The US company that owns blogging platforms Tumblr and WordPress pumped €200 million into its heavily loss-making Irish operation after the start of the pandemic.
Automattic, which was founded by tech entrepreneur Matt Mullenweg, operates all of its blogging operations outside of the United States through a company registered in Dublin, Aut O’Mattic A8C Ireland. The Irish entity employs about 200 staff although for years it has operated a fully remote work culture, and the workers may not all be physically located in this country.
Accounts for 2020 that became available for public viewing this week show the Irish entity’s sales in the year the pandemic hit rose by 9 per cent to €78.1 million, which included €21.1 million generated by a South African entity. The entity made a €2 million net profit, compared to a €21 million loss the prior year, which was largely due to heavy expenditure on research and development (R&D).
The Irish entity spent almost €31 million on R&D in 2020, which was €20 million less than the previous year. But despite moving into profit, it retained heavy accumulated losses on its balance sheet – €131 million by the end of 2020.
The US parent group has plugged the hole on the Irish entity’s balance sheet with a €200 million “capital contribution”, which came from the write-off of loans owed to the US operation. The Irish entity also carries €16.1 million in tax losses that can be written off against future profits to pare down its liabilities to the exchequer.
Automattic is a pioneer of the work-from-home culture that has become widespread in the tech sector, and many other industries, since the pandemic hit. Mr Mullenweg has long been an advocate for remote working, which he says is good for the economy and the environment.
All 2,000 staff of the group, including employees of the Irish unit, are entitled to take fully-paid three-month sabbaticals from work after five years’ service with Automattic.
The directors of the Irish business include Mayo software developer David Lenehan, who sold PollDaddy to Automattic more than a decade ago. The three directors of the Irish unit shared a €2.1 million pay pot in 2020, the accounts state.
Mr Mullenweg’s company is backed by Silicon Valley Bank and a number of venture capital firms. It raised capital in 2021 on a valuation of about $7.5 billion (€7.1 billion).