(Bloomberg) — ByteDance Ltd., the parent of hit short video app TikTok, swung to an operating loss of $2.1 billion last year after it issued more shares to employees ahead of a widely anticipated initial public offering.

The loss compared with operating profit of $684 million in 2019, according to a memo to employees Thursday. That was due in part to higher expenses incurred from share-based compensation to workers, a person familiar with the matter said, while expenses also soared as ByteDance boosted spending to acquire users and support its content creators. It earned gross profit of $19 billion on revenue of $34.3 billion, which more than doubled. Net loss ballooned to $45 billion, mainly stemming from accounting adjustments.

A ByteDance spokesperson confirmed the figures in an email to Bloomberg News. The losses were earlier reported by the Wall Street Journal.

Speculation over a potential ByteDance IPO has been growing, with the company said to target a listing of its Chinese assets that could raise several billion dollars, people with knowledge of the matter told Bloomberg News in April. Founder Zhang Yiming announced in May he was stepping down as chief executive officer to focus on longer-term strategy, just as Beijing steps up scrutiny of its internet firms and their billionaire founders.

Read more: ByteDance Founder Steps Down as CEO Ahead of Mega IPO

As of December, ByteDance had more than 1.9 billion monthly active users worldwide for its products from TikTok to Chinese twin Douyin and the news aggregator Toutiao.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

(305) 707 0888