TikTok has cut its worldwide ad revenue goal for 2022 by 20% due to a drop in sales. The targets were slashed by at least $2 billion in September by Shou Zi Chew, the chief executive officer (CEO) of the video sharing platform, reported Financial Times quoting sources.
The move was announced by the TikTok chief executive in a virtual all-hands meeting where employees were criticised for their poor performance which has played a part in the plummeting sales. Initially, TikTok had set the ad revenue target between $12 billion and $14.5 billion. However, after witnessing poor sales, the ad forecast was revised to $10 billion, the report added.
TikTok relies on its e-commerce and advertising sales for the majority of its revenue. At the meeting, the company told the staff that they had failed to generate adequate sales in both areas. However, according to some current and former employees, TikTok has been splashing money on salaries and extravagant social events, the report added.
The plan to launch the initial public offering (IPO) of ByteDance, TikTok's parent company, has also been postponed, the employees were informed in the meeting.
TikTok's decision to slash revenue targets comes when tech giants like Amazon, Intel, and Microsoft have said that customers' spending on cloud and data center has shrunk. Amazon Web Services (AWS), the cloud unit of the tech giant, has seen its growth slowing down consistently in the past four quarters. Its net sales grew by 28% in the July-September period while it was 39% in the previous year.
Meanwhile, spending and hiring cuts in the information technology and IT enabled services companies reduced the revenue from the sector by 50% for Quess Corp Ltd. The firm, which trains individuals for jobs in the hospitality and gig industries among others said that its information technology (IT) and information technology enabled services (ITES) clients were deferring onboarding new employees.