Zhang Yiming Photographer: Giulia Marchi/Bloomberg
Bytedance Ltd., the world’s most valuable startup, barely met its 2018 revenue target after a sharper-than-projected slowdown in Chinese advertising growth, people familiar with the matter said.
The company told investors to expect revenue of 50 billion ($7.4 billion) to 55 billion yuan during its most recent fundraising, the people said, asking not to be named because the matter is private. It reached the lower end of the target, the first time in years it hasn’t beaten its forecast, because it delayed monetizing new functions and China’s slowing economy dampened spending on ads, the people said.
Six-year-old Bytedance secured a $75 billion valuation in the most recent fundraising, vaulting it ahead of Uber Technologies Inc. in the global rankings, after attracting backing from SoftBank Group Corp., KKR & Co. and General Atlantic. The social media giant is nurturing a raft of apps including news aggregating service Toutiao and short video platform Tik Tok, helping it create an internet experience that’s a cross between Google news and Facebook.
Bytedance declined to comment on its revenue in an emailed statement.
Founded by 35-year-old Zhang Yiming, it started life as a producer of apps for sharing jokes before creating its signature service in Toutiao, which means “Headlines.” It then spent years building up its user base and improving its recommendation systems.
The company has since evolved into a multi-faceted empire spanning Tik Tok -- known as Douyin locally -- and other platforms for everything from humor to celebrity gossip. Tik Tok and Douyin had a combined 500 million users as of July.
But Bytedance isn’t immune to a slowdown in the world’s second-largest economy, as most of its revenue is generated from ads. The company’s heavy reliance on advertising means it is confronted with the same question that plagued Facebook early in its life, whether it will generate consistent profits.
The company however is splurging on marketing to get build its brand, plastering its name across subways in Japan and a skyscraper in Dubai. In November, it sought a syndicated loan with a base size of $500 million and a greenshoe option that allows it to boost the amount to up to $1 billion to fund expansion, people familiar said at the time.Related: Could Bytedance Be China’s First Global Internet Success Story?