China-based, TikTok’s parent ByteDance generated more than $3 billion of net profit on over $17 billion in revenue last year, figures that show the world’s most valuable startup is still growing at a brisk rate, according to sources, quoted in a report by a media.
The revenue for last year was more than double the company’s tally of about $7.4 billion in 2018, propelled by the phenomenal growth in user traffic that’s drawn advertisers away from Tencent Holdings and Baidu. The people asked not to be identified because the financial details are private.
Owner of other popular apps such as Helo, Resso, Douyin and Vigo Video, ByteDance has emerged as one of the tech industry’s most surprising success stories, an innovative Chinese company that is challenging the global dominance of US internet giants which include Facebook and Twitter. It draws some 1.5 billion monthly active users to a family of apps that includes the TikTok short-video platform, its Chinese twin Douyin and the news service Toutiao. This month, the company poached Walt Disney streaming czar Kevin Mayer to become chief executive officer of TikTok.
Overall, the company led by Zhang Yiming posted $17 billion in revenues in 2019, a 2 times growth compared to the earnings by Bytedance in 2018. With 2019 revenue numbers, the startup is now valued close to $100 billion. On the other hand, Facebook-owned Instagram had posted $20 billion in revenues while Google’s YouTube made $15 billion in revenues in 2019.
According to industry experts, the company owes most of its revenue to the popular short video sharing app TikTok. Across all platforms, Bytedance has over 1.5 billion monthly active users across all the applications while TikTok alone has attracted a more than 800 million users globally.
TikTok, which has over 120 million users in India, gives a tough competition to the likes of Instagram. As far as the India numbers are concerned, industry estimates suggest that TikTok’s advertising revenue grew by more than 50 per cent last year.
“None of the Chinese tech companies has achieved this level of success in the global market before ByteDance,” he said, adding neither social media company harbours much debt. “The fact that ByteDance is making a profit, if true, and sitting on a $6 billion cash pile means that it is not in a rush at all to come to market to raise capital, and therefore less likely to offer the shares at a more reasonable price for IPO investors.”
ByteDance is now strengthening its operations in newer arenas such as e-commerce and gaming. This year, it kicked off a wave of hiring employees and envisions hitting 40,000 new jobs in 2020, hoping to match headcount of e-commerce giant Alibaba Group Holding at a time technology corporations across the globe are laying off or reducing staff.
The company had very preliminary discussions about an initial public offering last year but is in no rush to go public given its financial performance, some sources who do not wish to be identified have said. It now has more than $6 billion of cash on hand, they added.
ByteDance, which is backed by SoftBank Group, General Atlantic and Sequoia, is already the world’s most valuable startup, according to researcher CB Insights. Some private trades recently valued the Chinese company between $105 billion and $110 billion on the secondary markets, Bloomberg News previously reported. It has also traded as high as $140 billion, one person said, making it one of the most highly valued private companies of all time.