Source: Securities Times
Author: Wu Shun

May 22,$PDD Holdings (PDD.US)$The Group released its results report for the first quarter of 2024 ending March 31. According to the report, Pinduoduo Group achieved revenue of 86.8 billion yuan in the first quarter of this year, with a market estimate of 76.86 billion yuan, an increase of 131% over the previous year; adjusted net profit of 30.6 billion yuan, and the market estimated 15.53 billion yuan, an increase of 202% over the previous year. The adjusted revenue per ADS is 20.72 yuan, and the market estimates are 10.54 yuan.

After the release of this financial report, Pinduoduo's US stock market experienced a huge shock: first, it dived in a straight line, then fell by nearly 10%; then it quickly rose, rising more than 9% at one point.

After the opening of the US stock market, Pinduoduo once rose more than 5% and closed up 1.13%, with a market capitalization of 204.274 billion US dollars;$Alibaba (BABA.US)$The closing price was 4.01%, with a market capitalization of US$2012.12 billion.

Pinduoduo: The company is still growing

Data recently released by the National Bureau of Statistics shows that in the first quarter, sales in the national market maintained a steady growth trend, demand for some upgraded products continued to be released, and service consumption grew rapidly. Among them, in the first quarter, online retail sales of physical goods increased 11.6% year on year, and the growth rate was 3.2 percentage points faster than the full year of the previous year.

In this context, it is not surprising that Pinduoduo's performance has increased, but the current increase is too “amazing.” Not only did revenue surpass expectations, but net profit for a single quarter was over 30 billion yuan. Currently, Pinduoduo has unquestionably become an e-commerce giant.

According to the financial report previously released by Alibaba, Alibaba's revenue for the fourth quarter of fiscal year 2024 (the first quarter of the natural year 2024) was 221,874 billion yuan, up 7% year on year, exceeding market expectations; adjusted profit before interest and tax (EBITA) was 23.969 billion yuan, down 5% year on year.

The quarterly report released by JD Group shows that in the first quarter of 2024, JD Group achieved total revenue of 260 billion yuan, an increase of 7.0% year on year, and net profit of 8.9 billion yuan under non-US GAAP, an increase of 17.2% over the previous year.

Regarding Pinduoduo's performance in the first quarter, the First Shanghai Research Department previously stated in Pinduoduo's performance forecast for the first quarter of 2024: “Judging from the three businesses, domestic online physical retail and other e-commerce peers all achieved a good growth rate in the first quarter. This is partly due to the low base in the first quarter of last year. We believe that Pinduoduo's main site is still leading the growth rate of its peers. Furthermore, the first quarter is a low season for traditional e-commerce, and the platform's e-commerce marketing activities are mainly concentrated in the second half of the year. Therefore, the profit margin of e-commerce in the first quarter is expected to remain at a high level.”

However, in Pinduoduo's view, this is probably just a new starting point.

“The company is still growing and will continue to invest more in deepening high-quality development strategies this year.” Zhao Jiazhen, executive director and co-CEO of Pinduoduo Group, said, “Our high-quality development is a long-term, huge, and complex system project. We will gather the strength of all parties to steadily advance and pay close attention to implementation to accelerate the achievement of the goals and tasks of this new stage of development.”

“High-quality development cannot be achieved overnight, let alone immediate results.” Chen Lei, chairman and co-CEO of Pinduoduo Group, said that since the decision to transform, the platform has been prepared for long-term investment and continuous efforts. “Step by step, we will steadily improve team execution and platform capabilities, and continue to create greater value for participants in the platform ecosystem.”

R&D investment exceeded 10 billion yuan for two consecutive years

Duoduo Cross Border (TEMU) is another highlight of Pinduoduo. According to information, in terms of global business, in order to cope with the rapidly changing international market, in the first quarter, Duoduo Cross-border launched a more flexible semi-hosting model. Sellers with warehouse logistics partners in target countries can decide on their own warehousing and logistics solutions, thereby continuously improving their comprehensive strength and better integrating into the global market in the process of facing overseas consumers; on the other hand, dozens of industrial belt matchmaking activities were carried out in the Yangtze River Delta, Pearl River Delta, Beijing-Tianjin-Hebei, and Jiaodong regions. Through offline communication and resource inclination, more industrial belt enterprises were able to seize overseas opportunities and broaden order channels.

“We will continue to explore high-quality merchants and products, adapt to local conditions, provide appropriate fulfilment links, improve supply chain efficiency, and provide a rich variety of high-quality products to different consumers around the world.” Chen Lei said that supply chain ability, compliance ability, and service ability will be the three “internal skills” that many will focus on training across borders.

Technological innovation is an important engine for achieving high-quality development. According to reports, since the establishment of Pinduoduo, the company has spared no effort to invest in technology research and development, polish supply chain capabilities through technological innovation, and promote supply chain cost reduction and efficiency.

In the past two years, Pinduoduo Group's R&D investment has surpassed the 10 billion yuan mark. In the first quarter of this year, Pinduoduo invested 2.9 billion yuan to support R&D, an increase of 16% over the previous year. Chen Lei said that it will continue to increase investment in research and development, accumulate easy-to-use tools and services, further empower merchants, and promote the digital upgrading of the industry.

In addition to being technology-driven, a sustainable platform also requires a healthy, orderly, and compliant ecosystem. Especially now that digital technology is highly integrated with modern commerce, consumers and regulators are putting higher demands on e-commerce platforms.

Pinduoduo said that as a platform-based enterprise, the group actively assumes responsibility, adheres to the bottom line of compliance, carefully conducts forward-looking research on laws and regulations in various markets, and invests resources to build first-class compliance capabilities in the industry. In the first quarter, the company continued to advance the “10 billion ecology” project and implemented a series of special management actions. For example, in order to prevent improper promotion and display of information, the governance team optimized the accuracy and coverage of image recognition, improved the ability and efficiency of identifying problematic images, and achieved control and interception of incremental content.

Chen Lei also stressed that the e-commerce industry is in a stage of rapid development, and competition and opportunities are emerging at an accelerated pace. “The development of the company's business is not linear; it is fluctuating. But we believe that as long as we continue to focus on long-term value creation, all fluctuations in performance will eventually return to the endogenous value we continue to accumulate and grow.”

Editor/jayden