TikTok parent Bytedance Ltd. posted an operating profit of nearly $6 billion in the fiscal first quarter of 2023, nearly double the year-earlier figure, as the Chinese social media giant cut expenses.
A rare disclosure of The private company's traditionally secret financials, as previously reported by The Wall Street Journal, shows how much ByteDance's business has turned around since 2021, when the company posted an operating loss of $7 billion.
While ByteDance's revenue has continued to grow, soaring more than 38 percent to $85.2 billion in 2022, the company's revenue growth this year has slowed from the previous year, when it grew nearly 80 percent, according to a financial report the company shared with employees. The company reported operating profit of more than $20 billion last year.
In addition to the financial documents sent to current and former employees, ByteDance offered to buy back stock from current employees at $160 per share, according to people familiar with the matter. The company also noted that it has 1.4 billion shares outstanding, implying a valuation of $223.5 billion. That's down nearly 26% from a valuation of $300 billion a year ago, as previously reported by The Wall Street Journal.
Tech news outlet The Information previously reported ByteDance's new share price and valuation.
'We can say with confidence that the company is growing,' a ByteDance spokeswoman said.
As a private company based in Beijing, ByteDance keeps its finances a tight lid and does not publicly disclose its results. The report, sent to employees on Monday, provides the most detailed look at current performance and future planning, covering the full year 2021 and 2022 and the first fiscal quarter of 2023.
The report shows that the company has sharply cut marketing, management and research and development expenses while rapidly increasing revenue.
Bytedance's TikTok unit launched an e-commerce initiative called TikTok Shop in the United States in August. The company hopes the move will generate more revenue, people familiar with the matter said.
Bytedance faces a number of headwinds as it seeks to woo investors. In addition to competition from US social media companies, political uncertainty is a growing risk as Sino-US relations become increasingly strained.
The slowdown in ByteDance's revenue comes as the company continues to try to convince the US government and regulators in other countries that its popular video-sharing app TikTok is safe for users. Regulators are concerned that the Chinese government could pressure TikTok to hand over user data or use the app for propaganda purposes, a concern TikTok has repeatedly denied.
TikTok's uncertain future in the United States has heightened tensions between China and the United States and magnified the importance of local legislation, such as a possible ban in Montana, which the app is fighting. A hearing in Montana is scheduled for mid-October.
Jeff Yass, a financier and influential Republican political donor who holds a large stake in ByteDance through his Susquehanna International Group, is also moving to resist the United States ban on TikTok. "The idea of banning TikTok goes against everything I believe in," Yass told the Wall Street Journal.
TikTok is also increasingly facing stiff competition from its American counterparts. META CEO Mark Zuckerberg said in July that annualized revenue from his company's Reels products had grown to more than $10 billion from $3 billion in 2022. Alphabet (GOOG), which owns Google, said in July that the number of monthly viewers of its YouTube Shorts product had grown to more than 2 billion, up from 1.5 billion a year earlier.
Bytedance's 2022 sales were $85.2 billion, slightly lower than Meta's $116.6 billion in the same period. Snapchat parent company Snap reported 2022 revenue of $4.6 billion, up nearly 12% from 2021. Pinterest reported 2022 revenue of $2.8 billion, up 9% from 2021.
Bytedance's cost of sales for 2022 increased by more than 37.6 percent year over year to $37.7 billion. Of ByteDance's declining spending in 2022, sales and marketing spending was $14.8 billion, down from $19.2 billion in 2021, according to the filing. R&d spending was $8.7 billion, down from $14.6 billion in 2021; General and administrative expenses were $4.5 billion, down from $8.3 billion in 2021.
Revenue in the first three months of 2023 rose nearly 34 percent year over year to nearly $24.5 billion.
The company's total assets were $95.5 billion in March, up from $87.6 billion in December and $64.3 billion in 2021.