TikTok’s European business grew by 477% in 2021… but posted $896m pre-tax loss

TikTok has filed the financial results for its European business for FY 2021 (ending December 31).

The filing, available publicly on the UK’s Companies House for TikTok Information Technologies UK Ltd, reveals turnover of USD $990.46 million in the 12 months.

That FY turnover figure represented growth of 477% YoY, up from $171.62 million in 2020 (see below).

TikTok Information Technologies UK Ltd represents TikTok’s business for users in the EEA (EU countries plus Iceland, Liechtenstein and Norway), in addition to users in the UK and Switzerland.

TikTok says that its turnover growth in these regions in 2021 was “primarily driven by the continued growth” of its user base.

It also pinned this growth on what it calls “enhanced monetisation tools to improve advertisers’ experience”.

However, within the filing, TikTok reveals an annual operating loss of $895.58 million, widening by 37% YoY compared with a $654.20 million loss in 2020 (see below).

TikTok’s losses are mainly due to increased staffing costs, with the platform’s monthly average number of employees in Europe increasing from 1,302 in 2020 to 4,396 in 2021. 

The firm’s cost of sales more than tripled year-on-year to top $1 billion in 2021.

Elsewhere in the filing (which you can read in full here), TikTok reveals that its ads business in Europe generated $802.3 million in 2021, versus $152.4 million the prior year (see below).

TikTok notes in the filing that “advertising is an important source of revenue” for its platform and that the company is “constantly improving its operations and service model to ensure we provide high-quality service and solutions to our advertisers”.

The ByteDance-owned platform says that it has boosted the number of staff on its sales and accounts teams.

TikTok notes under its business risks section that the platform faces competition from other companies “that operate content-based social platforms and companies that sell advertising to businesses that are looking to reach consumers”.

It adds: We need to continue to innovate and provide services that are useful to users to remain competitive.”

The platform’s live-streaming business in Europe, meanwhile, generated $151 million in 2021, versus $16.6 million in 2020.

Breaking TikTok European business revenues down geographically reveals that the European Union accounted for $532 million in 2021 (see above), versus $114 million in 2020.

The UK accounted for $279 million, versus $52 million in 2020, while geographic markets listed by TIkTik as ‘Other’ generated markets generated $179 million in 2021 versus $5.7 million in 2020.

Other business risks listed by TikTok include the size of its user base.

The company states in the filing that “the size of TikTok’s user base and the users’ level of engagement are crucial to our business, which continue to be significantly determined by our ability to retain our existing users, keep them engaged and acquire new users in a cost-efficient manner and our ability to attract, cultivate and retain content creators to contribute content”.

TikTok revealed in September 2021 that it had over 1 billion global Monthly Active Users (MAUs).Music Business Worldwide

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