Source: Wall Street News

$PDD Holdings (PDD.US)$Worthy of being the “king of volume”, “volume” is even more important for “volume” to win over itself: revenue doubled in the first quarter, net profit tripled, and the performance exceeded market expectations for five consecutive quarters.

However, in a conference call to be held later, Chen Lei, chairman and co-CEO of Pinduoduo Group, said that the company's performance development is not linear; sometimes it is “too good,” and sometimes it is “biased,” and should not simply be measured by a quarter's performance.

Liu Jun, vice president of finance at Pinduoduo, said that currently Pinduoduo is still in the growth stage, and if it sees good value creation opportunities in the future, it will make friendly investments. These investments may cause fluctuations and reduce profitability, but they will help Pinduoduo grow in the long term.

As always, we will focus on long-term value rather than short-term profit, and we will not measure business development by targeting quarters.

When asked about room for growth, Liu Jun responded that in the long run, there is still plenty of room for growth in the consumer market, which provides plenty of opportunities for Pinduoduo and merchants. In addition to the potential of the overall consumer market, Pinduoduo also sees that the online retail industry is growing rapidly. E-commerce infrastructure is constantly being improved, and new e-commerce models are constantly emerging. “I believe there is still great potential to increase the penetration rate of online retail.”

Liu Jun said that Pinduoduo will continue to start with merchants to improve the quality of service to consumers, expand the scope of services, and increase service value. Pinduoduo will “continue to invest resources to support high-quality merchants who are willing to operate in compliance.”

Chen Lei believes that the e-commerce industry is currently in a stage of rapid development, and competition and opportunities are emerging at an accelerated pace. Competition in the industry, which has intensified significantly in the past quarter, will inevitably increase company expenses for some time to come. At the same time, the birth of a large number of new technologies and new markets will also bring huge space and opportunities.

Regarding the globalization strategy, Chen Lei said that the global business is a very new business. At this stage, Pinduoduo is in the process of continuous exploration and learning, and the business will continue to focus on improving supply chain, service, and compliance capabilities in the future.

There is still plenty of room for the online penetration rate of agricultural products

According to financial reports, Pinduoduo's online marketing services and other revenue in the first quarter were 42.46 billion yuan, up 56% year on year; revenue from transaction services surged 327% to 44.36 billion US dollars, overtaking the online marketing business as Pinduoduo's biggest source of revenue.

“The consumer market started well in the first quarter, showing characteristics such as continued strong online consumption and continued rise in the penetration rate of online retail. We have responded positively to consumer promotion policies and launched a series of concession activities to promote businesses and benefit the public in response to the shopping needs of platform users during festivals such as the Spring Festival to stimulate the release of consumption potential.” Zhao Jiazhen, co-founder and senior vice president of Pinduoduo, said in a conference call, “Driven by a combination of policies and activities, the overall growth in the first quarter was steady, and we have full confidence in the future of the domestic consumer market.”

Zhao Jiazhen said that Pinduoduo will continue to deepen its high-quality development strategy and further increase investment this year. In the future, we will continue to make efforts in the three areas of consumer side, supply side, compliance, and platform ecology to ensure high-quality supply and services while vigorously giving back to consumers.

Regarding supporting agricultural e-commerce, Zhao Jiazhen said that agriculture is a difficult industry to do well. At this stage, there is still a lot of room for improvement in the online penetration rate of agricultural products and farmers' digital management capabilities. Agriculture has always been the basic market for Pinduoduo. Pinduoduo will still firmly invest in agriculture and will continue to invest in all aspects of production and supply chains.

Chen Lei: Pinduoduo welcomes healthy competition. In the future, overseas business will focus on improving compliance capabilities

Regarding the price and service system adjustments made by all e-commerce platforms since this year, Chen Lei of Pinduoduo Group responded on the conference call:

In the first quarter, we saw significant increases in investment from our peers. Pinduoduo welcomes healthy competition. Facing competition, our starting point is to create value for consumers.

Chen Lei said that currently consumers have formed a habit of spending across platforms. They will comprehensively compare various dimensions such as category, price, and service quality, and finally make a choice. In the next step, in addition to continuing to deepen the ability to provide multiple affordability and good services, Pinduoduo will enrich the platform's high-quality supply and further optimize the consumer experience.

Regarding the globalization strategy, Chen Lei said that the global business is a very new business. At this stage, Pinduoduo is in the process of continuous exploration and learning.

We are a re-execution company. We have determined that our strategic goals will be fully implemented, consistent with the past few quarters. In the future, the business will continue to focus on improving supply chain, service, and compliance capabilities.

As for Temu, a cross-border e-commerce platform owned by Pinduoduo, which has received much attention before, the first quarter earnings report and conference call did not provide detailed data or information.

editor/tolk