||
Vesting of early exercise of stock options
|
–
|
|
–
|
|
–
|
|
–
|
|
33
|
|
–
|
|
33
|
|
|||||
Share-based compensation to nonemployees
|
–
|
|
–
|
|
–
|
|
–
|
|
21,533
|
|
–
|
|
21,533
|
|
|||||
Share-based compensation to employees
|
–
|
|
–
|
|
–
|
|
–
|
|
77,272
|
|
–
|
|
77,272
|
|
|||||
Net loss
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
(138,146
|
)
|
(138,146
|
)
|
|||||
Balance as of December 31, 2013
|
49,885,055
|
|
$
|
420,281
|
|
169,646,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(429,544
|
)
|
$
|
(429,544
|
)
|
Year Ended December 31,
|
||||||
2013
|
2012
|
|||||
Cash flows from operating activities
|
||||||
Net loss
|
$
|
(138,146
|
)
|
$
|
(54,669
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||
Depreciation and amortization
|
71
|
|
61
|
|
||
Share-based compensation expense
|
98,805
|
|
38,259
|
|
||
Changes in operating assets and liabilities:
|
||||||
Accounts receivable
|
2,159
|
|
(819)
|
|
||
Prepaid expenses and other current assets
|
(1,884)
|
|
(166)
|
|
||
Other assets
|
817
|
|
(985)
|
|
||
Accounts payable
|
2,858
|
|
712
|
|
||
Accrued liabilities and other current liabilities
|
5,366
|
|
92
|
|
||
Deferred revenue
|
20,014
|
|
14,016
|
|
||
Net cash used in operating activities
|
(9,940)
|
|
(3,499)
|
|
||
Cash flows from investing activities
|
||||||
Changes to restricted cash
|
(1,800)
|
|
—
|
|
||
Purchase of property and equipment
|
(166)
|
|
(119)
|
|
||
Net cash used in investing activities
|
(1,966)
|
|
(119)
|
|
||
Cash flows from financing activities
|
||||||
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs |
49,802
|
|
—
|
|
||
Proceeds from exercise of stock options, net of repurchases
|
1,088
|
|
82
|
|
||
Net cash provided by financing activities
|
50,890
|
|
82
|
|
||
Net increase (decrease) in cash
|
38,984
|
|
(3,536)
|
|
||
Cash, beginning of period
|
6,558
|
|
10,094
|
|
||
Cash, end of period
|
$
|
45,542
|
|
$
|
6,558
|
|
Supplemental disclosure of cash flow information
|
||||||
Cash paid for income taxes
|
$
|
(250
|
)
|
$
|
(10
|
)
|
Cash received from income taxes refund
|
$
|
—
|
|
$
|
679
|
|
Cash paid for interest
|
$
|
(3
|
)
|
$
|
(8
|
)
|
•
|
There is persuasive evidence of an arrangement;
|
•
|
The service has been provided to the customer;
|
•
|
The collection of the fees is reasonably assured; and
|
•
|
The amount of fees to be paid by the customer is fixed or determinable
|
December 31,
|
||||||
2013
|
2012
|
|||||
Deferred revenue, current portion
|
$
|
16,247
|
|
$
|
5,119
|
|
Deferred revenue, non-current portion
|
33,129
|
|
24,243
|
|
||
Total deferred revenue
|
$
|
49,376
|
|
$
|
29,362
|
|
December 31,
|
||||||
2013
|
2012
|
|||||
Prepaid rent
|
$
|
473
|
|
$
|
465
|
|
Income tax receivable
|
1,808
|
|
–
|
|
||
Employee advances
|
193
|
|
110
|
|
||
Deposits
|
105
|
|
–
|
|
||
Prepaid expenses
|
287
|
|
358
|
|
||
Total prepaid expenses and other current assets
|
$
|
2,866
|
|
$
|
933
|
|
December 31,
|
||||||
2013
|
2012
|
|||||
Deposits
|
$
|
287
|
|
$
|
132
|
|
Income tax receivable
|
–
|
|
972
|
|
||
Other
|
8
|
|
8
|
|
||
Total other assets
|
$
|
295
|
|
$
|
1,112
|
|
Years ending December 31:
|
|||
2014
|
$
|
1,647
|
|
2015
|
2,031
|
|
|
2016
|
2,092
|
|
|
2017
|
2,155
|
|
|
2018
|
2,220
|
|
|
Thereafter
|
13,223
|
|
|
$
|
23,368
|
|
Shares Authorized |
Shares Issued and Outstanding |
Net Proceeds
|
Liquidation Value per Share |
Liquidation Value |
|||||||
Series A
|
40,000,000
|
20,000,000
|
$
|
248
|
|
$
|
0.0125
|
|
$
|
250
|
|
Series AA
|
44,444,440
|
22,222,220
|
7,964
|
|
$
|
0.3600
|
|
8,000
|
|
||
Series B
|
16,200,000
|
7,662,835
|
49,802
|
|
$
|
6.5250
|
|
50,000
|
|
||
100,644,440
|
49,885,055
|
$
|
58,014
|
|
$
|
58,250
|
|
Number of Shares Available for Grant |
Number of Shares Underlying Outstanding Options |
Weighted- Average Exercise Price Per Share |
Weighted- Average Remaining Contractual Life |
Aggregate Intrinsic Value |
|||||
(in Years)
|
(In Thousands)
|
|
|||||||
Balance as of December 31, 2012
|
9,430,000
|
16,925,122
|
$
|
0.04
|
|
8.24
|
$
|
659,870
|
|
Options granted
|
(6,275,000)
|
6,275,000
|
0.56
|
|
–
|
–
|
|
||
Options exercised(1)
|
–
|
(7,839,775)
|
0.04
|
|
–
|
–
|
|
||
Repurchased shares
|
1,075,000
|
–
|
–
|
|
–
|
–
|
|
||
Options cancelled/ forfeited
|
1,500,000
|
(1,500,000)
|
0.0025
|
|
–
|
–
|
|
||
Balance as of December 31, 2013
|
5,730,000
|
13,860,347
|
$
|
0.28
|
|
8.38
|
$
|
914,179
|
|
Vested and expected to vest as of December 31, 2013
|
13,860,347
|
$
|
0.28
|
|
8.38
|
$
|
914,179
|
|
|
Exercisable as of December 31, 2013
|
1,927,333
|
$
|
0.01
|
|
6.26
|
$
|
127,667
|
|
(1)
|
Includes stock options vested during the period that were early exercised.
|
Year Ended December 31,
|
||||
2013
|
2012
|
|||
Expected term (in years)
|
6.0
|
|
6.0
|
|
Expected volatility
|
36.9
|
%
|
37.1
|
%
|
Risk-free interest rate
|
1.3
|
%
|
0.9
|
%
|
Expected dividend rate
|
0.0
|
%
|
0.0
|
%
|
Year Ended December 31,
|
||||
2013
|
2012
|
|||
Expected term (in years)
|
6.7
|
|
7.1
|
|
Expected volatility
|
36.8
|
%
|
36.7
|
%
|
Risk-free interest rate
|
1.6
|
%
|
1.2
|
%
|
Expected dividend rate
|
0.0
|
%
|
0.0
|
%
|
Year Ended December 31,
|
||||||
2013
|
2012
|
|||||
Cost of revenues
|
$
|
12,319
|
|
$
|
2,193
|
|
Research and development
|
70,783
|
|
30,971
|
|
||
General and administrative
|
15,703
|
|
5,095
|
|
||
Total share-based compensation expense
|
$
|
98,805
|
|
$
|
38,259
|
|
Year Ended December 31,
|
||||||
2013
|
2012
|
|||||
Current:
|
||||||
Federal
|
$
|
433
|
|
$
|
972
|
|
State
|
153
|
|
(73)
|
|
||
$
|
586
|
|
$
|
899
|
|
December 31,
|
||||||
2013
|
2012
|
|||||
Deferred tax assets:
|
||||||
Net operating losses
|
$
|
5,366
|
|
$
|
180
|
|
Depreciation and amortization
|
2
|
|
–
|
|
||
Deferred revenue
|
19,669
|
|
11,696
|
|
||
Accruals and reserves
|
1,829
|
|
31
|
|
||
Tax credit
|
787
|
|
81
|
|
||
Deferred share-based compensation
|
22,458
|
|
11,629
|
|
||
Gross deferred tax assets
|
50,111
|
|
23,617
|
|
||
Deferred tax liabilities:
|
||||||
Depreciation and amortization
|
–
|
|
(1)
|
|
||
Gross deferred liabilities
|
–
|
|
(1)
|
|
||
Net deferred tax assets prior to valuation allowance
|
50,111
|
|
23,616
|
|
||
Valuation allowance
|
(50,111)
|
|
(23,616)
|
|
||
Total net deferred tax assets
|
$
|
—
|
|
$
|
—
|
|
Amount
|
Expiration Year
|
|||
Net operating losses, federal
|
$
|
13,237
|
|
2033
|
Net operating losses, state
|
14,825
|
|
2032
|
|
Research and development credits, federal
|
597
|
|
2030
|
|
Research and development credits, state
|
595
|
|
Indefinite
|