Black Friday, also known as the Foreign Shopping Festival, is in full swing.
The temperature of the Double 11 remains cool, and the overseas battle of Pinduoduo is still ongoing.
On November 28th, Pinduoduo Group released its performance report for the third quarter of 2023 as of September 30th.
Pinduoduo's revenue in the third quarter was 68.84 billion yuan, a year-on-year increase of 94%. Pinduoduo's US stock market rose nearly 17% before trading.
In the third quarter of last year, Pinduoduo's net profit attributable to common shareholders under US GAAP was 10.59 billion yuan. At that time, Liu Jun, Vice President of Finance at Pinduoduo, referred to it as an unsustainable "occasional profit".
This year, the number continues to grow, with a net profit attributable to ordinary shareholders of Pinduoduo of RMB 15.5371 billion, a year-on-year increase of 47%; Under non GAAP accounting principles, the net profit attributable to ordinary shareholders of Pinduoduo was RMB 17.0271 billion, a year-on-year increase of 37%.
Chen Lei, Chairman and Co CEO of Pinduoduo Group, said that the implementation of a series of consumer promotion policies has led to an increasingly strong demand for consumer upgrading, driving Pinduoduo's growth. He believes that consumers pursue a "quality price ratio", which is not only related to product quality but also to price.
Chen Lei revealed that in the future, Pinduoduo will continue to invest heavily in agricultural technology, supply chain technology, and overall core research and development.
Transaction service revenue increased by over 300% year-on-year, and the number of Double 11 users exceeded 620 million
In the third quarter, Pinduoduo launched a series of major promotions such as the "Summer Carnival", "Duoduo Harvest Hall", "National Products Festival", and "Duoduo Reading Month" to boost revenue. This quarter, categories such as agricultural and sideline products, beauty and care, digital home appliances, and sports and outdoor have all achieved varying degrees of growth.
The financial report shows that in this quarter, Pinduoduo's revenue from online marketing services and other services was 39.6877 billion yuan (approximately 5.4397 billion US dollars), a year-on-year increase of 39%. The revenue from trading services was 29152.7 million yuan (approximately 3.9957 billion US dollars), a year-on-year increase of 315%. The revenue cost was 26.830.2 billion yuan (approximately 3.6774 billion US dollars), a year-on-year increase of 262%. The overall revenue growth is mainly affected by the increase in revenue from online marketing services and transaction services.
The main reason for the increase in revenue costs is the increase in performance fees, payment processing fees, maintenance fees, and call center fees. The total operating expenses were 25.3541 billion yuan (approximately 3.4751 billion US dollars), an increase of 44% from 17.6536 billion yuan in the same period of 2022. The sales and marketing expenses were 21.7485 billion yuan (approximately 2.9809 billion US dollars), an increase of 55% compared to the same period in 2022, mainly due to an increase in promotional and advertising expenses.
The general and administrative expenses were 758.3 million yuan (approximately 103.9 million US dollars), compared to 906.6 million yuan in the same period of 2022.
Zhao Jiazhen, Executive Director and Co CEO of Pinduoduo Group, stated at the performance meeting that in terms of supply, Pinduoduo will further cultivate its existing strong field, namely agriculture, and increase investment in agricultural technology and supporting facilities; At the same time, Pinduoduo has initiated the construction of a billion dollar ecosystem, supporting merchants and ecological partners with good product quality and investment services, thereby further stimulating the high-quality development of the ecosystem.
Zhao Jiazhen revealed that during the recent Double 11 promotion, the user base of Pinduoduo exceeded 620 million. He believes that "user mentality is the most valuable asset, requiring years and months of effort, and may be destroyed in a short period of time. Therefore, we will not slack off in this regard.".
In the third quarter, Pinduoduo accelerated its efforts to seize overseas markets, laying out consumer nodes such as Halloween, Christmas, and Black Friday in advance. More than ten thousand factories from over a hundred industrial belts in Guangdong, Zhejiang, and other regions on the platform accelerated their overseas expansion. Since the third quarter of last year, Pinduoduo Cross border has been launched for over a year, reaching over 40 countries and regions.
Chen Lei said, "We hope to leverage the foundation of the supply chain accumulated over the years to provide consumers from different regions around the world with a direct channel to purchase from factories, a more flexible and personalized supply chain, and a more cost-effective comprehensive shopping experience."
In recent years, the upgrading of domestic consumption and the epidemic have driven up the penetration rate of overseas e-commerce. With the help of these factors, cross-border e-commerce has entered a stable growth period of mature business models.
Against the backdrop of slowing growth in the domestic market, "going abroad" seems to be the only choice for e-commerce to seek incremental growth at this stage. It cannot be ignored that the cross-border e-commerce industry utilizes internet technology to achieve cross-border transactions of goods and services and downplays international trade borders, possessing strong growth capabilities in the wave of consumption globalization and industrial upgrading and transformation.
Zhao Jiazhen stated at the performance meeting that competition is inevitable and the main theme of the industry. In the face of competition, there is actually no one size fits all solution. "What we have always been thinking about is how to continuously improve our core competitiveness, work with industry ecological partners, and create greater value for consumers.".
Re investing in agricultural technology and supply chain technology, the high-quality development strategy will continue
In the third quarter, Pinduoduo continued to increase its investment in technology, and the platform's research and development expenses reached a new high of 2.85 billion yuan, a year-on-year increase of 5.5%.
The operating profit for this quarter was 16.656 billion yuan (approximately 2.2829 billion US dollars), a 60% increase from 10.4366 billion yuan in the same period of 2022. The non GAAP operating profit for this quarter was RMB 18.1258 billion (approximately USD 2.4844 billion), an increase of 47% from RMB 12.3015 billion in the same period of 2022.
The net cash generated from operating activities was RMB 32.5379 billion (approximately USD 4.4597 billion), compared to RMB 11.6518 billion in the same period of 2022, mainly due to an increase in net income and changes in working capital.
As of September 30, 2023, cash, cash equivalents, and short-term investments amounted to RMB 202.8 billion (approximately USD 27.8 billion), while as of December 31, 2022, cash, cash equivalents, and short-term investments amounted to RMB 149.4 billion.
Chen Lei revealed that in the future, Pinduoduo will continue to invest heavily in agricultural technology, supply chain technology, and overall core research and development.
"This year is a year of boosting consumption and intensifying competition in the e-commerce industry. We will maintain strategic focus, accumulate experience through rapid product iteration and user feedback cycles, and achieve sustainable and high-quality growth." Chen Lei said.
In the second quarter of this year, Zhao Jiazhen first proposed the demand for high-quality development at the performance meeting after taking office 150 days ago. He stated that starting from the first half of this year, Pinduoduo has fully embraced the high-quality development strategy and has entered a new stage of development. The next step will be to focus more on improving the construction of a good platform ecosystem, deepening the supply chain, and vigorously supporting small and medium-sized enterprises and farmers through a billion yuan ecological special project.
Pinduoduo stated that in the third quarter, it will promote high-quality development and advance into deep water areas. During this period, the management team focused on implementing high-quality consumption, high-quality supply, high-quality ecology, and other dimensions, promoting the implementation of various tasks and achieving practical results.
In the second quarter, Pinduoduo listed illegal products and live streaming compliance as key governance issues at the current stage. In the third quarter, taking "Project One" as an example, Pinduoduo stated that the platform will deepen special activities such as protecting minors, managing and protecting books and other copyrighted goods, and upgrading the protection of the legitimate rights and interests of minors from the dimensions of account recognition, search browsing and shopping order restrictions, and positive content guidance; Strictly promote the review of book listings and the punishment of counterfeit shops, strengthen basic management, and promote the construction of a green, healthy, and modern platform ecosystem.
Zhao Jiazhen stated at the performance meeting that the next strategic focus will still be on high-quality development strategy, and he will not change during his tenure.