PDD - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings Inc.

First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your host today. Sir, please go ahead.

Unknown Executive

operator. you, Thank thank and joining today. us Hello, you everyone, for distributed is as available PDD as Holdings' our and was release services. Newswire investor.pddholdings.com earnings on earlier website the Globe through well at

in to begin, we to harbor which as this I applies like we certain earnings Before refer will release, press make would our you safe to call also statement forward-looking statements.

GAAP earnings of call financial measures. to to our non-GAAP non-GAAP discussions reconciliation Please a certain release, of includes contains Also, this which measures. measures refer

Joining Jiazhen, today are Executive Chen Director us Ms. the on Mr. Finance. Executive Co-Chief of as Lei, call Co-Chief and Liu Officer; our VP Jun, Officer; and our Chairman as well Mr. our Zhao Executive

past us Lei quarter then will XX, our Jun in Jiazhen will our ended first the focus. through Q&A and and session, and translate. make remarks will on the Lei strategic walk results general And during March quarter Chinese help Jiazhen some for financial XXXX. I the will questions our for answer performance

note language for of the the in only, statement discrepancy, and in original case Please translation prevail. reference English should is that

Now Lei, Chen please ahead. Chairman pleasure introduce Co-Chief Lei. Executive go to it's and my Officer, our

Lei Chen

for quarter earnings joining you for the call first Thank everyone. Hello, of all XXXX. our

on XXXX development. was the high-quality year towards our first journey

We and are our are from strategic encouraged merchants by the users more our and positive feedback direction. confident in

and improving demand our ]. the In macro we steady deepen from access year [ is to an critical XXXX a first quarter, growth. benefited achieved

Our represents XXX% total a year-on-year increase. revenue reached XX.X RMB which billion,

promoting consumption, through broadening to high-quality the and business of supporting on fundamentals high-quality work investments Looking will supply our ecosystem. continue ahead, we our high-quality in

few difficulties, still executing embark decided journey to are on ] a we will irreversible challenges to development Our proactive we've long-term market high-quality transition inevitably because seeing share. determined but and are this and well [ to face

at the First more and actively our same innovating response and all, to consumption to our this, service lines. merchants cover offering a upgrade, trend consumption broaden engaging in with clearly of we scenarios, we see product of to are time, our

our top a new product deepening to are we year, cooperation this around the world brands example, with our [indiscernible] platform. to For bring

consumer for services, we deepening ] my categories consumers our better In and platform hope in more customer demand savings [ with and strengthening to our with new groups. share addition meeting new connections among product the and

without cost-saving [indiscernible] tools essential have High-quality are experience we have costs, on built consumption to our our broadening reducing effective be is digital with to measures consumption. across platform, our and high-quality attracting support Through capabilities. in will development, be solutions. and entire and know-how pricing. years, proved investment of services These merchants not e-commerce of all product merchants pricing over empower possible a to And terms supply valuable product in the innovation chain our into easy-to-use the more and research transformed technology strong which

business And lastly, the is our long-term an ecosystem that to encourages foundation conduct of compliant platform. growth

program the bad and know-how. integrates higher interest, merchants to rules digital to quality behind we accountable creating and commerce taking initiative compliance attract positive willing our to healthy play consumer platforms an When This foster actors, build pace, a holding are e-commerce compliance comes drive by empower to environment former. SMB wellbeing record we it at to our As to the always is that and are economic stand regulators a consumers the businesses for a out that feedback. thereby and standards. technology are capabilities leverage technology with industry-leading And with

trust on building with our short-term consumers on focused long-lasting and gains. not are We

also business. aspects a long-term our We all adopt similar of orientation to

long-term continue great value opportunities focus invest potential. a on mode, in will to growth As with fully a company that and is creation still we into

in reflected We and global business. this goals, how manage short-term not guided also is by our are we

stage exploration the in still room is plenty and improvement. business of there's global for Our

We important as opportunities are to improve respond challenges, to ourselves. these positively to view we and prepared

will by term this key in effort long be capabilities. not are our distracted the building short-term results. we for on We our and will With focus that,

Firstly, roll for efficiency solution to fulfillment to welcome out capabilities, tailored around improve supply the merchants costs. markets variety different to reduce we worldwide. will of rich and chain providing in supply from quality quality continue chain us join We world in products a consumers

compliance legal capabilities. Secondly, and

and [ of goal our environment for will compliance of make create an a the With investments plenty we users. industry-leading safe program, to trustworthy ] building shopping

uphold our research tools and into assess our conduct into operate will the merchants. that laws we know-how can regulation To easily compliance forward-looking transform markets our centers, and we in

needs capabilities. service up users, thirdly, and we user overall our And investment global improve to of technology and In in keep diverse standards response operations quality experience. to will

and the As over we we value for by to around prepared increasingly local merchants more to communities will hopeful and our bring we the consumers investments we We that long globe, are easy recognized are be welcomed and not this do expect be run. platform serve.

at some the say would I to been in the intensified will are evolving pace. a has and inevitably past Finally, industry expenses that -- both are operating rapid opportunities our Competition we organic a which emerging competition be can in where growth. constantly like past and increase intensified affect quarter, in

markets growth. technologies offer On and tremendous the also for us new other hand, opportunity new

letter when moment, first shareholder read went the this public. company I At our want to

bumpy company, of and not the numbers to colors are seem company we be. how matter conventional may our hope a to show you or true rough no We the

from performance a our not almost our with business to linear certainly will results Our path fluctuate. earnings our quarters. suggest follow Therefore, few we measure and not a does overall shareholders

long beat keep our may value to will miss ultimately, we at on value. or long-term intrinsic creation, convert as market short-term this expectations fluctuation but times, focusing growing performance financial Our

will our Jiazhen. hand And now I it to Co-CEO, Jiazhen, please. over

Jiazhen Zhao

Hello, Lei. XXXX. earnings Thank all first for you everyone. our Jiazhen. This [Interpreted] the for quarter joining is Zhao Thank call you, of

shopping has first is continued made meet a a the retail consumption rise. needs the good a seasonal promotional to promotion. users' year promotion policies to of other responded Spring series consumption strong, during We The proactively penetration remained quarter and consumption the in Festival This start. and activities launched consumer events. year Online and online for to market

benefits This consumption first we potential effective quarter. further and by in and merchants. environment our Driven solid achieved the events, promotional both releases macro growth

in in We China. consumer the are confident market

As long-term Lei mentioned, step investment year, we strategy. will execution this up the development development our our high-quality of deepen is to High-quality strategy.

which key ecosystem forward, Going into offering platform our continue areas, to and consumers. we consumption, compliance will supply, efforts savings direct more to while X are

focused also to services are more and delivering on We supply high-quality consumers.

quarter, in by Guided the first the we consumers to committed strategy, this side, putting consumer remain first. on

tangible to the better our most services, users. give back rewards continue to Focusing on more savings and we

up the in stepped billion consumers' quality merchants we fulfill example, Day festival for to Festival a Spring savings. For season and of with program millions our shopping more shopping May the investment demand XX and partnered during

of this As for year's efforts. promotion nationwide initiatives one better driving services, is consumption consumer program the goods trade-in the

We to electronics, third-party service categories. washing air-conditioners, actively served have covering refrigerators, convenient Today, mobile and been we working million machines, with provide have other phones, with users TVs more platforms customers. XX trade-in services than

extend offers discounts. program, Our to which products billion the under XX popular consumers attractive trade-in services also

easier their shopping for As consumption, consumers is upgrade their we enhanced. further experience it to make even

the make to enjoy wanted addition, free-shipping in also shopping areas In that sure remote experience. could we consumers

first in remote shopping the and provinces. upgraded villages we in quarter, to our services pioneered and shipping shipping So free

to Such growth. now X improvements post Our [ last-mile growth regions. ] further the radius. closer driving year-on-year kilometers efforts We're rapid to volume led are consumers with most our within of that from even for happy service to innovation order see these delivery a our

we investment This focused help our of continued merchants. we side, grow and ensured with high-quality traffic platform to but supply national resources our the the merchants. on such as the together only theme supply, branded the On first support high-quality not the trending to merchants' quarter, brands businesses. also boost and support allocated In

the product offering a the shopping For season, product by for year New our launch. dairy and for traditions launched edition inspired chose a example, during of the Festival the Year brand Spring platform dragon limited

resources, a dairy in With gained became top quickly and the popularity the platform's our support seller product the category. of

is foundation. Agriculture our

first Competition Duo long growing This to forces to agriculture. we innovation launching new the run. invest In Smart Duo are the helps and technology We sector important Academy productive agriculture over by in competition. fourth in the continued explore this to Agriculture the second quarter, committed support

advancing e-commerce screening bring same cloud farmer agriculture has the our such to initiative local one-on-one merchants. to time, regions production as Shandong steadily consultation in been At and Guangxi and Hunan, Anhui,

more In our specialty across with agriculture farmers' addition, production during brought to collaborated more which income. season, our we than Spring agriculture shopping products Festival also only the not boost but platform, nation, quality X,XXX regions

the scaling festival, specialties, branding blueberries focus Day dedicated During regional launched the agriculture of and on as production shopping products under we agricultural billion agriculture for products. the We XX sessions and flowers. supported streaming live local such the with particular a program [indiscernible] the of May

critical policies can is our to platform ecosystem development. Only support sustainable an long-term transformation high-quality growth of well-designed the a high-quality e-commerce ecosystem platform. to with The healthy

In ecosystem we to projects. of invest out in and the the billion first compliance initiative XX continued quarter, a series carried

safety our efficient information trust our on of example, further team technological the automated and review utilized For to the means enhance platform. product

our As an resources lost campaign, for on e-commerce to platform year, Home elderly help beginning caring have of to Key consumer own to base, more and continued responsibilities. and ] support take return also actively [ social this safely. home the unique we the diverse we Since serving seniors utilized a vast nationwide the

the launched we Duo the Reading discount provided people to seventh enabling thousands enjoy sharing. knowledge to Month Day, direct more of Reading Duo World the of products, tens book Around and of benefits

strategy and Our is development a project. complex massive high-quality long-term

together execution merchants. and bring our value to will ecosystem consumers from resources participants our We efforts create the and all more deepen and for

you Jun. performance Now in to financial let first She on over the hand quarter. it an with our provide update will me

Jun Liu

everyone. Hello, Thank you, Jiazhen.

me March our XX, quarter XXXX. first Let ended performance through financial walk for you the

online billion. mainly by the services transaction of services. total first our income revenues was terms XXX% statement, In RMB increase in XX.X revenues and This an in year-over-year quarter, marketing from to increased driven

others quarter were year. the Revenues and from RMB XX.X XX% billion, marketing from RMB services quarter, from same XXX% XXXX. services of transaction Revenues quarter up from same XX.X billion were the up online last this

and to on cost Moving expenses.

maintenance total XXX% expenses. due billion XX.X Our increased XXXX quarter, processing center mainly revenue call to fees, in to in RMB QX billion and costs from XX.X this of fees, fulfillment RMB payment increase cost

same non-GAAP billion QX billion to increased GAAP XX.X RMB quarter the quarter expenses a billion RMB increased RMB XX% total billion from of XX.X quarter On operating in XX.X in expenses XXXX. basis, this operating total XXXX. to XX.X a from On basis, RMB this

invested as to our offerings, brand decisively in promoting In the strategic awareness we quarter, investing such initiatives the in and R&D. consumers, service first key giving back

compared quarter year. quarter Our a total to non-GAAP last XX% as in was XX% this of percentage operating total revenue the same expenses

items. expense specific to Looking

quarter, past marketing sales the the versus a back RMB this quarter over we and same advertising business to XX% an were give Our continued quarter consumers of brands. up of promote non-GAAP series expenses promotion year. to last to campaigns, billion, increase XX.X our Throughout

basis, as year. our was sales same XX% quarter expenses our On quarter of this a percentage a revenues for marketing non-GAAP last XX% the and versus

Our non-GAAP XXX XXXX. of general and quarter same million the versus administrative XXX million were RMB RMB expenses in

were Our research year-over-year. on X.X and billion and a XX% up development basis non-GAAP a billion basis, RMB expenses this RMB X.X GAAP quarter on

at is of core Technology the our development strategy. high-quality

investment R&D our users program. with continue build provide a efficiency and chain in will supply satisfying a experience, our robust shopping to more compliance to improve We

quarter in XX.X billion last same quarter year. was with On for XX% operating RMB profit billion compared profit the versus quarter a last the margin RMB GAAP Non-GAAP RMB was same X.X quarter this profit billion basis, the X.X year. year. quarter billion RMB XX% versus was XX operating for same Non-GAAP the in last operating

for quarter income same billion billion XX attributable ordinary was quarter shareholders X.X in last the RMB to to RMB the the year. compared Net

earnings in versus X.XX Basic of was XXXX. XX.XX RMB and ADS the quarter earnings XX.XX basic earnings per earnings was ADS RMB and RMB of ADS same per X.XX diluted diluted of per per ADS RMB

RMB the Non-GAAP ADS shareholders was attributable XX.XX quarter ordinary XX.X Non-GAAP the diluted net per quarter RMB was billion versus in of X.XX XXXX. income XX.X to versus RMB earnings billion second same RMB in last year.

linear a As Lei follow path. our business mentioned, does not

the financial few growth based our Fluctuations to We not future. quarters. data not does forecast suggest investors quarter's are This represent results from inevitable. on solely a

That completes income the statement.

Now me move cash let on to flow.

was activities in RMB with Our X.X RMB year. same last quarter billion generated operating net compared from billion XX.X the cash

billion cash have XX, RMB March equivalents in of As and cash, investments. we XXX.X short-term XXXX,

prepared remarks. This my you. concludes Thank

Unknown Executive

Thank you, Jun.

purposes. take we'll Operator, let's Chinese questions Q&A session. we and questions session, Jiazhen X convenience on for Now the take today's Lei a questions. each will and will Q&A In the questions maximum for help translate on analysts to of from We in could and Jun move are Lei, Jiazhen from analysts. answer line. open

Operator

Your Yap question Citigroup. [Operator Alicia first Instructions] comes from from

Alicis a Yap

Congrats results. Two strong on questions. [Foreign the Language]

domestic the competition. is First regarding

So over Can actively the of in on evaluate would such adjusting going how view environment, an e-commerce strategic the and focus platform share competitive past forward? strategies you business have seen their In year, Pinduoduo landscape? your what the service. terms management we pricing the be for

question related Second is to compliance.

the is to the that think about earnings achieve? attention in also I quite of management a goals explain management market bit time on recent you Can a have what we doing work to made far more and noticed spent talking area. Obviously, this the you compliance-related matters. close bit so are paying about call efforts wanted you little

Lei Chen

is This Lei. [Interpreted] Chen

decide purchases making as they the overall different across And a competition, from shop compare question. first different which we your for consumers choose to find And take me Let platforms. -- shopping your to getting and in platforms experience strategy before on on from, areas. to competition, that are few platform regarding from used consumers question

For selection, competition, industry trend example, welcome And significantly up to put given healthy peers response consumers first. always on during have also we on stepped our services. and product And first pricing competition. efforts. And that seeing we our we this are their in quarter, the

keep our on our continued more are users. better the value by is it. our survival recognized very up to same But that Our savings value and and of over we for increasingly the depends to see our must also at proposition being the with with we changing create is and we years, consumers. do And that accepted services consumer best we pleased realize investments demand our constantly time,

more the work we platform. consumer we supply experience, products can more this And irrational And on savings scenarios. also to consumption also also needs quality trust we more [ further becoming us. also capabilities, hope we offering savings, diversified user's for and expected on quality currently, top and means, And more overall are boosting more are on by deepening meet demands high of better ] higher the and therefore, of services improving addition our consumers' and on products in varied our deepen shopping in to

second And question on regarding compliance. your

an improve and us committed also have our past bodies create environment holding where accountable we're And grows, and users, our compliance and few As consumers with ever-higher regulatory doing significant merchants order business a to the us. resources in are for for the compliance invested business shopping requirements we is area over quarters. trustworthy to where

an framework And our and regulatory of new our of one capabilities and world are core around Major compliance see as the and strategy evolving capability high-quality we therefore, laws regulations aspect of are our as capabilities platform. introduced. development combined important also being

this compliance various we we are mindset, last during quarter's during regulatory that a strengthening call, countries. And are communicated earnings engaging actively learning also And bodies in with process, with our we proactively capabilities.

all research to the We regulations and and regulations findings to also cover understanding in own these operation. researching teams our to business. And apply our initiatives only not in heavily the those of area dedicated of have aspects related compliance platform's we market, are investing each our

But For example, includes well. it merchant operations those related data-related regulations. to also as

ecosystem. product consumer which at example, sustainable a the their of same necessary we and our manner, development compliance medium-sized providing And high-quality time, our merchants platform for and and are For in benefits the also to small- compliant more incentives businesses the conduct protection.

And consumption virtuous better matters. diverse high-quality a growing of while fundamental us thereby for forming healthy view product support the platform, needs cycle. more is our And are development Thank compliance bring This compliant merchant my to will both offerings ecosystem satisfying and a base and which long-term quality high-quality consumers' you. on of onto will in our platform. operations

Operator

Bai comes next CICC. Your from with question Yang

Yang Bai

I X questions. Language] have [Foreign

line is growth can growth forward? rate the The a should Please, The grow? the room first share delivered the one still this growth. your going management decent the company about top this about for potential think on Is there How business. growth quarter. to we of thoughts

like And your would global around the the How my more a bit your about global of talk X business about latest business. second look the is in Could years? business? this thinking management strategy question

Jun Liu

you always still long Well, by the about creating Jun. for being many is questions. first than short-term long-lasting rather results, This Thank we focused value. long-term on And to upset I take see question growth. have and areas run, investments the consumption will your financial your the in improving we market.

online consumer The to consumption opportunities is of retail the industry e-commerce market, to see merchants. that market And actually plenty platforms and models offers the of also for overall infrastructure continue and addition potential continues growing improve new the to quickly. E-commerce emerge. in we

greater exploring innovating new create for value actively are and consumers. to models We our

term, still retail online in penetration. potential long the large there's In we believe

will improving We services consumers. keep to our

the of side, and scale the we our value services. merchant From are the improving also

do We continue properly. further to with quality factors to merchants selection to loop high-quality By doing products platform. feedback work is willing broaden the allocate to so, and our achieved these together. together hope A support who are resources positive on we business of when merchants grow the

to our on competition. In such we more execution a rising keep on and with industry, need focus faced hats

Our be deliver consumers more we financial constant merchants for focus for value results. the Thank value our our merchants. believe you. create to consumers is in that and reflected ultimately will and We

Lei Chen

This is Lei. [Interpreted]

question me strategy. Let business on global your the take

grow and still all, we of is are new more models. about new a learning working do we'll heavily still a execution, achieve direction, on hard are same after our high-quality in business focuses time, at our the First to it. business that the a company quite we to way, and global strategic best And setting business very while

supply our around on suppliers terms deepen expanding of focus high-quality capabilities. with communicated we And product capabilities our the continue quarters, further chain supply past the as is platform. supply few in high-quality connect and to ahead, in compliance capabilities, chain to further and merchants the to on broaden our chain, expand service to will goal we world and And looking our our offerings and

At cost supply merchants of benefit from able doing same of chain sell and the the their time, be and business. efficiency lower also easier products can will to their the this. we'll for to Therefore, consumers merchants to worldwide make improve it we -- to

service of to and scenario. consumption In terms exploring different are improve solutions also fulfillment efficiency capabilities, serve diverse more to we

shopping the experience. also customer are we addition, to service In our capabilities our technology improve overall leveraging and

about to quality And area. as talked of foundation creating invest sustainable platform high also the it for this environment the on firmly this the and key in it and for development call we our is users, have that for continue compliance, this to our shopping we will earlier a and safe is

the doing unique investments more is products them finally, of affordable to a these experience. purpose shopping to And consumers and all to offer us at enjoyable prices bring always safe, quality and worldwide

Operator

Your next question UBS. Kenneth comes Fong from from

Kenneth Fong

company [Foreign in still the can is Language] questions, the I on profitability X have despite first The intensified competition. achieve profitability. quarter first growth

sales seeing in We talk in resources are leverage down about marketing mean allocation? management slowing also the plan expenses. the marketing? operating is investment good your company broadly, can Does More terms it in and of

And my second question is on agricultural strategy.

Regarding product agriculture, growth evaluate how share And your competitive about think you agricultural of area? also could this category? management key advantage you in the how do potential

Jun Liu

is for your Thanks question. This Jun.

suggest regarding path. from market quarters and to investors answer based it your a linear prepared first in others. future mentioned not about growth miss profitability. we me remarks expectation that Let our will the beat forecast results company's few not expectation We profitability, follow our in quarters. some does on completely business question in Well,

not data. value of on company's long-term always ] financial smooth the will short-term growth focus intrinsic [ We and out the

in while The specific increase markets a allocation, investment return budget. quarter solely In different resources each we decrease on investment see plans in in we on preset not items prudent to investment and expense we're make in or company's based will market. business execution, the compelled depends opportunities of for the

profitability. investment growth intrinsic grow view to bring These Thank value-creation long short-term we a in run. fluctuations on will you. we investments marked This [indiscernible]. see in is future, still us the profitability, the are we help Currently, our value opportunities but will If in phase.

Jiazhen Zhao

This is Zhao Jiazhen. [Interpreted]

is Agriculture me take products. Let We our started with business of retailing question our your foundation. on agriculture. agriculture

investing agriculture have initiated the We for years, many in been group and agriculture purchase for we model new products. of

supply agricultural delivery local a Duo as products many that platform such innovated place of also the have direct Duo origin from to the solutions our up Grocery, connects of demand. We and building agricultural local

remains is decentralized rate supply, standardization Agriculture product there can industry enhanced challenging and Currently, transporting of have lot the products storing penetration products we the taken upon this to still dive industry. in in into supply is room be and of agricultural accumulated low low, online deep With improvement relatively for a ourselves transforming operations. team's quite and we plenty and and difficult. of this it experience capabilities. agricultural digitalizing Therefore, chain. a valuable farmers' Throughout have journey, invest our agriculture

featuring now a a important always and products category are high-frequency category, products. has full Pinduoduo Agricultural been agriculture platform very e-commerce

making still and investments on Smart to firm production. we agriculture focused We're planting launched month, in the optimization AI last agriculture. and of Agriculture commercialization fourth explore encouraged In Competition participants

also initiative agricultural production farmers cloud bring various to to digital regions. agriculture in Our solutions continued

We to continue of production in supply in diverse and the invest will chain agricultural future. aspects

help to rural industry same farmers and Through the the we agricultural continued in Thank supply and increase agriculture, chain. time, the income, of quality we of supporting jobs overall you. thereby value create promote of their revitalization efficiency and the investment enhance modernization communities. At the hope local

Unknown Executive

have you, And about further to you joining a great thank Thank Thank you Investor team. have Kenny. And for out questions, once all and please you, any Thank time. Jiazhen. it's if and again reach also Relations you, today, day. our us

Operator

for participating. gentlemen, and you today. our conference conclude Ladies Thank for does that

You disconnect. may all

call.] spoken interpreter [Portions on the [Interpreted] of this an that are transcript marked were present by live

PDD (PDD) 22 May 242024 Q1 Earnings call transcript