Because his service scales so well, it is bringing in a lot of revenue for the company (sorry, don't know the exact amount), at a very low cost. He is a very productive developer.
Whatever his salary is as an engineer, he is definitely underpaid.
Since I have mostly avoided doing side projects outside of work to learn something new [1], I understand spending extra time at work to scratch an itch and doing a low priority project as long as it doesn’t interfere with revenue generating - or cost reducing - initiatives.
[1] I would much rather work on a work related project using a new to me technology and if it requires longer hours to complete it, I’m find with putting in the extra time. It seems like more of a win, I get to learn a new technology, get to see it actually be used by others, and it will be helpful during either review time or worse case a resume builder.
Whatever his salary is as an engineer, he is definitely underpaid.