August 8, 2022
TikTok, nipping at the heels of Facebook parent company Meta which forecasts tough times for digital advertising, delivered a massive surge in Australian revenue last year.
Last month, TikTok Australia reported a 220 per cent jump in 2021 revenue to nearly $US50 million ($71.8 million), up from $US15.5 million from November 2019 to December 2020, according to accounts lodged with the Australian Securities and Investments Commission. TikTok launched its local arm in Australia in November 2019.
TikTok globally is estimated to have raked in $US4 billion in revenue last year and is forecast to hit nearly $US12 billion this year – more than Twitter and Snapchat combined.
TikTok’s local operations expanded aggressively between 2020 and 2021, illustrated by employment expenses jumping to $US23.2 million, up from $US6.2 million. Superannuation expenses rose to $US3.3 million from $US515,138 in the previous year.
Advertising, promotion and project expenses lifted to $US12.6 million, up from $US4.8 million.
TikTok Australia received $US12.7 million in advances from its holding company, up from $US15.4 million the year earlier, and $US2.3 million for marketing services to a fellow subsidiary company, down from $US14.8 million 12 months earlier.
TikTok Australia had outstanding money owed to TikTok Ltd of $US28.1 million last year, up from $US15.4 million in 2020.
TikTok paid $US1.5 million in income tax in Australia and recorded a net profit after tax of $US1.3 million last year, up from a tax bill of $US267,195 and net profit of $US46,846 in 2020.
“ByteDance Ltd ultimate holding company has provided its commitment to provide financial support to the company so as the company could continue its operations and to meet all liabilities for the next twelve months from the date of this report,” the financial report said.
TikTok Australia is owned by TikTok Ltd, which is registered in the Cayman Islands. TikTok Ltd is owned by ByteDance Ltd, a Chinese multinational company headquartered in Beijing and domiciled in the Cayman Islands.
Last September, TikTok hit 1 billion monthly active users across the world, about 7 million of which are in Australia.
Last month, TikTok admitted Australian user data could be accessed by staff in mainland China in a letter, which was revealed by The Australian Financial Review, to Liberal Senator James Paterson.
Ongoing concerns from Western governments and intelligence agencies about TikTok, links between its parent company ByteDance and the Chinese Communist Party (CCP), and China’s wide-reaching National Intelligence Law, have not slowed its growth. TikTok denies any data can be accessed by the CCP and that it has robust security protocols over who can access it.
Meta has suffered amid TikTok’s rise, even though Facebook’s Australian business still far outstrips the Chinese tech company’s. Facebook Australia’s total advertising revenue last year was $1.1 billion, although most of the money was sent offshore for the “resale of advertising inventory” leaving it with net revenue of $194.2 million.
Its shares have nearly halved since the beginning of this year and late last month, Meta reported its first-ever yearly revenue decline for the second quarter.
Changes to Apple’s privacy policies last year, which limited Meta’s ability to target users, allowing them to opt-out of tracking, also hurt its ad revenues.
Mr Zuckerberg forecast a tough third quarter for the Silicon Valley-based giant amid an economic downturn and rising inflation, which has led to a slowdown in digital advertising spend.
“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. The situation seems worse than it did a quarter ago,” he said.
The Facebook founder said its TikTok rival format Instagram Reels reached $US1 billion in annualised revenue, but that “in the near-term, the faster that Reels grows, the more revenue that actually displaces from higher monetising surfaces. Obviously, there is a cannibalistic impact, but the net impact is positive.”
