Annual revenue of TikTok owner ByteDance grows to $ 34.3 billion
SINGAPORE — ByteDance Ltd., owner of the popular short video app TikTok, told employees its revenue more than doubled last year to $ 34.3 billion, stressing why the Chinese giant tech is one of the hottest startups in the world.
The private company shared highlights of its 2020 financial performance with its employees on Thursday. ByteDance said its total revenue grew 111% from a year ago, while gross profit rose 93% to $ 19 billion, according to excerpts from a memo consulted by the Wall Street Journal.
ByteDance had around 1.9 billion monthly active users across all of its platforms as of December 2020, according to the memo. The company also runs viral apps like Douyin, the national Chinese equivalent of TikTok, and a news aggregator app called Jinri Toutiao.
The Beijing-based company told its employees it suffered an operating loss of $ 2.1 billion from January to December of last year. The loss was in part due to higher expenses incurred for workers’ stock compensation, according to a person familiar with the matter. For 2019, ByteDance reported operating profit of $ 684 million.
Its net loss for 2020 totaled $ 45 billion, largely due to an accounting adjustment made by the company for an increase in the fair value of its convertible redeemable preferred shares. Startups that have raised outside funds often face these non-cash costs as their valuations rise, if they prepare to perform in line with international financial reporting standards.
ByteDance, which was started in 2012 by Chinese entrepreneur Zhang Yiming, has raised billions of dollars from global investors including KKR & Co., Sequoia Capital and General Atlantic. The company was valued at $ 180 billion at the end of 2020 after a fundraiser that included Fidelity Investments and some of its existing shareholders.
ByteDance is considering registering in Hong Kong or New York, according to a person familiar with the matter. The company has not set a timetable for an initial public offering.
Earlier this year, one of the smaller domestic rivals of ByteDance, operator of short video apps Kuaishou Technology, was listed in Hong Kong after raising $ 5.4 billion. Kuaishou’s market capitalization was recently around $ 103 billion, and the company reported 2020 revenue equivalent to about $ 9.2 billion.
In China, TikTok is widely regarded as China’s most successful mobile internet export. The hugely popular short video app has been downloaded over 240 million times in the US, with teens and adults posting video clips of themselves lip-syncing, dancing, and even giving financial advice. .
TikTok’s ByteDance revenue comes mainly from advertising. The company is also expanding beyond social media into areas such as gaming and e-commerce.
While ByteDance hasn’t broken down its 1.9 billion monthly active users by app, its scale rivals that of Alphabet. Inc.
YouTube, which reiterated in April that it has more than 2 billion users who log into its site to watch videos. At the end of 2019, ByteDance had around 1.5 billion monthly active users.
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Thursday’s numbers also reflect the breakthroughs ByteDance has made in the global advertising market, as advertisers increasingly shift from traditional platforms to new internet formats to target consumers who have been spending more time online since. the coronavirus epidemic.
In China, digital advertising sales increased by more than 20% in the first half of 2020 to reach 300 billion yuan, equivalent to $ 46.9 billion, short video, e-commerce and media platforms social media being the most popular among Chinese marketers, according to the latest data from industry researcher R3. Alibaba Holding Group Ltd.
and ByteDance attracted the most digital ad spend during the period, R3 said.
Many international peers of ByteDance, such as Facebook Inc.
and Google and YouTube’s parent company Alphabet have also seen ad booms after spending slows in the first few months of the pandemic.
Last year, ByteDance was caught in the sights of US-China relations when the administration of former US President Donald Trump identified TikTok as a national security threat and sought to ban the app. This month, President Biden revoked the ban, instead issuing an executive order mandating a broad review of apps controlled by foreign adversaries.
At home, ByteDance has also seen turbulence, as Chinese authorities seek to crack down on perceived excesses of its powerful tech sector. ByteDance has been called by authorities this year for offenses including inappropriate use of data and problematic content.
Last month, Mr. Zhang resigned his post as managing director amid increasing government oversight of the sector. Following the change in management of the company, ByteDance launched a share buyback for employees, according to people familiar with the matter.
In June, two of ByteDance’s apps were included in a list of 129 apps named by the Cyberspace Administration of China for excessive collection of personal information from users. The authority has asked all applications to rectify the situation. The move followed a similar order on Douyin the previous month.
—Raffaele Huang in Beijing contributed to this article.
Write to Liza Lin at Liza.Lin@wsj.com
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