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Pinduoduo’s performance report for the first quarter of 2023 shows that the company’s total revenue for the quarter was 37.6371 billion yuan, a year-on-year increase of 58%; the net profit attributable to ordinary shareholders was 8.101 billion yuan, a year-on-year increase of 212%. Non-GAAP net profit attributable to ordinary shareholders was 10.1264 billion yuan, a year-on-year increase of 141%.
Chen Lei, Chairman and Co-CEO of Pinduoduo, said: “Technology is the cornerstone of sustainable and inclusive growth that can create positive value for society. We will devote more resources to research and development, because it is a key catalyst to improve efficiency and discover opportunities .”
Zhao Jiazhen, executive director and co-CEO of Pinduoduo, said: “We are entering a new stage of development and will be fully committed to promoting high-quality growth and further strengthening the ecosystem. We are launching a dedicated ’10 billion ecosystem plan’ to An environment that fosters the flourishing of quality merchants.”
The increase in revenue was mainly due to the increase in revenue from online marketing services and transaction services
Pinduoduo said that the main reason for the increase in revenue in the first quarter of 2023 is the increase in revenue from online marketing services and transaction services.
In terms of business, online marketing services and other revenues in the quarter were 27.2444 billion yuan, a year-on-year increase of 50%; transaction service revenues were 10.3926 billion yuan, a year-on-year increase of 86%.
In the quarter, Pinduoduo’s total cost of revenue was 11.1253 billion yuan, a year-on-year increase of 55%. The increase was primarily attributable to increases in fulfillment fees and payment processing fees. The total operating expenses were 19.5827 billion yuan, a year-on-year increase of 35%. The main reason for the increase was the increase in sales and marketing expenses.
Sales and marketing expenses were 16.2597 billion yuan, a year-on-year increase of 45%, mainly due to the increase in promotion and advertising activities; general and administrative expenses were 816.4 million yuan, a year-on-year increase of 38%, mainly due to the increase in employee-related costs; research and development expenses were 2.5067 billion billion, a year-on-year decrease of 6%.
Operating profit for the quarter was 6.929 billion yuan, a year-on-year increase of 222%; non-GAAP operating profit was 8.4624 billion yuan, a year-on-year increase of 130%; net profit attributable to ordinary shareholders was 8.101 billion yuan, a year-on-year increase of 212%; Non-GAAP net profit attributable to ordinary shareholders was 10.1264 billion yuan, a year-on-year increase of 141%.
The net cash generated from operating activities was 1.338 billion yuan, while the net cash used in operating activities in the same period in 2022 was 9.0681 billion yuan, mainly due to the increase in net income and changes in funds.
By the end of the first quarter of 2023, cash, cash equivalents and short-term investments will be 157 billion yuan, and by the end of 2022 it will be 149.4 billion yuan.
Chen Lei: Different ideas from Zhao Jiazhen will lead to more efficient decision-making
In early April, Pinduoduo issued an announcement stating that with the approval of the board of directors, the company’s co-founder Zhao Jiazhen will serve as executive director and co-CEO, and will partner with chairman and co-CEO Chen Lei to jointly manage the company’s business. According to Chen Lei, Zhao Jiazhen will focus on supply chain management and China business in the future, and his own work will focus more on globalization.
When asked about the changes in the future strategy of Pinduoduo due to structural adjustment and becoming a co-CEO model, Chen Lei said that Pinduoduo has formulated a clear long-term strategy under the big goal of high-quality development, and will continue to lead the team to implement it these strategies. “On this basis, if we can combine our different backgrounds and ideas, this will lead to more efficient decision-making.”
Chen Lei said that in the past period of time, Pinduoduo has been gradually adjusting its strategic focus, from “focusing on the speed of growth” in the past to “pursuing the quality of development”. Under the long-term strategy, Pinduoduo continues to improve its supply chain capabilities and increase high-quality supply. In the future, support will be further increased, especially for high-quality merchants, and the overall service quality of the platform will be improved through the establishment of a special “ten billion ecology” project. In addition, Pinduoduo will continue to optimize the overall ecology of the platform.
Chen Lei said that Pinduoduo is also continuing to strengthen its research and development capabilities and increase investment in research and development. At present, research and development-related personnel have accounted for half of the total number of employees. But it is worth noting that Pinduoduo’s research and development expenses in the first quarter fell by 6% year-on-year.
Chen Lei added that China is a huge market, and Pinduoduo still has great development potential in China. In the foreseeable future, the Chinese market will be the most important market for Pinduoduo. “Of course, we also see that the market is changing very rapidly, and the competition is also intensifying. It can be said that challenges and opportunities coexist. Because of this, the board of directors appointed Zhao Jiazhen as the company’s co-CEO, and jointly formulate and implement strategies with me. , to further strengthen the strength of Pinduoduo’s China business team.”
Zhao Jiazhen said that while the entire industry is recovering, Pinduoduo is also entering a new stage. In the past few years, it has changed from “marketing-driven” to “R&D-driven”. Now it is at the door of another stage, that is, a new stage of comprehensively promoting high-quality development.
Zhao Jiazhen said that in the current new stage, we are further optimizing the platform ecology, upgrading consumer services, vigorously supporting high-quality supply, and deepening supply chain capabilities. Platform governance will also be continuously optimized.
Regarding the reasons for the performance growth, Zhao Jiazhen explained that since the past quarter, with the gradual implementation of policies to promote consumption in various places, consumer confidence has continued to recover, Pinduoduo has also benefited from it, and the consumption vitality of the platform has been further released. “In order to help consumption recover, Pinduoduo has mobilized platform resources; the platform has also organized several large-scale promotional activities in succession, issuing additional coupons and discounts; at the same time, Pinduoduo has also comprehensively upgraded consumer protection and services.”
Pinduoduo says Temu business line is still in its infancy
Since 2022, Pinduoduo’s cross-border e-commerce platform Temu has received a lot of attention.
According to reports, Temu was established in Boston in 2022, implying “TEAM UP, PRICE DOWN”, providing users with services and products through the website (https://temu.com) and its mobile applications (Android / iOS).
On September 1, 2022, Temu was officially launched in the United States. Since then, Temu has entered the fast lane of development, and “dominating the app store” has become the norm. According to a report released by Sensor Tower, the number of downloads of the Temu APP increased by 19 million times in the first quarter of this year, and the total number of downloads of the app has reached 33 million times.
At the beginning of this year, Temu could only ship to the United States and Canada. Since then, Temu has accelerated its expansion in many European countries. Online one after another. In addition, Africa, Latin America and other regions will also be the expansion targets of TEMU.
Liu Jun, Pinduoduo’s vice president of finance, said that Pinduoduo’s Temu business line is still in its infancy. Compared with the overall size of the company, Temu’s revenue in the financial report is relatively small.
Liu Jun said: “Pinduoduo has always focused on tapping consumer needs, hoping to better satisfy consumers. As the value created by the company continues to increase, I believe that the positive financial returns brought by the business will gradually appear. We will continue to expand various businesses with the goal of ROI (return on investment), and carefully evaluate various investments and related opportunities.”