December 6, 2023 - ByteDance is tapping a cash pile of more than $50bn accumulated from its popular short-video apps to buy back up to $5bn worth of shares from investors.
The owner of the viral apps TikTok and Chinese version Douyin raked in $29bn in revenues in the three months to June, up about 40 per cent from the previous year, according to four people briefed on the figures. Earnings before interest and tax, ByteDance’s preferred metric of profitability, were $9bn.
By mid-year, the start-up had $51bn worth of cash on its balance sheet, $7bn of which is restricted and not available for immediate business use. Total debt stood at $12bn, according to people briefed on the numbers.
The Chinese social media company, backed by General Atlantic and SoftBank, aims to purchase shares from investors at an approximate $260bn valuation, according to three people familiar with the matter. Last summer, it was valued at about $300bn when it conducted a share buyback from its employees.
Founded in 2012 by Zhang Yiming, ByteDance has been one of the fastest-growing companies to emerge from China in recent years. But a bruising regulatory crackdown on the internet sector by Beijing and political scrutiny in Washington has hampered its progress towards a public offering.
It has postponed an intended Hong Kong listing several times since Beijing launched a crackdown on major tech groups in late 2020 with the cancellation of Ant Group’s IPO. The US government has also called for a ban or divestiture of the short-form video app beloved by American teenagers.
ByteDance had more than 3bn monthly active users across its various platforms, including Douyin and TikTok, 2bn of whom logged on to the apps daily during the second quarter.
By comparison, Meta, which owns Facebook, Instagram and WhatsApp, had just under 4bn monthly active users, 3bn of whom used its platforms daily during the same period.
The internet group has leveraged the popularity of Douyin to make an aggressive push into ecommerce in China, posing a challenge to incumbent Alibaba. ByteDance is also investing in expanding TikTok’s international ecommerce business.
ByteDance does not publicly disclose its revenue and profitability figures and declined to comment. The Information previously reported the company’s revenue figure.
One ByteDance investor said the start-up’s strong sales were overshadowed by uncertainty about whether it and Ant would be allowed to conduct an IPO. “The numbers are wild, but none of it matters until the Chinese government decides if they can go public,” they said.
