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Mozilla reports $338M revenue spike from settlement over Yahoo contract

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Mozilla’s revenue in 2019 shot up by almost 84% compared to the year before, but the bulk of that increase came from a one-time settlement the organization received from Yahoo and its successor, Verizon Media.

Without that financial shot in the arm, Mozilla’s 2019 financials looked much grimmer; for the second year running, Mozilla’s expenses outweighed revenue.

According to the 2019 financial statement released by the maker of the Firefox browser, Mozilla posted $338 million as “Other revenue,” a new line item that had not appeared in prior years’ reporting. Elsewhere, Mozilla implicitly tied that amount to an earlier contract with Yahoo, which was purchased by Verizon in 2017.

“In CY ((calendar year)) 2019, Mozilla Corporation generated $465M from royalties, subscriptions and advertising revenue, excluding one-time litigation settlement revenue,” wrote Angela Plohman and Roxi Wen, Mozilla’s executive vice president and CFO, respectively, in a post to the company’s website.

Mozilla was a bit more forthcoming in the financial statement. “In 2019, the Corporation recognized $338.0 million of litigation settlement as revenue under Topic 606.”

Six years ago, Mozilla declined to renew its deal with Google to make that search engine the default in Firefox. Instead, Mozilla signed a five-year contract with Yahoo for $375 million annually, considerably more than what Google had been paying.

But when Yahoo was sold to Verizon three years later for $4.5 billion, Mozilla took advantage of a clause in the Yahoo contract to nullify the remaining years. According to news reports, the new owner was required to pay Mozilla for the full length of the contract, or alternately, the difference between Yahoo’s $375 million and whatever Mozilla got out of a new partner.

Mozilla’s action triggered a lawsuit by Verizon (and a counter-suit by Mozilla) in late 2017. Nine months later, the cases were dismissed when the parties settled out of court. Terms of that settlement were not disclosed. But as Computerworld anticipated a year ago, the monetary settlement surfaced in the latest financial statement.

With the $338 million payment from Verizon, Mozilla’s 2019 revenue was $826.6 million, an 84% year-over-year increase and easily the most the open-source developer has booked in a single year, beating the existing record by more than a quarter of billion dollars. Strike the settlement, however, and Mozilla’s revenue was $490.6 million, just 9% higher than the year before and 13% lower than the 2017 peak.

Google paid Mozilla $397M in 2019

As in every year prior, the bulk of Mozilla’s 2019 revenue — excluding the massive settlement — came from royalty payments, with the bulk of that generated by deals struck for Firefox’s default search spot. Last year, 92% of all revenue derived from what Mozilla classified as royalties.

It was unclear how much of that $451 million in royalty payments stemmed from search deals. Traditionally, Mozilla has called out the percentage of all royalty that was produced by its various search deals. For 2019, Mozilla changed its reporting, saying that, “approximately 88% … of Mozilla’s royalty revenues from customers with contracts were derived from one customer in 2019 (emphasis added).”

That customer, the one that provided the overwhelming fraction of the $451 million in royalties, was, of course, Google, even though Mozilla did not speak its partner’s name. By Mozilla’s numbers, then, Google paid it around $397 million in 2019 for default place of pride in Firefox. That would have been more than Google paid before Mozilla dumped it for Yahoo — more even than Yahoo handed over each year.

Copyright © 2020 IDG Communications, Inc.

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