In a year where many tech companies struggled to show growth, messaging startup Discord saw a 44% increase in revenue, reaching $445 million in 2022. However, this was a slowdown compared to its 126% growth in 2021. The company generates revenue through subscription fees and has been successful in broadening its user base beyond gamers by removing video game references within the app and introducing private groups for college students.
Discord’s popularity has been reflected in its user growth, which reached 183 million in Q1 2022, representing a 21% increase from the previous year. However, the company’s solid numbers have come at a cost, as it posted an EBITDA loss of $66 million in 2022 and an increased loss of $11 million in Q1 2023. Discord is seeking new sources of revenue aside from subscription fees, including allowing users to charge for access to content they create or giving members of groups they oversee additional perks.
Despite the promising growth, news of its increased losses could complicate any plans Discord has to go public soon. The company had hoped to go public before the end of 2022, but the market struggles and significant valuation cuts for late-stage startups caused the company to change its plans. While its growth may be appealing to investors, any sign that its losses are increasing could turn them off.
The company’s CEO and co-founder, Jason Citron, has stated that he does not see ads as an option for revenue, as they would be an annoyance to users. Instead, the company has been looking for alternative sources of revenue, including paid access to premium features and capabilities.
Discord’s enduring popularity and solid growth numbers in a tough market highlight the potential for the company’s future success. Investors in the company include Tiger Global Management, Bessemer Venture Partners, and Greylock Partners. However, the company will need to continue to explore new revenue streams and address its increasing losses to ensure its continued success.