On Thursday, November 21st, pdd holdings announced its third-quarter earnings report, showing a 44% year-on-year increase in Q3 revenue to 99.4 billion yuan, a 61% year-on-year increase in net income attributable to shareholders to 25 billion yuan, but a 22% decrease from the previous quarter.

During the earnings conference that evening, pdd holdings Joint CEO Zhao Jiazhen explained that since this quarter, the platform has launched a series of measures to support merchants, reducing transaction fees for high-quality merchants on one hand, and investing billions in resources to significantly lower the operating costs of merchants, improve operational efficiency, and help merchants have the motivation and ability to further enhance their product services.

Zhao Jiazhen stated that in the next few quarters, the company will continue to firmly implement a high-quality development global strategy, constantly improving the platform and industrial ecosystem.

However, considering the increasingly complex external environment and intense industry competition, as well as constraints from the natural path of business development and the platform's operating model and the team's lack of experience and capabilities, Zhao Jiazhen stated that due to these factors, the revenue growth will slow down in the long term.

Zhao Jiazhen mentioned that in the latter half of this year, due to the limitations of third-party operating platforms, the team did not fully grasp the macro policy dividends, resulting in offering costs much higher than other peers in order to maintain the competitiveness of the same commodities, which will inevitably affect our current and future profitability levels for some time.

Zhao Jiazhen predicts that the company's disadvantages relative to its peers will significantly exist for a period of time, which may further expand the financial impact.

The following is a transcript of the analyst Q&A session:

Q1: How have the results of the series of measures to support merchants been? What is the future direction? In the face of many uncertainties, what are the management's plans for the future development of global business?

Zhao Jiazhen responded that, as we have always emphasized, as an e-commerce platform, the platform and all ecosystem participants need to collaborate to create value for consumers, and merchants are important partners in serving consumers well. Therefore, a healthy and sustainable merchant ecosystem is an important foundation for the high-quality development of the platform.

This quarter, we have made a lot of investments in the merchant ecosystem, vigorously supporting high-quality merchants, and implemented multiple policies, such as launching a hundred billion reduction plan. Currently, we have successively implemented a package of new measures including refunding service fees, lowering deposits, waiving logistics transfer fees, and upgrading merchant after-sales service.

Through long-term and effective implementation, we hope that these policies can promote the high-quality development of excellent merchants and work together to provide better services to consumers. For example, in terms of cost reduction, we have introduced policies such as service fee refunds and deposit reductions, which not only reduce merchants' operating costs but also improve operating efficiency, helping merchants to further improve their products and services with more motivation and capability.

Additionally, in the third quarter, we also made significant efforts in logistics, implementing policies to reduce logistics costs. We waived the logistics transfer fees for orders shipped to remote areas in the western regions, allowing merchants to cover more consumer groups at lower costs. The implementation of this policy further promotes the implementation of our e-commerce emerging plan and encourages more high-quality goods to be supplied to the western regions.

The implementation of these policies has received positive feedback from many merchants. In the future, we will continue to make more meaningful long-term investments in this direction. Through the improvement of the merchant ecosystem, we hope to build a foundation with higher quality supply, working together with merchants to provide consumers with better products and services.

Regarding global business, Chen Lei, Chairman of the Group and Co-CEO, stated that our goal and original intention have always been to bring sufficient value to consumers in different countries. We will continuously strengthen our abilities, continuously invest and optimize in various aspects such as supply chain capabilities and service levels over the long term.

With the continuous growth of the business, consumers and external stakeholders have raised higher expectations for us. In response to this situation, we have always maintained a proactive and open attitude. During this period, we have proactively communicated with various stakeholders in the business locations, carefully listened to feedback and suggestions from all parties, and promptly reflected valuable feedback in our daily operations, continuously optimizing service standards and compliance levels.

Currently, the initial results of these communication efforts are beginning to show. We are demanding higher standards for our operations in various locations. With the development of our global business, we will continue to focus on strengthening these aspects of capacity building, providing global users with higher-quality services that are more in line with local usage habits and standards.

At the same time, as mentioned in the previous quarter, our global business is facing increasingly fierce competition, compounded by a complex external environment. Our business is bound to experience some fluctuations and impacts, but these short-term effects will not deter our determination to explore and move forward. External challenges and pressures will compel us to continuously improve ourselves, creating a safer and more trustworthy shopping environment for global consumers, as well as a better consumer experience.

Q2: What specific measures has the company taken in terms of compliance and platform ecosystem, and what results are expected in the future? Both profit and profit margin recorded a decrease compared to the previous quarter. What is the management's view? Does it align with the "long-term trend" mentioned in the previous quarter? What is the future direction of profitability?

Zhao Jiazhen stated that the regulatory trends in various markets have posed higher requirements for our compliance capabilities. We have always believed that providing a safe and secure consumer environment is the duty of e-commerce platforms. Therefore, we consider this compliance and high-quality ecosystem as an important part of our strategy for high-quality development.

This quarter, we continued to intensify the implementation of a series of resolute governance measures, further improving the platform's compliance and governance system. From a compliance management perspective, we continue to invest heavily in building a professional compliance team, keeping track of market regulations and industry trends in real time, and translating them into practical guidance; we also prepare rich and detailed compliance educational materials for merchants to enhance their compliance capabilities, promoting the high-quality development of supply chain merchants.

On the technical front, we further optimize the norms and processes for merchant entry and product listing, invest heavily, combine technology and manual screening methods to proactively inspect and manage products, further improving potential product safety risks. While actively expanding the market, we also actively cooperate with external stakeholders' requirements, imposing high standards on ourselves, striving to build a leading level of compliance in the industry.

Through these investments in compliance and governance, coupled with the support policies for high-quality merchants that we have launched and implemented, we hope to achieve optimization and upgrade on the supply side, cultivating a healthier and more sustainable merchant ecosystem through rewarding good behavior and eliminating bad behavior. These achievements will ultimately translate into more competitive products and services, creating more value for consumers.

PDD Holdings' Deputy Chief Financial Officer Liu Jun responded, "In the previous quarter, we mentioned that due to competition and external factors, our revenue growth may slow down. In addition, as we firmly invest in driving a healthy and sustainable platform ecosystem, in the long run, our profitability may gradually decline."

In addition to financial data, our investments in the platform ecosystem have begun to pay off. The positive feedback from merchants on our "Merchant Support Program" has been very encouraging. We believe that the investment in the merchant ecosystem lays the foundation for the platform's health and sustainable development.

In the long run, these efforts will benefit merchants, consumers, and the platform, and create more value for consumers through supply chain efforts. I believe this is a long journey. In the future, we will continue to explore more investments in this area to achieve impactful results.

We believe that the investment in the merchant ecosystem lays the foundation for the platform's health and sustainable development, and in the long term, consumers will benefit from it.

Q3: How did PDD Holdings perform in the Singles' Day sales promotion? What consumer trends were identified? Were there any new strategies during this promotion? What were the results achieved? As the domestic e-commerce competition intensifies, how does the management view this situation? Will there be any adjustments to the company's global strategy in the future?

Zhao Jiazhen stated that in the second half of this year, overall consumption rebounded, with online consumption showing good momentum. Recently, driven by the atmosphere of the sales promotion, we have also seen further release of consumption vitality on the platform. In terms of consumption trends, consumers' choices are becoming more diverse, and there is also an increase in cross-platform mobility. In the face of such trends, from the platform's perspective, enhancing consumer trust in the platform is key. To this end, we have continued to invest heavily in consumer and supply sides, providing tangible benefits to consumers.

In the recent Singles' Day sales promotion, we launched the Billion Consumption Voucher activity for the first time, rewarding consumers with real silver and gold. The response from consumers was very enthusiastic, especially with significant growth in sales of commodities such as agricultural products, small appliances, and daily necessities. The platform and merchants together effectively met consumers' demand for high-quality and cost-effective products.

At the same time, we launched the Super Double Rebate activity and focused on supporting a group of high-quality merchants with product and technological innovation capabilities. Many domestic brands leveraged our platform to launch new commodity products in the sales promotion, quickly gaining momentum. The growth of these high-quality supplies also provided consumers with better and richer product choices, further solidifying the trust foundation of consumers in this platform and achieving a win-win situation for consumers and suppliers.

In the past, guided by the philosophy that consumers are the priority, we have patiently and consistently invested to accumulate this hard-won positive user perception for the platform. Currently, we believe that by persistently making high-quality long-term investments in consumer supply and ecosystem, we can further strengthen consumer trust in the platform, which is the cornerstone of our long-term healthy development.

Regarding the industry competition issue, as we have mentioned multiple times before, the current e-commerce competitive environment remains highly intense. Our business faces many challenges and is constrained by the natural operation path of business development. The growth rate of our business will not be linearly extrapolated in the long term, leading to an inevitable revenue growth slowdown.

In the third quarter, as macro policies further strengthened, we have seen opportunities while also facing many challenges. The domestic market is very active with significant changes, intensifying competition. Our team is gradually aging with insufficient capabilities, which may result in missing some macro opportunities while dealing with certain changes.

Since the beginning of this year, macro policies that have greatly benefited certain industries and consumption have been driving forces. Due to the limitations of third-party operation platforms, our team has not fully seized these macro policy dividends. To maintain competitiveness in the same products, we have offered costs much higher than other competitors, which will inevitably affect our current and future profitability for some time.

With the continuation and expansion of consumption stimulus policies, we will actively embrace change, seize new opportunities, and better serve consumers. However, due to the limitations of our platform's operation mode, team's historical experience, and insufficient capabilities, our relative disadvantage compared to peers will significantly exist for a period. The resulting financial impact may further widen, posing a real challenge for us.

To cope with the current competitive environment, we will raise our standards further, strengthen core business capabilities, continue to seek new investment opportunities in the supply chain and platform ecosystem, make long-term high-quality investments, and transform these capabilities into higher, more competitive products and better services for consumers.

We firmly believe that the high-quality development of this ecosystem and supply side is a crucial foundation for the long-term development of the platform and creating long-term value for consumers. This is a lengthy and patience-demanding process. We are prepared for long-term battles, and external changes in the competitive environment will not affect our pace.

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