TMTPost -- The American Depositary Receipts (ADRs) of PDD Holdings Inc. rose s much as 7.6% and settled 1.1% higher to US$147.09 on Wednesday, after the Chinese discount e-commerce giant beat Wall Street on both top and bottom line for the fifth consecutive quarter.

Credit:PDD

PDD said total revenue in the quarter ended March 31, 2024 surged year-over-year (YoY) 131% to RMB86.81 billion (US$12.02 billion) , a more than 100% growth for two quarters in a row. Revenue grew much stronger growth compared with Wall Street projection of RMB76.86 billion, and even accelerated from the previous quarter that saw a 123% increase, the first triple-digit growth since the first quarter of 2021.

The Temu parent beat big on earnings in the first quarter. On non-GAAP adjusted basis, net income that period tripled from a year ago to RMB30.6 billion, trouncing the analysts estimated RMB15.53 billion. Adjusted diluted earnings per American depositary share (ADS) RBM20.72. That was nearly double the expectation of RMB10.49.  The company logged operating profit of RMB25.97 billion with a 275% YoY growth and adjusted operating profit of RMB28.55 billion with a growth of237%, whereas analysts projected RMB14.4 billion and RMB16.0 billion, respectively.  

With a massive beat in the starting quarter of this year, PDD outpaced domestic competitors Alibaba Group and JD.com, both released their quarterly results last week. Taobao and Tmall Group, Alibaba's top business segment that includes two major online marketplaces, brought RMB93.22 billion with a 4% YoY rise, accelerating from a 2% increase in the previous quarter. Adjusted EBITA, excluding share-based compensation expense, impairment of intangible assets and goodwill and certain other items, in the March quarter shed 1% YoY to RMB38.5 billion. Revenue from JD Retails gained 6.8% YoY to RMB226.84 billion, whereas opearting income of the core business dropped 5.2% YoY to RMB9.33 billion.

Transaction services maintained sales driver of PDD with an over 300% YoY growth for the third straight quarter. Revenue from transaction services, the charges the company collected from merchants for transactions on its platform, jumped 327% YoY to RMB44.36 billion, versus Wall Street expected RMB38.1 billion with a 266% growth. Moreover, PDD's transaction services for the first time topping online marketing by revenue. The latter generated RMB42.46 billion with a 56% increase, well above analysts' forecast of RMB37.7 billion, up 38% YoY.

PDD's stellar performance benefited from the shift towards price sensitivity. Chinese consumers focus more on less expensive shopping platforms amid challenging economic recovery, while overseas consumers, especially those in U.S., became more discriminated with every dollar the spend in face of elevated prices. PDD's Chinese e-commerce peers have ramped up their price competition to keep up with the trend.  

PDD Co-Chief Executive Officer and Chairman Lei Chen noted his company saw increasing competition in the past quarter at an earnings call. "Our industry peers have significantly stepped up their efforts," Chen said. "We welcome healthy competition. We also realise that consumer demand is constantly changing and we must do our best to keep up."

PDD management highlighted focus on value in the long run. "In the first quarter, we continued our investment in key areas critical to our high-quality development strategy," Jun Liu, the company's vice president of finance, said in the release of quarterly results. "Rather than focusing on short-term results, we prioritize long-term value creation and remain committed to further deepening our investments in the future." Priorities for PDD include "improving the overall consumer experience, strengthening our supply chain capabilities and fostering a healthy platform ecosystem," Co-Chief Executive Jiazhen Zhao added.