Mozilla reports flat revenue from Google-Firefox search deal
- 22 November, 2014 05:14
Mozilla today said that 2013 revenue from its deal with Google was flat compared to the year before, as was its income overall, even as expenses jumped by 42%.
The flat-lining of revenue was in stark contrast to its previous financial statement, which had shown a bullish increase of 88%.
The Mozilla Foundation's 2013 revenue was $314 million, up half a percentage point from 2012, according to the financial statement released Friday (download PDF).
Mozilla Foundation is the non-profit that oversees Mozilla Corp., the commercial arm that develops the Firefox browser and Firefox OS mobile operating system.
Virtually all the foundation's 2013 revenue came from search providers, which paid Mozilla to place their engines as the default in Firefox. In 2013, those royalty payments accounted for 97% of the year's income, a slightly-lower portion than in 2012.
Royalty revenue totaled $306 million in 2013, up $3 million, for a very small increase of just 0.5%. In 2012, Mozilla's royalty payments had doubled over the year before due to a new contract with Google, its global search partner, that was signed in late 2011. At the time, reports circulated that claimed the contract guaranteed Mozilla $1 billion over the three-year deal.
Payments from Google in 2013 were approximately $275 million, an increase of $1 million from 2012. Google's contribution accounted for 88% of Mozilla's total revenue last year.
As it has in the past, Mozilla did not name its largest source of income, saying only that, "Mozilla entered into a contract with a search engine provider for royalties which expires November 2014. Approximately 90% of royalty revenue for 2013 and 2012, was derived from this contract."
But that "search provider" was Google.
On Wednesday, Mozilla announced that it had not renewed the Google contract, and had signed with Yahoo for the U.S. market. Yahoo will replace Google as the default Firefox search engine early next month, probably when Firefox 34 launches during the week of Dec. 1. Additionally, Mozilla said it has agreed to other deals in Russia and China, and would try to forge partnerships with search providers on a country-by-country basis.
But because of Mozilla's financial release timetable, the results of the new monetary strategy won't be apparent until November 2016.
Most of Mozilla's expenses -- 67% in 2013 -- were devoted to software development, which increased from $143 million in 2012 to $197 million last year, a jump of 38%. Another line item, branding and marketing, increased by even more, 60%, to $46 million in 2013.
Overall expenses increased 42% year-over-year. Along with flat revenue, that halved Mozilla's "profit" -- it tagged the line as "net cash provided by operating activities" -- to $36 million.
But the foundation's financials remained in good shape. Cash, cash equivalents and the organization's investments totaled $272 million in 2013, up 13% from the year before. With that in the bank, Mozilla could survive at its 2013 expense pace for just shy of four quarters if income suddenly vanished.
Yet Mozilla still faces a rough road, especially if 2013's pattern of flat revenue-versus-increasing expenses continues.
Firefox's share of the desktop browser market has slipped by 26%, or about 4.8 percentage points, in the past 12 months, according to metrics firm Net Applications, even as the global share of browsing from the desktop has fallen because of the move toward mobile devices.
Meanwhile, Firefox OS faces an uphill battle against ultra-cheap Android-derived devices in the emerging markets Mozilla has targeted.
Some analysts have begun to wonder whether Mozilla can be a long-term player in browsers, much less mobile.
"Mozilla's browser share is likely to shrink over time," contended Jan Dawson, principal analyst at Jackdaw Research, in an interview yesterday. "Because there are more costs to cover moves [like Firefox OS], it's stretched thinner than before. If its [browser] share shrinks, it will have less revenue, which means it can spend less on development. That may make its products less appealing to users, so fewer people use them."