PDD - Earnings call transcript Q3 2020

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Jason Shu

Thank you, operator. Hello, everyone, and thank you for joining us today. Pinduoduo's earnings release was distributed earlier and it's available on the IR website at investor.pinduoduo.com, as well as through GlobeNewswire services. On today's call, our CEO, Chen Lei will make some general remarks on our performance for the third quarter of 2020 and our strategic focus going forward.

Our VP of Strategy, David Liu, will then elaborate further on our specific strategic initiatives.

Tony for then September the Finance, our us XX, of results financial third VP Ma, take will through XXXX. Our quarter ended

of our contains Also, the measures. our begin, non-GAAP Harbor GAAP as applies non-GAAP the we we I'd financial certain to Please the includes call you Before earnings measures. forward-looking discussions make statements. certain like to this to statement call to release, press earnings to in reconciliation will release, this which which refer measures refer Safe of

Now, it to introduce ahead. Executive Chief Lei, our Lei. please is my pleasure Officer, Chen go

Chen Lei

Hello, continue everyone. another you joining deliver and growth to reaching journey. and milestone turned Pinduoduo third us on incredible Thank strong results with user announcement. quarter month, trust consumers. for years build on we last engagement year, five this our This

with We support are the business of our every more partners. sales merchants and facilitating day users,

XX, million generated revenue XX-months Pinduoduo's yield ended the XXX RMBX.X September nearly of For and XXXX, trillion buyers active GMV.

anniversary fifth the increased volume XXX products. campaign October, our into During order Strong by for agricultural QX. million, demand activities peak surpassed continue driven daily consumer early

expect user experience. focus this continued on growth We to our

mind. fun to industry more of XX our annual RMBX,XXX We growth the QX, per from frequency today spending evolution growth And still believe today, average of user make metrics and consumption have the engagement around. is as and not million we in contributed scale who China's always Fueling the retail people feels number benefit RMBX,XXX of the our despite in QX, our We it to spent, the yesterday. in the first features. we visits, we development recognize of Pinduoduo's platform built a that consumers achievement beginning and from interactive like active which This QX daily more and power. principle benefited why it so, net time just increasing of add we buyers. and all another compelling is other visited from way value offer more average Internet, with observed increase enterprises, the better the and In selection, in categories of increased that started

years, Over mobile the that we for new championed. five growing interactive past we commerce witnessed support experience the

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open. by guided be to of being continue also more We principle the

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the even Pinduoduo. on own from Some leveraging their they can them consumer insight get launched of brands has

dining direct has for Pinduoduo enabling Lastly and farms by largest from products most selling table. importantly, also China's online the platform agricultural become to

our To report. first managing stakeholders our to there in transparency improve We progress ESG governance of matters, we inform that did and with comes issue are social our and responsibility. mindful environmental, scale

from local we greater rewards and convenience. and can share by efforts the communities Our corporate opportunities social are of responsibility benefit new into goal productivity promoting economy, believe more digital of the inclusion. bringing new people guided and jobs By the market digital

in our a offering fun experience. steadfast next our we of consumers for to products greater forward selection a look discovery we vision of interactive value through As of and remain journey, phase money our

how are observe evaluate We consumer technology how behaviors closely evolving continue could and to help.

capital products We chain are for to committed this to and adapting our invest products. prepared with and to a agricultural that we innovation. vision. have ecosystem we supply Post-pandemic platform, do, in resources and change to realize lot pushing There consumer We're remains particularly of saw noticed Many channels can first online staples. in market users a just of the or year, half for and shopping industry, grocery done be not shifting. daily to that surge China produce, delicate for vegetables across habit The shifted transported, the our more fruit and such in foods. in and products. are a The We their to not supermarket wet for of orders especially have China's agricultural with and to about apples agricultural platform. but three agricultural our much sector the easily for learn steady as if certain to root more leafy to we days. we familiarity how started ourselves could can largest logistic given to potatoes users, current has other existing within leverage optimized more We can ask networks also logistic online do. goods, manufactured vegetables transfer be could network deliver our two Pinduoduo Today, the

have merchants found to with minimal transfer damage. ways Some eggs even

some possible good it prices. across As in consumers and we for China good produce time enjoying a agricultural result, have at made to

supply in realized could meet the not fully China's to buy rate leafy less July that company path and It beginning that was our very to were handling. started Many rare our significantly. We vegetables our some we users increased platform, a agricultural on in heat new of where from our damage at only However, expectation. chain. users poor we create and packages August, more sustained value

key to Duo we factors infrastructure get identify fulfillment produce. Each logistic decided in sale and on whole for vendors, great roadblock a produce and be the daily available localized a services our and critical chain provide perfectly launch nearby, executed from need value building supply we a just qualified offer and be to the to agricultural who a and users. live the logistic after handout location Therefore, Duo products of We is orders on enable channel. list step One services. more of and workflow pick to to Maicai agricultural source information create Aggregate the handle ensure daily.

Of of e-commerce with require price matching but aspects with attractive most Pinduoduo, but operation of many users. deliver the is exists our supply, course, supply, demand that development. know-how just others leverage matching Maicai day It significant next to to at not about demand suitable

drive to infrastructure a farmers for agricultural all products consumers We China. build are committed in and for new

China's long-term but something extension now team believe engaged an part management integral Pinduoduo is agriculture for Our agriculture vision less produce. started commerce It's of natural If highly our aligned mobile with with ecosystem. our our hearts of a industry. that highly we Maicai platform, our touched

invest a other daily of in is prices the of is us function Maicai We agriculture provides to we infrastructures products the our in At gain same and interactively deciding feature main offer For locally and available, category The we produce. to natural understanding want the cities, customers and SKUs essentials insight products. on which experience enabled users pick they value-providing the of our at curated buy discover app. fun a where our how next us purchase lower enjoy option value turn we from in to their the Maicai, create main time, to to continue staples. day. can better for But what and better app

talent technology also will and to long-term brings. are pay Pinduoduo. of providing challenge the believe off We the We tackle that Maicai deploying that for it value

consumers and investment chain in infrastructure of As partnership We're in the more. whole save goods. last quarter, value more help and mentioned and we opportunities Pinduoduo committed to is earn interested agriculture farmers

We now, David the agricultural trends on share let years insight me ask benefit to the to recent past some will more we details And have gathered and value leverage efficient to our initiatives. all. continue to from five make

David Liu

years communities you, Pinduoduo past the Thank savings by world's the online more fun. largest consumers one focusing and built bringing more of Lei. in on five has

behaviors evolve, capable users manufacturers our choose the purchase affordable Two Five model, they agricultural started led New have user adapted and ago, years we but save do together Brand our an ago, years to never their right. enabled with which user easiest are need, and bigger ahead is to As own And even browse. now, which also products users' pin we started team we exceed is expectations. brands Initiative, what to meet we to products. We tailored fresh, preferences. launch what their pushing our as on

do world's these capable have we started could merchants important part the and national has about the progress Brand to help We accumulated. with gaining could this of manufacturers brand manufacturers Initiative Seeing chain the been the helping and road become over though retail how brands. have their control, means of past can leverage our largely brands a market interactive marketing It not sales target next tips domestic CXM created teaching products, tools We proven been and for that Brand quarter. new factory orders, and solve manufacturing, their the important conventional results, and potentially many past been prediction made them, production we global quality manufacture them that inefficiencies conducting on a troubling XX to of making to have or potential which and hope these forced insights accurate just opportunity increasing new not number out these takes has Pinduoduo, become merchants into and has more tailored started We Initiative COVID inventory they manufacturers to to customers, see New Manufacturers to can plan always is making great XX-years. workflow launched establish that manufacturers capable our users and Even full to price of have effort channel China at our valuable their we the with day. one potentially capable by of shipping achieve. It and we back for capped receiving but New time the are own tailor-made the in as globally. these our and supply following help, brands even turn and quantity products channels and the of cycle, time, just market. sell have decades. users our their brands which brands revenue new years. the reverse sector brands and insights brands of design the in

today than SKUs, to more X,XXX worked over see XXX companies, to million with cumulative that happy and are X,XXX than generated we launched We more have orders.

more companies. to X,XXX pledged provide marketing we the support coverage programs' expand quarter, and to This

We that, are plan of To with XXXX. technology investments targeting we SKUs facilitate offer by to customized enable them. to to RMBX CXM in trillion XXX,XXX aggregate our continue GMV

of Further, advantage into prediction make We our China. user-friendly unique of an created and regions make different have gaining. we more manufacturers industrial in to behavior it users' have software prediction, for take merchants supply to as such plan platform easier model, material inventory and tracking, taking to insights services more Pinduoduo partial are automation. operations, the confident to are changing we We to chain analysis, on it merchants raw their exploring streamline

to part. You our possible done consumption. in cycle directly model or recently would off consumer have agriculture years for and area apparels. long-term. where displayed believe in other have hope Besides the just extend value reduction future It will with such infrastructure manufactured build this. view offer is What service to experiences prior We the is lack doubt the XX the and safety. not farmers different cut our three a demand operated to infrastructure build It scale. users, we save and connect Duo we warehousing fundamental We another entire a consumption our our is dedicated Duo need of farmers it chain a effort, food so in have roadblocks, and Pinduoduo started, providers, some other earn meet up, efficiencies, and intermediaries what But No with the more. delivery addressed now have closely leveraging we CXM to function style seen to pay it to of logistics days. we in products, we a our to capability categories. was But the delivery i.e., day in XX unnecessary and more network, is we're next ecosystem working in product partners an launched When production, already for have past agricultural new experience, the It the fulfillment fleets created five Maicai. to parts: to requirements. transportation in in help designed, such productivity a user own we efforts farm have as we totally

Sometimes we we manage -- workflow to design step ourselves. warehouse have even have the and even in

in cost explore to plan more localized options also at We to deliver consumer reasonable order better coaching experience. demand-driven a

logistic invest investing the can we more of produce are accelerate people to we warehousing fleet systems, efficiently, in fulfilled quality players We With the are needed, being value to supplies in when and consumption willing already coaching better daily agriculture entire warehouse in and key and chain. improvement meet in needs users management the more time. sectors with shorter localized

logistics our and from ability We're to demand can local source agriculture work Maicai cheaper we to needs farmers By and the distributors understanding directly its with R&D making convenience. creation, in from consumer impact enhance engagement sourcing infrastructure, addition top our In upstream pricing account product accuracy. bigger our and of and further creation the predict and we on goods demand, of improving faster. mode aggregation taking to user investments into of are to

goods, already kick give years, Over we fine-tune which agriculture as the past start can Maicai. we for accumulated substantial a insights us five have

enough Another have important we in area not is production. done

technology food labor various populated and than in We address by half for started agriculture have for supply, there smart in market challenges shortages. production food even safety solutions Company, believe a agritech. engineers, to a huge opportunity investments food to and more technological As explore is

community adoption placed we visibility given vast are demand of the of facilitate have and to access well to We our agricultural the producers. agritech, a

We commercial will agritech of solution have. our viability potential explore new partners the

see competition the competition, AI on four labor. to against agriculture to demonstrate standardize actual inspire based in farm, and we for develop have they By farms working agritech smart localized to and to generate Chinese solution four their deployment while and with smaller interest winner solutions. develop and for agritech to hope strawberries. plan merits top implement this we innovation, can methods the traditional scale their young solution suitable is to determined an tech on will we fits of foreign solutions that as researchers have broader this across in teams be on more smart of RMBXXX future and PDD expect hit China. to The initiated highest technical a which the growing profitability, that the this for in for go-to-platform agronomy The growing reliability, billion identify RMBXXX worldwide competition We we China. teams growers scalability XXXX agriculture category Consumers this winner more farmers the year, such agriculture as We GMV minds generated For bright AI it of deployed. come economizing in hope solution in yield, inputs, agriculture gathers in goods. billion year. to Through

and Our driving aim agriculture buildup. is to lead the industry a in be innovation force infrastructure of

agriculture long work in the easiest, structural that the create hard manufacturing right off efforts users' Our to do. are sectors will industry. of seek to to they They value not creation and believe but the experience certainly in our contribute that long-term the are will We changes pay and the things our improve run.

details Now, of results. through me the walk to Tony our quarter let invite third

Tony Ma

Thank you, David.

trillion RMBX.X XX% our nearly to year RMBXXX For XXXX, the increased September XX, months from a ended ago. XX GMV billion

spending users an increased user, result in monthly our million of quarter third XX.X quarter growth increase previous from in or ago. the XXX.X a our the increased continued million, average year active from and per a of base user As to XX% by

of our increased XX same significant added, XXXX, who GMV. XXXX. of purchases new annual of months. annual spending increase ended contributed in active annual XX, by XXX.X active XX, add RMBXXXX per million. months less for XX% was September buyers for buyer This Our than the XX from per net ended the a The XX the moderated spending months XX-month to XX% in in represents past buyer year-over-year million reach users to XXX the in period The period active RMBXXXX XXXX, September grew to number

investing Our strategy and average contributed in in increase buyer. user activities engagement active per in to QX of user higher spending

at observed high Consumer and exceed goods to data, During to in resulting the continued behaviors quarter, China growth to in online value of in -- physical the continued a retail increase of contrast third slower the ago. GMV pick GMV according during industry quarter growth QX, its up QX. the to activities. rate grew XX% offline MDS online year pandemic. the in that from Pinduoduo's recovery of the normalize, year-over-year continue seasonality XX% in pickup on third in sold saw versus Compared QX

China ended necessities items, the on average shipment value and XXXX, QX lower nine the grew This September to parcel online from last during per decreasing, in products grow XX.X% have demand with year. is For in goods for the physical months volume XX, continued sold observed is which platform. parcel period. of strong household In the only like ticket just rapidly total QX same and comparison, is at same period the value we value consistent our the XX.X% agriculture

they We continued what to support categories engagement promotion These users building our response our mainly of with which better activities and category, platform. accelerate trust promotions because our us users, conversion other that on frequency needed. translated to in this and to our consumers are and conducted for helped we high have the

Our September XX% by marketing driven was an services. representing strong quarter billion, total increase increase the momentum in from of quarter year. the billion in in last RMBX.X online the primarily The RMBXX.X were revenues same

Our ago. XX% up was from RMBXX.X year online and revenues billion, services -- a from marketing others marketing

Our XX% service RMBX.X to transaction increased revenue billion.

implied is XX, X.X% year XXXX. as XX-month period last from for period the GMV, XXXX, which QX ended the advertising September merchant the more by comparable continue and We will platform in last monetization XX-months advertising to defined for up ended divided and in revenues total was rate, higher user attractive attribute our on to The due merchant QX, activities strong see as compelling which engagement ROI products. same X%,

on cost. moving to Now,

RMBX.X margin and in gross a costs same from in of cost increases to this quarter, this translating XX% the mainly last year and staff increased of expenses directly other RMBX.X other billion increased, period total revenues. marketplace Total online attributable services bandwidth server the and to costs, revenues revenues due XX%. cost the of billion Our to quarter to

expenses compared XXXX. quarter of RMBXX.X billion to Our quarter same as total billion, operating RMBX.X were the in this

sales sales was in last basis, from compared and billion XXXX. a XX% as to Our quarter same a our marketing of RMBX.X billion XX% of On marketing this quarter revenues increased our as the non-GAAP same expenses XX%, quarter to percentage RMBXX.X the for year. and

mind user more improve year this share consumers. and gain priority to is Our engagement with

We marketing priority saw. QX in our we investments and continue toward this wherever with sales

was base. and our user users purchases internal going basis, And the in G&A per spending our million cloud of quarter our due this with meet QX RMB-related and an our XX% Technology to opportunities expanding million, spend annual engineers, to and sales was rapidly of G&A continue with certain QX compared billion We as a investments average we non-GAAP as our in XX% been a to our revenue billion, investments average fundamental we efforts as such expenses to recruitment On increase operation, a On and marketing quarter RMBXXX.X of headcount of our platform the build The in continue percentage to toward and one-off per position quarter QX. an same quarter. us to We service primarily long-term. spending and who wherever values. an in in of RMBX.X our increase more revenues percentage The expenses. expenses user. engineering our expenses R&D platform, to a our spending across engagement and more categories in expenses development were General talents did plan this were was same to related XXXX. initiatives RMBX.X saw in our expenses would incur in in frequently have continuous talented expenses our on buyer on above administrative priority expenses alleviate quarter to for capability that increase to in well QX. and Users rural poverty. XXXX. prior invest shop basis, in technological non-GAAP included RMBXXX.X our the the increase our attribute and is tends longer on this We QX from ROI Research increase of increase annual not the a forward. X% XXXX in

database Some system. of for CXM our R&D include developing for our manufacturers, planning demand system agriculture, forecasting key logistics and initiatives

to RMBXXX.X in same As operating billion of the with RMBX.X operating basis, Non-GAAP on compared quarter same loss was compared in million, RMBX.X a GAAP of result, quarter with loss a the for RMBX.X XXXX. billion the for narrowed billion loss the operating of quarter XXXX. quarter

million, offset reflects impact XX, the we a RMBXXX.X and non-operating with investments, of of market For million long-term quarter convertible outstanding income of bonds. the from RMBXXX.X net amortization in change from ended loss primarily compared The recorded interest on same the September in net higher quarter XXXX. interest XXXX, expenses increase income our fair value by

amortization to market and initiative non-GAAP in this recorded the still RMBX.XX loss basis, quarter billion have this respectively net Maicai is loss non-GAAP basis, to as Basic share-based per with the net a loss XXXX. RMBX.XX of net And with million, of Duo RMBX.XX in were same young addition income transaction sum revenues to . and GAAP diluted of contribution we and facilitating a RMBX.XX, sales net sales presentation ADS of and compared We to change ADS loss RMBX.X Non-GAAP Duo its logistic On a diluted quarter recognized net for quarter, basic net expenses. was the is the million statement our shareholders a same cost compared of compared profit in attributable in model. marketing basis, the To goods and GAAP the RMBXXX.X and and results fair and completes services incremental cost under a a of for sold incurred income loss excluded in up, of Maicai on non-GAAP the compared bonds of operate the attributable net the QX That XP were XXXX. value under to loss convertible same We We quarter. immaterial. quarter the RMBXXX.X RMBX.X ordinary per as of with shareholders and metrics. non-GAAP on RMBX.XX ordinary XXXX. in our compensation

by Our this RMBX.X as in compared net quarter marketing due primarily cash operating same to RMBX.X activities flow services revenues. in increase billion, to in billion of the XXXX, generated an quarter online was

flow an annual Our been operating has cash basis since on positive XXXX.

of short-term reserve equivalents September RMBXX.X of cash investments XXXX. billion, end and cash, comprising cash at concludes reserve As are remarks. of flexibility to a liquid short-term was as ready receive highly for XX, capital cash yield to and prepared and deploy to withdraw cash company's our questions. maintain December the to RMBXX.X compared investments allocated you. we better This billion of We strategically as our Thank most XXXX, the necessary. Operator,

Operator

question Thank from we First the [Operator will of now session. Chong question-and-answer you. begin Jefferies. line of Please Instructions] Thomas ahead. gentlemen Ladies the go and comes

Thomas Chong

taking Can our purchase? Thank community the group competitive strategies is you. And market? management landscape addressable you comment questions. we my the Hi. big how about forward? Thanks, see And for in going how

Chen Lei

question. for your you Thank Hi.

is community buy others have. clarify places it people or for to now misconception To us, Yes, But Maicai is as pickup difference, really prior past them. buying location-based the we seven been really the we have models in know thinking the are cannot the our seeing different it what group ourselves. Duo because from speak and close comment years. to can doing, many don't but on want we their customers purchase I from community a Duo I first, business. not the So I believe is

And the business, our I infrastructure think, day ecosystem natural our the conveniently that see know-how meet. of users in more strong of preferences, why this they current our the grocery needs. and saw a because offering half customer meet for its year our cannot this we from us, which I agriculture sensed given And And extension buy these -- our users' current emerging a of players. that -- fresh new cannot now fresh new and about is platform we need agricultural So, actually, we want consumption -- Maicai frequently. sectors bring existing we ever produce, and to think is want since of to next first more the need -- year, Maicai,

now existing think day from a or can business. be days five an platform, door-to-door our So, with users with we stand-alone need this can Maicai. But are It's pickup let's actually offering and it service is our Maicai say, delivery as choose very services we with next customers. different running three offered, important to integrated

the are package we think infrastructure in make home this terms their deliver this cheaper. think in two-fold. from whole happen I and to committed the invest to consumer landscape, to So, we to And in the faster to need make of about need farm

today imagined value significant today. number category. one purchases would and to years then imagined a think no with to I stand-alone, That with for to the for just will shopping apparel and And I Maicai of are daily seeing I And do return seven who are consumers ago online. using the shopping portion one is, in First that grocery grocery like coats. change online, -- believe significant of totally choose no is their very consumers have would buying think the have future we to complete that try this similar out -- what saw online is five

think grocery of thing terms shopping, in So, I will a similar happen.

this about synergy between Maicai frequency. our basically a as is platform, fold and Maicai other main The high ecommerce has purchase

will user our platform. have with engagement So, our higher

they platform. spectrum from full of our category ecommerce of can So, other products pick

Operator

you. Thank

the from ahead. Ju of of is of question line Please America. Joyce go Next Bank

Joyce Ju

opportunity get like management. Duo for would this -- colors evening, to I the the your strong my Duo quarter strategic this take new Congrats to initiative, and thanks taking more on questions. results Good on very Maicai.

in also like we platform why like other the chose comment models, you the a advantage experts on we have differentiated to And bit is As entrance a but so? major guys business its to this key of XP chose actually marketplace we on how opening this seen, all of the and is business, XP all probably -- kind to have like in chain. a And seen models. like XP model from, and we there think Could secondly, players business do special you elaborate or heavily know, supply lot this particularly rely mentioned remarks, you more your actually are know, I conduct industry are And little like model? in any we this compared we advantage like why the market? decided

Company because a model. perspective, more business While from light like in we typically our

So offline for investment have don't infrastructures heavy before. we really like

I of are going will the logistics business? chain? for like know, to actually the users So, for lot budget capex Thanks. plan investments we like to also like And supply marketing How a front, new or invest to also and what's on this be for related? would the spend sales to investment acquire big money like

David Liu

thank you for very that comprehensive. question. Joyce, It's

Let things. a out me point few

they first of quick, have day. And as a is market emerged we emphasis able model want e-commerce trying again, are more to of and their daily see their mentioned looking have to as behaviors looking all, really they that, are And identify are evolving. an Lei to Duo wet to great natural continue supermarkets that, on and COVID-XX, from are seen So agriculture. be extension increasingly our what things consumers value. and have are be now online. to our we his What to country Maicai we and time how so seen venue next to changing, be Duo is address also, remarks, buy as groceries users deliver They alternative for needs in the

use we that recognized cases platform and equation on PDD's e-commerce deficiencies. at a certain this are there at that looking basis, addresses stand-alone looking the So,

something next for. that platform For of kind day example, to delivery PDD's been date the have isn't optimized logistic

they Maicai And specifically much to we a different addressing is this really purchase is And fulfilling require businesses. different needs. our decision enter likely engaging really to not. perspective, better agricultural we the -- are that on -- Duo can't this in think very more community players' way of that their are and you usage us So, extension again, products. produce tailored Maicai consumers, point patterns for of Duo Duo a like will into We do out type with agricultural right infrastructure similar other more or But Duo comment whether from for to natural. see what

heavy been some go people, accelerating involved working Today, this in the provider the we we services in in we're them SOPs is doing so teams with to have in establishing prepared today. that third-party development got getting for warehouses building, are involve have workflows. to ground in the agriculture we we instances, the the infrastructure. on investing have But what been So

development already have is we scenarios including We infrastructure, of be but need that, management we localized to certain demand-driven, facilitate systems we from that in cost-efficient. for investments invested specifically, where potentially platform. will and But fleet our to can and are optimize technology to ways leveraging will we more in have that operation continue platform to order though, do warehouse coaching that the be build-out, make and a there e-commerce think therefore, looking most

instances, do provider but to it leverage looking to ourselves. this, and develop and services existing test are we to in We need some may do cases

there let question address pause and regarding Maicai. Tony me Duo the on Duo Let and sales marketing

Tony Ma

Duo a remarks, his Lei natural and from also mentioned Yes. extension our in David And model. mentioned to is e-commerce as us Maicai main Duo just

So, generate short-term our Duo we same as the we Maicai from marketing principle sales Duo of guiding ROI platform. profitability. the business, can as way we in we e-commerce in invest investment budget long-term the will is, on not instead And the our and focus the

Joyce Ju

like what's suppliers Duo May follow-up suppliers? main of it. colors, between I the Got may and quick like marketplace in current like like overlap get just agricultural like for terms Maicai, have or produce like a, Duo is PDD our a fresh we

David Liu

Duo that quite also was e-commerce merchants integrated reason be I an scenario platform. in question can I'm Maicai offer our Joyce, not as is this of the who meaningful. us The merchants online. Duo The say actually work part with we sure Maicai is, that

really with to capabilities welcomed delivery depends are work they their platform. the and on to course, -- can with the more they scenario they to than in So, dispatch working and, whether it on on continue can and localized of forces our nationwide Maicai

platform work give by we the have with the in leverage localized looking users, us In with incredible largest e-commerce we fact, see China's I as would credibility lot say a of us merchants well. merchants and scenario to as second that

Joyce Ju

Got it. Thanks a lot.

Operator

you. Thank

Jason Shu

please. question, Next

Operator

Yes.

Next go of Morgan question Please line from Wang ahead. is Stanley. of Eddy the

Eddy Wang

for Hi. the congratulations very my results. great question Thank on and you taking management

follow-up Duo have Duo also Maicai question I on as well. yeah, So, a

give we of the if how understand that have started color been ASP agriculture -- understand purchase? business this past Duo more -- Maicai the user I the you. Thank can -- look momentum with product months? compared the us Duo Yeah. agricultural just product basically, past compared wise, So user August. you AOV But -- at of with we I of integrated us AOV how would the into three if share Duo the in frequency can -- you is business. and months, Maicai on the compare behavior compare your appreciate both with our But the in the if And I this Duo it's users in that business is three the if with much the wise, we you

David Liu

that. Thank Eddy. you Sure, for

Duo business pointed for you a rightly is out, new Maicai us. As still the Duo very

are also operations. we fine-tuning So, our

specifics. comment not of you most So are now for But featured available app the on we way to Maicai prominently. Maicai main entry and the across be provinces we itself that function going on the to the an note able in is very would China

our on So, good business and the pickup I that, user Maicai we would to say visibility great helping seeing is good particular, the Then, to also itself. main momentum and in drive traffic are the app adoption.

needs daily the think cater You platform. on grocery also meant AOV, the it's the to consumers is asked the it's about our to address scenario say Maicai I fair or that of

lower on to those itself And is are orders relative So, today frequency engagements -- higher also that our to average our AOV platform the lends and naturally the platform. for AOV the today. of AOV this a true purchases on it

frequency. much The the the Maicai is, over we will infrastructure looking However, out continue the higher the increase time, it serve compensated we well, increase. way consumers at as AOV we also if is the to are a and business by frequencies will build

we the this them amount focused of best the experiences on So, see providing potential for tremendous just for in are we do now business, and a daily grocery needs.

Operator

Thank you.

Piyush Goldman of Next Mubayi question is ahead. go Sachs. Please from

Piyush Mubayi

Congratulations, question David, that is, you'd far, is XXX away the after what Thank basis, side look where you go on is, not Thank could at we question the cost equation? buying the trying now far And we've question. the second thinking the When city-by-city are of how you I what million, my if obtained pursue? community The number you market to examples of on taking from you be? the we're Or understand side. level? better should could buyer on to step of What active just through through Lei, seen take is the I'd like results. super that. leader. profitability be you. you profitability us the next thus So, a of for appreciate

Chen Lei

Okay.

So let first first question. answer me your

we the customers. are for being are said, base. inevitable million room that slow down. us currently see and we terms active still in So, will have user And that our It's XXX expand there to growth of grow do

focusing launched However, the believe I their here one my is share, I all bigger of the on That behind we Maicai. trust now. one lagging still are have And is, with us. it also key issue we reasons is users we're we think the therefore, the area

and the offline. a Internet COVID-XX are mobile mobile a we our we generations, of I if little think their of further, a quick this us And is them, pandemic. such and also approach and into believe see no we And expedited about penetration. All this they things integrated. that our whole think take of But bit preferences, online, offline think is fall a by at there do to is do the for Maicai trend result I very work. young are online era process point I their behaviors consumption that of to win and this as Internet key at launched And we integration to a structural I trust. kind high very changing and look do meet currently these

we a you it. If areas. of focused channels, do mobile And hope area to of integration majority of payment, why integrated this the provide I that, of But things, sort infrastructure world, more at of of And see online. to in both to opportunity. activities e-commerce, higher will capture potentially take that will And see are than we most in are world, efficiency. other this they of believe type committed think kind help new be performed new purchases they will streaming, look bit be online And earlier shift that in this this kind a typically of we is new will examples I live needed. technology this the buildup process. good And retail we online. new need realize to you do definitely infrastructure and That's

boils it meet will need run which long be successful think for think value to factors, to I change, you satisfaction two expectation. To it is which something, in money. their I to do meet and Let's really us, constantly order user never one down in is

The will have. the other user expanded experience is interactive

So, hopefully, that will answer your first question.

Tony Ma

and up limited guess, I the a think fulfill to which us the which Maicai, speak to I pick today, I by Thank long-term And will second on us agriculture profitability help Yeah. of address Maicai is Lei. on infrastructure. is will you, the one. the opportunity, user needs,

and more value the in we're committed waste process, to different as for reduce try therefore, additional trying to layers innovating process, outlook some creating in that, of to the the keep cut long very as Maicai on initiative, today. invest from With the users. we the So economic will this for the be

monetization to not built For which model include the but be us, of along journey, this -- and the can evolvement advertising, it. limited

think So, determined cities rollout, there the after all cover in haven't in three after to China. two we too I summary, operation. be tell lot early only And yet months a is it's or in to

our progress. We investors will keep the about all informed

Piyush Mubayi

much. Thank very you

Chen Lei

you. Thank

Operator

you. Thank

International. of line Please Next go Natalie question Haitong Wu the ahead. from is of

Natalie Wu

for Hi. the Good taking for Maicai deploy congratulations to quarter. my question very and strong evening. plan My regarding that you question results on the is initiative. Thanks

of from to side cities. the So, personnel your we set you main Maicai across the aside see that do business

main business? sales as we marketing and Or and for understand incremental? as planning your for marketing purely budget that and side? that path main budget exercise business understand budget side, is that should think the the -- of sales how your the budget Thank Should should of this we that we Maicai-related marketing you. sales So, together with is choosing actually so that incremental

Tony Ma

sales previously, we as and marketing Thank Duo in we investment and main Like marketing the question. same platform. investment other budget way you the Okay. on our Duo our said for manage the I sales Maicai

managed the basically, So metrics ROI It's same. don't dedicate metrics. case-by-case through we We our based sales the budgeting and marketing evaluate internal sales all for and internal ROI on evaluation of our pack exactly Maicai. on for marketing example. activities, It's certain the for investment a

Natalie Wu

right? So that is that incremental, purely is

David Liu

Yeah.

what on main the add level, as said, deeper to just to we Natalie, see and evaluate platform and mean, be every So, little user frankly, fairly little fairly do now a as bit itself for to -- the at Maicai, spend is bit on dollar marketing can it's in at sense but go the individual as that user-based Tony down level, a only specifically I -- right? So, to misleading they granular spend, individual users if well. we question I a we and look sales a you continue -- will the continue think user also the

features users and at dollar our from So, these the investment. at individually the looking in getting we're investments across functions the that different looking our deployment or we in are

we're So -- and that going really now more the that's -- it's a say as allocate a bottom-up budget. with approach to so of budget opposed we're and beginning year to fixed

Natalie Wu

Got it. clear. Thank you. Very

David Liu

question? don't last we why take Operator, one

Operator

ahead. Go Sure.

question Citigroup. ahead. Please Our Alicia go Yap is from of last the line of

Alicia Yap

on Thanks to also the -- Hi. taking shopping. Good community management. related my for Congratulations my is strong also questions. the evening results. I grocery question

consider cloud with with our the this intense payers in infrastructure, investment other is much right, partnerships winning wondering commitment, the -- even we delivery of capability? at looking leverage well. the battle? success what that or factors Just Just PDD's of how chain support partner to supply the competitive ride-sharing we the your landscape, cooperations need Will sourcing and players you. or to as Thank do seeking

David Liu

Alicia. you, Thank

this to I evaluating of to As Maicai or the sorry, think on the consumers type for to it a of in necessary platform, right is dedicated this market we partners -- and don't earlier, certainly -- will we are be deserve and us available We level products. infrastructure would Obviously, open Duo type is the type out an core this. a localized to being more mentioned stuff, we see those want -- agriculture because work we we Duo the delivering experience believe build infrastructure of go most We today. what for the to being open, with is build committed be to efficient looking why experiences. available deliver deeper readily

we how informed So, players to will in deployment. invest and need we what that the best that be can how, by consumers that again, we fulfill certain to help need. would needs that facilitate And mean accelerate or

the do these think So, any way need as in that we continue the Maicai develops. pay-out do investments to the shareholders. the to we will And business event, will for long-term

Alicia Yap

to to your of be the infrastructural It from in the quarter just kind Will investments? you fluctuate could -- be very the that to we just build temporary go quarter? a year a follow-up indeed case sometime you Can quarter-to-quarter into could back may up more structural capital, profitable cautious? have that need loss-making quickly if future model, this I

Tony Ma

Okay.

comment me this. Let on

think, talent, base. Lei, also mentioned further increasing it's already continuous near-term opportunities investments, I infrastructure, these of speed and technology all the As remarks, very improvement a platform. we up And about on to David profitability. engage pursuing. there's we agriculture about sales both young is the Pinduoduo with number This on impact our likely -- to a our -- user lot we on marketing talk we in investment but today's investments, and these still are when And

all a profitability for investments value are long-term we our generate on focus confident quarterly But we won't basis. will on So, these very shareholders.

Operator

Thank for hand conference back the you. And Jason to to Mr. like would go Please ahead. remarks. I closing Shu

Jason Shu

Okay. today. everyone, us the conference on joining call you, Thank for

day. to free further any and have Thank the have IR you, you If great team. follow-up reach feel questions, out to a

Operator

concludes thank and that for participating. ladies for you conference you, today, and Thank the gentlemen,

now all disconnect. You may

PDD (PDD) 12 Nov 202020 Q3 Earnings call transcript