TikTok recorded a massive increase in revenue in its European/international business last year – but the jump in turnover came with a similarly large increase in the company’s operating losses.
TikTok Information Technologies UK posted $4.57 billion in turnover in 2023, according to the company’s annual accounts filed with the UK’s Companies House on Tuesday (October 8).
That’s a 74.6% YoY increase in revenue. However, the company posted an even larger increase in its operating loss, which came in at $1.37 billion, more than double the $512.1 million loss it recorded in 2022.
The company’s negative operating margin grew to 29.9%, from 19.6% the year before.
While revenue grew rapidly, TikTok UK’s costs grew even faster. Cost of sales jumped 85.6% YoY to $3.38 billion. Administrative expenses more than tripled, to $1.57 billion from $448 million the year before. Staffing costs rose 22%, to $805 million from $660 million the year before.
The filing is for a group of companies comprised of parent company TikTok Information Technologies UK Ltd. and its subsidiaries.
TikTok Information Technologies UK Ltd owns TikTok’s business across the European Economic Area (EEA), the United Kingdom and Switzerland.
(The EEA includes all 27 EU members (like France and Germany), plus the three European Free Trade Association (EFTA) countries: Iceland, Liechtenstein, and Norway.)
In addition, it collects revenues from TikTok operations in South and Central America (exclusively via Brazil and Mexico), and a handful of other territories.
TikTok Information Technologies UK Ltd. is a separate entity to TikTok’s operating companies in the US (TikTok Inc via TikTok LLC), Australia/New Zealand (TikTok Australia Pty Ltd), and Singapore (TikTok Pte Ltd, which owns TikTok’s operating entities in India and South-East Asia).
TikTok’s sister platform in China, Douyin, is also owned and operated separately.
In previous years, TikTok UK broke down its numbers by region, including for the UK and Europe, but this year it didn’t “because, in the opinion of the directors, it would be seriously prejudicial to the interests of the company to do so,” the report stated.
TikTok UK attributed its revenue growth to “continued growth of our user base and enhanced monetization tools to improve advertisers’ experience and ad performance including a number of… new creative, branding and commerce solutions.”
TikTok reported in August that it had 150 million “monthly active recipients” in the European Union between February and July of this year, up 11.9% from 134 million in the same period a year earlier.
The company said its widening loss was “primarily due to one-off provisions of legal and related matters,” which TikTok said cost just over $1 billion.
It noted that TikTok is “involved in legal proceedings including regulatory investigations and litigation proceedings.”
In 2023, Ireland’s Data Protection Commissioner fined TikTok the equivalent of $370 million for violating European Union laws on the protection of children’s data. Among the violations was that TikTok profiles for users under the age of 16 were set to public by default.
The company faced further regulatory problems in the EU this year. In February, the European Commission opened an investigation into TikTok “in areas linked to the protection of minors, advertising transparency, data access for researchers, as well as the risk management of addictive design and harmful content.”
A few months later, the Commission opened another investigation, this time to determine whether the platform had violated the EU’s Digital Services Act with its TikTok Lite Rewards program, which it launched in France and Spain. The program rewards TikTok users for performing specific tasks, a feature that the EC feared was “stimulating addictive behavior.”
TikTok settled that investigation in August by agreeing to remove TikTok Lite Rewards in the EU.
TikTok’s ongoing litigation against the US’s “divest-or-ban” law would not have been accounted for in TikTok UK’s numbers, as a separate entity, TikTok Inc, handles North American operations.
Under that law, TikTok and its Chinese parent company, ByteDance, have until January 2025 to sell TikTok’s US operations or face an effective ban on the app in the US.
TikTok has challenged the law, signed by President Joe Biden in April, in US federal court, arguing – among other things – that it is an unconstitutional infringement on freedom of speech.
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