Mozilla

State of Mozilla and 2008 Financial Statements

November 19th, 2009

Today we are posting our audited financial statements and tax form for 2008. We have also posted our FAQ. As in past years, I’ll use this event as an opportunity to review both our financial status and our overall effectiveness in moving the mission forward.

Financial

The financial highlights are:

  1. Mozilla remains strong financially despite the financial crisis of 2008. Our investment portfolio was somewhat reduced, but overall revenues remained steady and more than adequate to meet our needs. We continue to manage our expenses very carefully.
  2. Mozilla remains well positioned, both financially and organizationally, to advance our mission of building openness, interoperability and participation into the Internet.

Our revenue and expenses are consistent with 2007, showing steady growth. Mozilla’s consolidated reported revenues (Mozilla Foundation and all subsidiaries) for 2008 were $78.6 million, up approximately 5% from 2007 reported revenues of $75.1 million. The majority of this revenue is generated from the search functionality in Mozilla Firefox from organizations such as Google, Yahoo, Amazon, eBay, and others.

2008 revenues include a reported loss of $7.8 million in investments in the Foundation’s long-term portfolio (approximately 25%) as a result of economic conditions and investment values at the end of 2008. Excluding investment gains and losses, revenues from operational activity were $86.4 million compared to $73.3 million in 2007, an annual increase of 18%.

Mozilla consolidated expenses for the Mozilla Foundation and all subsidiaries for 2008 were $49.4 million, up approximately 48% from 2007 expenses of $33.3 million. Expenditures remain highly focused in two key areas: people and infrastructure. By the end of 2008, Mozilla was funding approximately 200 people working full or part-time on Mozilla around the world. Expenditures on people accounted for roughly 58% of our total expenses in 2008. The largest concentrations of people funded by Mozilla are in the U.S, Canada, and Europe with smaller groups in China and New Zealand and individuals in many parts of the world.

Total assets as of December 31, 2008 were $116 million, up from $99 million at the end of 2007, an increase of 17% to our asset base. Unrestricted assets at the end of 2008 were $94 million compared with $82 million in 2007, a 15% increase. The restricted assets remain the same as last year: a “tax reserve fund” established in 2005 for a portion of the revenue the Foundation received that year from the search engine providers, primarily Google. As noted last year, the IRS has opened an audit of the Mozilla Foundation. The IRS continues to examine our records for the years 2004-2007. We do not yet have a good feel for how long this will take or the overall scope of what will be involved.

Total grants, donations, and contributions in 2008 were approximately $1 million matching the approximately $1 million of 2007. Mozilla supported projects such Mozdev, Software Freedom Conservancy, and accessibility support for the jQuery library, HTML 5 video, and Firebug.

We believe that Mozilla’s financial setting will continue with relative stability. We continue to use our assets to execute on the mission.

Moving the Mission Forward

2008 was another exciting and robust year for Mozilla. Our scope of activities continued to grow, our community of committed contributors and users expanded, our geographical diversity deepened, and our effect on increasing openness, participation, innovation and individual empowerment in Internet life is significant. Here are some examples.

In February we launched Mozilla Messaging to develop Mozilla Thunderbird as well as new possibilities in the broader messaging arena. 2008 was primarily a start-up year for Mozilla Messaging. In 2009 we’re starting to see the Mozilla Messaging team deliver on the promise. The final version of Thunderbird 3 –- a vastly improved product — is due to be released shortly. In addition the initial developer version of Raindrop — a prototype for a new way of integrating different kinds of messages — has been released.

In 2008 we developed a set of two-year goals (the “2010 goals”), setting out major areas we’d like to see the Mozilla project address in 2009 and 2010. The 2010 goals build upon the Mozilla Manifesto, which articulates the values underlying the Mozilla project and our products. Two of these are familiar — openness in general and continued vitality of Firefox. Two are newer: the mobile web and helping people manage the explosion of data around us. These reflect our desire to see the values of the Mozilla Manifesto infused into these areas of Internet life.

We began an on-going process of strengthening some of the Mozilla project’s basic assets. We began broadening our “module ownership” system beyond code to include governance activities. We began a long-overdue update of the mozilla.org website. In September Mark Surman joined as the new Executive Director of the Mozilla Foundation. These activities continued in 2009, along with new Education and Drumbeat programs.

We expanded the scope of our innovation efforts under the “Mozilla Labs” banner. We launched a range of projects including our first Design Challenge, Test Pilot (user testing program), Ubiquity (natural language interface to browser interaction), and a Developer Tools program. We also expanded existing projects like Weave, Personas and Prism. This focus on innovation continues during 2009.

The activities of Mozilla’s support, localization, campus representative and design communities expanded significantly through 2008 and 2009, reaching more people in more ways.

Mozilla continues to grow ever more global. In June 2008 Firefox 3.0 launched simultaneously in 46 languages. A year later, Firefox 3.5 featured 70 languages. In 2008 Firefox became the majority browser in specific countries. This started with Indonesia, which passed 50% in July 2008, and grew to include Slovenia and Macedonia by the end of 2008. Since then, Slovakia, the Philippines, Poland, Hungary, Latvia, Bosnia Herzegovina, and Ghana have joined this group. Our local communities also work with other Mozilla products and activities such as Thunderbird, Seamonkey and Service Week (in 2009).

We intend to continue to invest significantly in global participation.

Product and Competition

The number of people using Mozilla products increased dramatically throughout 2008 and 2009. This user base makes Mozilla relevant to the Internet industry, helping us move the Internet to a more open and participatory environment. It also helps us build public benefit, civic and social value as components of the Internet’s future.

The number of people using Firefox on a daily basis increased from 28 million in 2006 to 49 million in 2007. In 2008 we moved up to 75 million daily users. As of November 2009 the daily number has grown to 110 million, bringing the total number of users to approximately 330 million people.

Our market share rose to approximately 21.69% in December of 2008. This breaks out into U.S. market share of approximately 20.2%, and more than 32% in Europe. Our statistics for Asia are similar, with our own estimates around 20%. Our South American market share rose to 27% by the end of 2008. These numbers have all continued to rise in 2009 as well. In February, 2008 we crossed the half-billion download mark; in July, 2009 we exceeded 1 billion downloads. As of November, 2009 Firefox’s market share worldwide reached 25%.

In June 2008 we released Firefox 3.0, bringing dramatic improvements to the online browsing experience. These improvements included features to help users quickly navigate to favorite websites, manage their downloads more easily, and keep themselves safe from malware attacks. Firefox 3 was downloaded over 8 million times in the first 24 hours, earning Mozilla a Guinness World Record. In June 2009 we released Firefox 3.5, with additional performance and feature improvements. In November 2009 we celebrated the fifth anniversary of Firefox.

Work on Firefox for mobile devices began in earnest in 2008 with the first development milestones released. We expect to release the first product versions late in 2009. The mobile market has many challenges for us, in particular the fragmentation of the development platform (a plethora of operating systems, handsets and carriers) and a market where touching a consumer directly is more difficult. However, the market is beginning to change and a great, open browser will both help that process and benefit from it. We have much more to do, but have laid a good foundation for long-term contribution to the mobile Web.

SeaMonkey remains a vital project with millions of users. Bugzilla continues as a backbone tool for numerous organizations. A revitalized Thunderbird 3 should ship in 2009.

Looking Forward

The past few years have seen an explosion of innovation and competition in web browsers, demonstrating their critical importance to the Internet experience and marking the success of our mission. In 2008 not only did Microsoft and Apple continue developing their web browsing products, but Google announced and released a web browser of its own. Competition, while uncomfortable, has benefited Mozilla, pushing us to work harder. Mozilla and Firefox continue to prosper, and to reflect our core values. We expect these competitive trends to continue, benefiting the entire Web.

The Internet remains an immense engine of social, civic and economic value. The potential is enormous. There is still an enormous amount to be done to build openness, participation and individual opportunity into the developing structure of the Internet.

Hundreds of millions of people today trust Mozilla to do this. This is an accomplishment many thought was impossible. We should be proud. We should also be energized to do more and to try to new things. It’s a big challenge. It’s important.

We’ve made this opportunity real. Let’s go surprise people once again by showing how much better we can make the Internet experience.

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