TikTok continues its rapid ascent. After dodging geopolitical uncertanties in some of its western operations, it’s back to disrupting the world of social sharing and content discovery. In parallel with product moves, it continues to develop its eCommerce and ad monetization engine.
But what’s TikTok’s financial snapshot and operational scale? Figures have emerged over the past few weeks that help us extrapolate where it sits. So we’re aggregating them all in one place for Localogy Insider readers. The short version: there’s good news and bad… mostly the former.
Diving into the numbers, the latest milestone is that TikTok just surpassed 1-billion monthly active users. To put that into perspective, it’s about 1/7th the world’s population. It also notably compares to Facebook’s 2.9 billion global users, though TikTok reached the 1-billion mark faster than Facebook did.
In fact, TikTok’s 1-billion milestone marks 45 percent growth since July 2020 when it had 689 million users. Beyond active users, it’s also notable that TikTok in July became the first non-Facebook app globally to reach 3-billion downloads. Though that’s not active users, it’s notable as a proxy for scale.
As for how these numbers translate to dollars, TikTok continues to develop several revenue streams, with ad monetizations as the primary model. As we’ve learned from players like Facebook and Snapchat, it’s all about gaining traction, then optimizing ad revenue per user over several years.
TikTok is obviously earlier in that journey but is showing positive signs, at least in a top-line sense. Specifically, revenue in Europe grew 545 percent in 2020 to $170 million according to public filings reported by CNBC. The bad news: losses grew from $118 million to $644 million in the same period.
These losses aren’t unexpected, given the blitzscaling playbook to reinvest in growth — often when there are market share battles for growing markets. That’s the case here, given developing markets — the other 5 billion untapped people on the planet that Facebook, Snapchat, and TikTok will fight for.
The biggest culprit for TikTok’s losses — at least in Europe where we have a glimpse — is staff. In the above period of hyper-growth, its headcount rose from 208 to 1,294. TikTok declined to comment to CNBC about global headcount but did reveal it plans to grow U.S. headcount from 1,400 to 10,000.
Circling back to TikTok’s ongoing product and monetization development, models include eCommerce and ad monetization as noted. It’s even flirting with NFTs – digital assets that have standardized value, defined by the blockchain. They could be an important element and currency in the metaverse.
But the most recent and notable of these moves is likely TikTok’s emerging eCommerce business. It has formed a few relationships with Shopify and a handful of other eCommerce players as we examined last week. Insider meanwhile reports that TikTok is making other covert moves around eCommerce.
All of the above will continue to be a moving target as TikTok challenges Facebook and Snapchat for social-sharing mindshare. Its differentiated format that’s more about content discovery than social graphs could give it an edge. We’ll keep watching and report back as this market-share battle rages on.