Mozilla revenues hit $75 million – Hello IRS.

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Mozilla Chief Wrangler Mitchell Baker today reported Mozilla’s financial position which shows 2007 revenues of $75 million up by 12 percent from 2006 revenues of $67 million. Though Mozilla is on the upswing, Baker’s report shows some areas of potential future financial concerns.

As was the case last year, the bulk of Mozilla’s revenues came from a search deal with Google. That deal has now been extended until November of 2011.

As part of the deal Google pays Mozilla a fee every time someone does a search using the default Google Search start page that is included in Firefox.

An interesting thing to note though is that there is not a 1:1 correlation between the user growth for Mozilla Firefox and the corresponding revenue from Google. Baker noted in her report that, “search revenue increased at a lesser rate than Firefox usage growth as the rate of payment declines with volume.”

Another interesting item in the report is the fact that Mozilla expenses were up in 2007 by 68 percent over 2006. Approximately 80 percent of Mozilla’s expenses come from its staffing costs. What makes this really interesting is that Mozilla even with more paid staffers is still getting the same proportion of its code from external (i.e non-Mozilla) contributions.

“The percentage of code contributed to Firefox by people not employed by
Mozilla remained steady at about 40 percent of the product we ship,” Baker reported. “This is
true despite a significant amount of new employees in 2007.”

Last but not least, Baker’s report reveals that the Internal Revenue Service, the US national tax agency is reviewing aspects of some funds generated by Mozilla. Baker does not specifically use the word “audit’ in her report.

“We are early in the process and do not yet have a good feel for how long this will take or the overall scope of what will be involved,” Baker commented about the IRS review.