ByteDance posts record profit despite TikTok losses

Earnings before interest, tax, depreciation and amortisation, ByteDance’s preferred metric for profitability, surged 79 per cent to about $25bn in 2022, according to two investors briefed on the numbers. That was up from about $14bn the year earlier.

ByteDance’s profit came on the back of almost $85bn in sales in 2022, up more than 30 per cent from a year earlier, as advertisers increased spending on the fast-growing TikTok viral video platform and its sister Chinese app Douyin.

This rise has helped ByteDance, which was valued at $300bn last year, surpass China’s listed tech giants, Tencent and ecommerce group Alibaba, which reported ebitda of $23.9bn and $22.5bn for 2022, respectively.

ByteDance’s explosive growth comes as TikTok faces mounting security concerns from governments and regulators around the world. The US government has called for a ban or divestiture of the short-form video app.

TikTok chief executive Shou Zi Chew defended the app in a congressional hearing last month, saying it would be kept “free from any manipulation by any government”. Beijing has said it would “firmly” oppose any move to separate TikTok’s US arm from its Chinese owners.

Any forced sale or ban of TikTok would hit ByteDance’s potential earnings. Although it generated about 80 per cent of its revenues in China last year and TikTok was lossmaking, it nonetheless represents an important future profit engine.