by Shortly before media startup The Messenger launched last year, its president said the company planned to generate more than $100 million in revenue by 2024. It will need a major turnaround in fortune to achieve that.
The site generated about $3 million in revenue last year, according to two people with knowledge of the company’s financial results. And it has told potential investors that it had only $1.8 million in cash on hand at the end of December, after losing about $38 million last year, putting it under serious financial strain.
The Messenger’s operating results, which until now have not been fully disclosed, underscore the difficulties facing the company. The founders, who raised $50 million to start the website, initially said their goal was to transform coverage of American politics, culture and sports. But it has had editorial and financial problems.
This week, the company will lay off about two dozen employees, including those who covered national politics, science and technology. It is raising money from investors to maintain its operations through this year. On Tuesday, Richard Beckman, a founder and longtime executive of Condé Nast magazine, announced that he was leaving the company.
Kimberly Bernhardt, a spokeswoman for The Messenger, rejected the idea that the company was under “serious” financial strain, adding that The Messenger posted as much revenue in January as it did all of last year.
Bernhardt said the company had already raised more than $10 million in its latest funding round. He added that the company was also “planning to introduce events and The Messenger TV” and that its finances would break even later this year.
“Messenger’s revenue will continue to increase and its expenses will continue to decrease throughout the year,” he said.
Messenger’s problems highlight the difficulty of starting a media company that relies on digital advertising, which has been the company’s main source of revenue.
The site has struggled despite having longtime media executives as founders, including Jimmy Finkelstein, whose career has included stints running The Hollywood Reporter; deep-pocketed backers, including Josh Harris, co-founder of private equity firm Apollo Global Management; and journalists with experience in top-level publications.
The company has also had some editorial problems. Gregg Birnbaum, a highly respected politics editor, resigned in May after a confrontation with an audience editor at the site. Some staff chafe at demands to produce stories based on articles published by rivals.
But it has begun to gain ground among readers, according to figures from the measurement firm Comscore. The Messenger told potential investors that it attracted 24 million visitors in December, a 24 percent increase from the previous month.
As of last year, The Messenger projected just $75 million in revenue in 2024, according to two people with knowledge of the company’s finances. About $10 million of that projection will come from the television division that has not yet started.
The company’s costs exceeded $40 million last year, the two people said. Much of those costs — more than $8 million — came from lease obligations on its office buildings. The Messenger has offices in New York, Washington and West Palm Beach, Florida.
According to both sources, the company’s valuation for the ongoing financing round is unclear. Axios reported earlier Thursday that the company was looking to raise $20 million.
Upon hearing the news of the newsroom layoffs, many of the company’s employees asked Mr. Finkelstein for more transparency on the internal messaging system Slack, demanding an employee meeting to discuss the company’s financial status.
In an internal memo Wednesday, Finkelstein described the decision to lay off employees as “tough.”
“I understand this is difficult and I am truly sorry for those affected,” he wrote.
