It has been almost a year since Facebook (NASDAQ:FB) announced its blockbuster acquisition of messaging start-up, WhatsApp. All the while, I've remained a bit skeptical over the hefty $22 billion price tag, particularly after seeing how Facebook is accounting for the deal and the state of WhatsApp's financials.

Ignoring the numbers for a moment, WhatsApp is a perfect, complementary fit for Facebook, and the messaging service is well on its way to hitting a strategic milestone targeted by its owner: 1 billion monthly active users.

700 million and counting
WhatsApp CEO Jan Koum took to Facebook on Tuesday to announce that the service had reached 700 million monthly active users, or MAUs. The user base is now collectively sending more than 30 billion messages per day, an incredible feat for a start-up that was founded just over five years ago and a testament to the disruptive nature of the service (at the expense of SMS).

When Facebook announced the acquisition in February 2014, WhatsApp had 450 million MAUs. On the conference call announcing the deal, CEO Mark Zuckerberg said:

Based on our experience of building global services with strong growth and engagement, we believe WhatsApp is on a path to reach over 1 billion people worldwide in the next few years. Internet services that reach 1 billion people are all incredibly valuable and we believe WhatsApp will be as well.

At this rate, it won't be a "few years" before WhatsApp hits that number. This becomes particularly clear when you consider how Facebook will accelerate the service's ability to scale and add users, much like it did with Instagram. Thanks in large part to its bigger parent, Instagram grew from 30 million users at the time of acquisition to 300 million over the course of two years.

Show me the money
This also means Zuckerberg will need to start thinking about monetizing WhatsApp sooner than he might have anticipated, since he had previously indicated that getting the service to 1 billion users was the top priority, and WhatsApp seems to be ahead of schedule. Once there, he and Koum indicated they would shift their efforts toward a broader monetization strategy, with the belief that ads are not the right way to go with a messaging service.

Our explosive strategy is for the next several years to focus on growing and connecting everyone in the world. And then we believe that once we get to being a service that has 1 billion, 2 billion, maybe even 3 billion people one day, that there are many clear ways that we can monetize. But the right strategy, we believe, is to continue focusing on growth in the product and succeeding in building the best communication tools in the world.

WhatsApp's current subscription model brings in $1 per year per user, which suggests an annual revenue pipeline of $700 million based on the current user base. That assumes these users stick around past the initial 12 months: WhatsApp transitioned from a one-time cost to a subscription model in 2013, but new users still get the first year free. WhatsApp's user retention is likely quite high, though, considering the savings that it offers over traditional SMS plans.

As of June 2014, WhatsApp had $22.7 million in trailing-12-month revenue, suggesting at least 22.7 million users had fully transitioned to paid subscription plans. In June, WhatsApp had somewhere between 500 million (April 2014) and 600 million (August 2014) MAUs, based on intermittent updates from Koum. The deal closed in October, and hopefully Facebook will provide investors with more financial data for WhatsApp in its next earnings release.

WhatsApp also has $51.9 million in deferred revenue on the balance sheet. That consists of $20.1 million in current and $31.8 million in long-term deferred revenue (for the services' three-year and five-year user plans). Since WhatsApp does not go into more detail, it's harder to derive user estimates from these figures. The point is that WhatsApp has a revenue pipeline sitting on the balance sheet that will only continue to grow, particularly as the MAU base approaches 1 billion.

Whats next?
Zuckerberg and Koum have suggested they have other routes to monetize the growing user base beyond this nominal subscription fee. Even after WhatsApp reaches 1 billion users, which now seems like a matter of time, that's only $1 billion in annual revenue assuming that user base matures and all users transition to paid plans. At that rate, it would take over two decades to make up for how much Facebook paid. That would be in terms of revenue, before even considering the hope for positive operating income or net income.

WhatsApp might get away with price increases, since it offers such a strong value proposition over the alternative of paying exorbitant fees to wireless carriers. As a shareholder, I can't wait to see what Facebook has up its sleeve for WhatsApp. Hopefully, it'll make me feel better about that $22 billion price tag.