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Comment by bsimpson | Hacker News Reader

I'm a bit shocked that they're paying $600M. Is Shazam even profitable? It feels like a clever tech demo from 10 years ago that's already been replicated in search engines like Google.

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According to MacRumors, it's a deal "that could be worth $400m". If I were to guess (based on just public information which is almost nothing), the stock is not going to be worth much. Obviously Apple is going to pay the least they can, so I wouldn't be shocked if they're paying exactly what investors need to either get their money back or maybe a slight profit (if the recent investors had conditions for it). Employees will probably get nothing, except a new plan. The total sum of that new plan would depend on hitting some very aggressive numbers, that are unlikely to be hit (no idea what they'd put the metrics on). And the bulk of that is probably going to the CEO who has to stick around for 4 years to cash in.

Yes, they became profitable in 2016 via mostly brand advertising [1][2]. The company has nearly 400 employees according to LinkedIn. With a very conservative personnel estimate of $125k/employee/year, that's $50M alone. Let's throw on another $25M for everything else and they need to be doing at least $75M+ in annual revenue.

[1] https://www.macrumors.com/2016/04/20/shazam-for-brands-user-...

[2] https://www.billboard.com/articles/business/7526322/shazam-1...

Perhaps I have limited understanding of running a £40m a year business, but why does an app like Shazam need 400 employees?

Even if selling data and/or advertising, do they need (say) a 200 people sales team.. ?

I have no idea, it's bewildering to me frankly. Take two recent IPOs for example: MongoDB had 820 employees as of July 31st. StitchFix had 5,800 employees as of July 31st [2].

[1] https://www.sec.gov/Archives/edgar/data/1441816/000104746917...

[2] https://www.sec.gov/Archives/edgar/data/1576942/000119312517...

Is it actually profitable? "Profitable" is a fun term to throw around to make your business look good, but it can mean a lot of different things (net margin profitable, gross margin profitable, pre tax profitable, etc). I'd be surprised if they really were all that profitable (meaning they would end each year with more money than they started with).

Fair point, guess we'll see when Apple discloses more details on financials.

Given that Apple seems to compensate junior engineers with compensation packages north of $300k, it wouldn't be too surprising if they overpaid for Shazam too. Apple also has $74.2B in cash and short-term investments, so paying $0.6B for Shazam doesn't really move the needle.

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