PDD - Earnings call transcript Q2 2024

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Operator

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

Second 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

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

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

Joining Finance. us well Officer; as Chen and and today Mr. on our Executive Officer; of Mr. Executive as the Ms. Director call Co-Chief Executive Co-Chief Lei, are Liu Zhao general walk us quarter Jun, our our the Jiazhen, VP Jiazhen our and ended Chairman XXXX. make on June quarter past for and performance through then strategic the will focus. will XX, second our some remarks financial results Jun for Lei our

and for During is and in language note translation the English discrepancy, Q&A session, of in that the any Please should Jiazhen will help case original translate. we'll statements questions only. kindly And Chinese, reference the in answer prevail. Lei

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

Lei Chen

and for Hello, remained the our grown in have significantly, invested continued We and have we new for improve. further of the experience high-quality everyone. committed meets A merchants In ecosystem. Consumer earnings in our for feedback consistently to diverse our half to all services consumers. have received positive Thank efforts. XXXX, strategy of of these products needs this second development the number you call joining our quarter first of our platform XXXX.

the This improving and robust benefited quarter, from financial results. macro achieved we environment

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

consumer intensifying environment. are we seeing uncertainties changing competition new from global ahead, and many demand, However, challenges in

increasingly demands. new also the moment, and come among go that to these in can to the increased On the just for that will create are only we to value improvements and revived it seeing more cater profitability key be -- rational diverse quality phase other are technology a the customized investments even growing affected focus digital platforms of that will brands making high-quality result. Since many have purchases. result, firmly competition more consumers as important back year, calls new opportunities. At brands. we Consumers therefore, a of to established on together many more e-commerce This chain a manufacturers chain balance new our we of supply the going In invest preferences we will this enter forward. emphasis supply has approach hand, consumption. a become popularity and high-quality over quickly decisions one manufacturing and one development to it's is escalating, high-quality response, create basics success, of and This is ] consumer for efficiencies. As with development our are that and to of On choosing diverse. experience-based hand, thoughtful have . consumption material there's propelled products brands [ not how example this collaborated beginning This

people's to brand. production process, agriculture local this directly quarter, agriculture second major example, our helping to to to and initiative foods For homes. regions bring in the in seasonal And continue bring growers our cloud teams local promoted

with established University to fruit. we promote Research the Fund technology support supply China inclusion, In bear started competition. nurture continue ] Agriculture has addition, the Agriculture and chain, Agricultural Academy research to cooperation talents in further growing improve Competition the and Smart we agriculture to Pinduoduo [ also The

a have digital our development. results strengthened from small the very further in On integration stronger have to been our platform using emerged support pleased and investing only led towards innovation. competition, are to and also this development. they businesses we capability not Through commitment the that These process, high-quality from to find but side, have the manufacturing high-quality industries product medium-sized local

We have that financial cycles. be few a in communicated and business occasions a as not for long-term profit number And used growth mismatch between should it the is quarters investment of reporting past the a of guidance. the result

reached profits profitability and presence As on healthy end, sustainable will I this is in high-quality we short term. and decline be run, it the in to would long saturations [ to necessary down like make And platform starting In that policies investors we our committed a to high-quality ones. new development low-quality to QX, there adopt gradually in to or remain our will we'll inevitable. focus support merchants investment and a vigorously the ecosystem. phase, creating has will Currently, and enter a clear scale, considerable tackle the the trend and ] rebounds our

fee incentives to will invest resources support XX merchants improve who first innovate so, CNY high-quality merchants, willing will transaction side, our we we supply development. substantial to these to offer billion in the an the is with for On doing of to reductions target And significant are the and to high-quality goal provide join merchants year. qualities. clear By initial

chain. our further to merchant improve the safety our and deepen other we our supply will strengthen trust capabilities On hand, ecosystem and

environment downward quality create We sold will fair our gradually few identifying noticed merchants. the R&D external profit management of from to new the and moving in platform's have global platforms investments a sacrificing a firmly transparent continue and is and that tacitly we this In In shift product-listing trend for onboarding our support streamline believe all is and these quarters, the necessary. clear unanimous lot This and but technology, business a in the the started efforts. At that decision operations our to of platforms, long-term merchant we strengthen from in process, prepared a products the have are team. And to in to environment actors on profit and expected A and short-term greater our are Leveraging which process. on has of uncertainty. we we round is we now already rapid invest moment, the will actively health. removing we improve brought significantly bad received past business.

Our also face in expected operations has intensify here nonbusiness become competition growing is Competition we by is is and increasingly meanwhile, And industry. to the our affected stronger. to stay factors.

from uncertainties business competition is cause These significant combined environment. to and global will fluctuations Our facing factors external evolving business. our inevitably intense

responsibilities. and the longer our grow, We support better and changing returns industry who company give inevitable. And through it high sustainable believe discuss a our we things capital our time. how enhancing team not where short-term we revenue adapt is society the and to agriculture need also to recognize As with continues evolves no our aligns and is We back resources governance fully most. shown I to offer a other example, are be in more performance by to can finally, downward do environment management our results, measuring and structure company's to still that simply corporate as can done, there this and can to greater trend growth in people fulfill sectors extracting today. to support that profitability We quarter's many often for better social is

quarter. innovation, social second in global about company taking committed to era, to now greater operations and in in to globe. And change on adapting the hand the our drive more we are the responsibilities Co-CEO, Zhao region I it to a Jiazhen, this will over As across our talk

Jiazhen Zhao

for Lei. the Thank fresh in China [Interpreted] to is the the Jiazhen. you, consumption for Hello, first quarter Zhao earnings second XXXX. In well, of energy overall all Thank continues market. perform this half online of our everyone. you call to year, This joining bringing retail

to platforms. the high-quality steady continue past strategy, long-term both side investments of development and advance support Over making quarter, our we supply demand to our

year we're the ahead the consumer very second and in this Looking quarter the confident market. Chinese beyond, of of future to

enjoyable our This focus and shopping demand, after-sales to more enhanced better capabilities consumer to value savings and services experiences. with quarter, provide and our consumers upgraded we services more more continued further on

XX June continue During promotions and new the consumer we increasingly provide diverse savings to straightforward consumers to preferences. meet the promotion, with introduced

and necessities across third regions. and We to upgrades the produce, appliances contribution high-end also cities consumption brought made daily our product categories into like and tier four fresh

On the merchants support up and quality Billion XX through sales. and products side, high-quality to our for we Program supply traffic brands, stepped directing fresh more

through We quality, group. To and have agricultural bringing appliance household products. agricultural enhancing boost producers categories many focused domestic chain, the electronics, and [indiscernible] billion XX. the RMB on invested also and local quality efficiency supply as we to June week and and the more countryside consumer program to in first kitchenware led during of more home benefiting appliances, regions, and home the the support industry the of such This value growth for remarkable areas group brands X

example, digital with platform technology, X latest market for joining with years in after achieved of the a For to demand XXX blockbuster sales our growth return utilizing to XX just brand helped It local product. we history RMB understand a million months. and the

the merchants the of XX, merchants XX% participating support first and meaningful by number the XX June week agricultural products platforms increased by new addition, number of In year-on-year. in new number XX% over Program year-on-year, and our saw merchants growth. the of the of Billion grew of In

high-quality in home cosmetics. To categories create better Our a round electronics, platform environment new attracted started for investments and a of R&D. we merchants, and operations have also in merchants business new great a of number such appliances as

compliance a healthy to goal and capabilities industry-leading build Our foster ecosystem. is platform

penalties safe rigorous shopping chain costs while control technology by product experience. We their in avoiding boost we time, onboarding screening product with comprehensive capabilities. reach. ensures to have same merchants compliance merchant better processes our heavily developing product example, safety This oversight training products continue and materials to and integrate our to to trust approach and enhance for quality, reviews and reliable a manual merchants. At helping thorough unintended the offer expand For on and automatic quality while invested compliance effort for market This team. our and streamline compliance aims for consumers product-listing lower supply merchants we their user-friendly quality

healthy recognize a achieving process, development building ] ecosystem consumer the our platform gradual platforms. core We [ and given that scale is also a especially high deeply of

ecosystem. In we face merchants this So addressing healthy This and issues while strong high-quality Lei approach. One has a support to create as sustainable committed to will low-quality with providing way, short-term aim process, we to mentioned. inevitably dual costs, we are side, ones. a

for of our Our managing to committed health is long-term investing fully team heavily platforms. the

few While profitability even or next the it might rebound that unavoidable vary lower term. over is profits trend in long the quarters, will

the around for [indiscernible] Smart Courtyard advanced kicked off also project fourth team with largest collaboration our in products world. agricultural Competition and the agricultural in quarter, and and China, We Science strategy. top launched in research the this from platform the we As Technology further [indiscernible] Agricultural

Duo agricultural to research continue in in development. will direct provides the with invested funding commercial strength accelerate initiative the This as critical We to products. Meanwhile, millions agricultural on and also and our of to accessible platform, discounts on knowledge market We people. XXXX products, launch proactively Reading application year working increase subsidies our Duo ecosystem high-quality making tens investments path is more partners Reading Month. of to to research a more leverage of social a high-quality the we more Month seventh thousands responsibilities. of on take towards promote adoption

platforms. We healthy our the platform foundation will high-quality we more our empowering support. will with ecosystem development of and creating resources platform solid and partners technical towards sustainable on a focus lay Together, and ecosystem

provide will for hand quarter. I update performance over on She will Next, second Jun. our to the an financial

Jun Liu

Hello, you, Thank everyone. Jiazhen.

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

from XX% last is up Revenues slowdown up driven transaction significantly to were transaction the In few services others an result same as competition billion, in global XX.X Revenues XX.X a revenues from year-over-year were QX, and XX% revenues terms from line by in Further inevitable from versus quarter, growth our from top This the marketing same RMB quarter of services quarters. the online of year. uncertainties. total services and online this XXX% In increase quarter last XX.X quarter, billion of second marketing XXXX. mainly and income down RMB was billion. the RMB slowed our increased statements services.

cost expenses. to on Moving and

a our XXXX a increased to quarter platforms. Our increased QX RMB XX.X fees increase and in support processing On from firmly in billion RMB this fees. On of RMB the increased expenses operating of invest quarter, GAAP total mainly total to payment basis, developments of XX.X XX.X RMB in to this cost total XX.X XX% in billion same in operating revenues expenses billion XXXX. from QX, the fulfillment high-quality due quarter XX% quarter QX RMB billion RMB In we from non-GAAP XX basis, this billion XXXX. XX.X to continued to billion to

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

items. expense Looking to specific

XX.X promote give back Our non-GAAP versus year. quarter marketing quarter XX% expenses Throughout this our up and last stepped same efforts the revenues to we versus the billion, to as marketing XX% year. QX, this sales non-GAAP to On and were our RMB our marketing consumers in and our invest last sales promotional up for a expenses of XX% a same percentage was basis, quarter quarter platforms.

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

RMB RMB to focus non-GAAP a R&D XX% basis, continue to and experience. On income of operating last the billion in billion year. quarter Our a on for shareholders year. billion in XX.X research earnings quarter GAAP per second profit was XX.X per supply ADS same was quarter and last was last RMB profit XX.XX year. were and quarter XX.XX income and Non-GAAP versus attributable versus the RMB quarter RMB X.X for the same we efficiency our was customer to invest ADS basic was compared was in XX.X XXXX. versus RMB RMB RMB It's RMB the ordinary compared Non-GAAP earnings this the XX% billion with diluted that long-term XX.X billion expenses same to XX% attributable quarter RMB basis, RMB net ADS X.XX ADS earnings in profit up to Non-GAAP XX.XX a for ADS XX.XX, basis. per Non-GAAP per XXXX. of critical of billion in diluted X margin drive the RMB in versus XX.X X.X and ordinary RMB operating year. Net development shareholders RMB billion per on in versus billion was GAAP same same quarter quarter chain Basic of earnings RMB last billion diluted last this and XX.X quarter year. quarter the year-over-year earnings XX operating the RMB maintain quarter billion the was same XX

not the a linear future. last in business and noted quarter, not follow our quarters As few does represent path last the does profitability

Looking invest to ahead, high-quality a ecosystem merchants. support we healthy will firmly that encourages

gradually in on run. platforms. track fluctuate inevitable the our short term, in statements. the as the development is may but Our profitability we That high-quality completes of focus long-term, long income lower the This we

Now cash let me move on to flow.

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

we XX, equivalents This Thank in June of my As concludes RMB XXX.X remarks. XXXX, billion you. have short-term and investments. cash, prepared cash

Unknown Executive

Thank you, Jun.

Lei line. Chinese, questions. In Jun convenience will and will will we the for translate Next, questions session. Q&A for take [Operator are Instructions]. Q&A we analysts on to we'll purposes. today's open move Lei, help Jiazhen the on from in questions Operator, and session, answer Jiazhen and

Operator

from Ju of comes question Joyce America. [Operator first from Instructions] Bank Your

Joyce Ju

question myself. management [Foreign Duo's growth have the management questions. robust caused will two first competition. increased in it, how the you how this the become platform and profit My we the Language] seen of future? a remarks, we on bit prepared it second merchant In in merchant to any payout? My I ecosystem the does ecosystem, quarter. on lot plans stage? have there have in you I But buyback dividend remarks, share how's is, Could Duo investment to the for merchant that supporting will terms question translate noted and elaborate this how why the by be management focus is of understanding plan a mentioned remain prepared for please policies. and next emphasized or in share shareholder in the the fluctuations the profit management profitability your on returns, addition, assess understand Could review the will

Lei Chen

is This Lei. Chen [Interpreted]

Let me take first question. your

long-term used guidance. on investment occasions as the the cycles. We the profit financial not between past be business a reporting quarters was of mismatch growth number and have communicated a a result that it should in And of few

to inevitably is growth. bring which slow business shifting business top currently competition down our factors, and external fluctuations and our addition, will our In line intense facing also

new months to supporting crucial and downward We trend. And invest patiently support sustainable steady profitability our support but invest we platform the towards high-quality will enter our XX platform our to high-quality entering need gradually high-quality is directionally, merchants short ecosystem. of a now building to health. a of we substantial a merchants. resources ahead, in also And fluctuate And phase it will a to transformation the a platform's are And ecosystem, looking development may long-term creating chain robust over next the in and development. empowering supply run,

long affected. the for will to virtuous we the platform. be committed off though profits investments start short-term this will will run, a even therefore, remain cycle Over patient And

is phase, In on facing shareholder therefore, uncertainties different are I still management terms external returns, of fronts in investment team the And believe the it company and such share from we and dividends. do and unanimously factors. ahead, our purchase an appropriate intense also also share the for we not not need. And for years a -- repurchases is time or that foreseeable you. Thank see in competition

Jiazhen Zhao

Zhao is This [Interpreted] Jiazhen.

your merchant Let question take ecosystem. me on

consumers quality protect of our one community. ensure new oversight product consumers. The mutually consumer to this our joint to a key On community substandard is efforts and demands are prevent teams. our feel our and partners platform a must increased in on serve a platform. responsibility as in competition Merchants process, our In operations rights. strict as side, we goods we industry strong brings Our merchants, dependent sense of

high-quality ecosystem. To the ones. necessary for essential but the towards must no to meaningful side, low-quality Therefore, dedicated policies the have choice tackling ecosystem, healthy which that development. merchants development high-quality will adopt provide fairness On in support strong we balance the other merchants so ensure to firmly platform to of is high-quality achieve we rewards, we earn transition can while

merchants the capabilities. and side, supply with innovation support technology strongly On we product will

fees significantly year. high-quality amount of RMB reduce these billion in XX an transaction will for following expected the We merchants with

our We merchants will to incentives drive the to for of development ecosystem. enhance continue high-quality

supply will This strengthen side, other merchants and platform platforms enforce the identifying includes of we from removing unlawful further governance our On our to merchants. our strong and chain.

platform ensure control we with and together working use grow merchants. We The a in of strict high-quality consumers for long-term As can consumers the services. merchant which to growth onboarding of merchant better already investment high-quality high-quality create management and long-term environment the in you turn product the opportunities started to new bring processes, creating now, technology quality our operations have the high-quality listing we cycle, the healthy our of and the new product community. the a is technology to a ecosystem, optimize to offer healthy, our to round our development of of and together ecosystem, commit products and sustainable create development has advanced reached partners, firmly all. ecosystem. consensus achieve to To Thank merchant key a investments goal virtuous to

Operator

from is Bai question next CICC. The Yang from

Yang Bai

I questions. [Foreign Language] two have

your the a priorities? on that first management management proactively? also one Could relatively of company the growth think the such company's competitive company please In regard? The in elaborate the caused your your but this your in development markets a we approach company the strong, global how overall Has positioning? some does the down. of cautious growth And will saw the suggests trying investment is it noticed thinking to rates that quite environment, investment slowing global that impact Is growth? certain business. remains the future environment business the intense. remarks, any adjust The your is towards that takes observed about and how competitive your we risks we the prepared on manage are some one, have In the data external second

Lei Chen

[Interpreted] Lei. This is

business. Let global me take your question on the

significant prioritized environment. growth, our Our have see our And over resources have global has few for a global the and we building invested always in Currently, entered development. evolving, business and still we foundation past actively compliance are is over as And the quarters, it we XX during new shopping exploring opportunities. markets. this safe business

allowing our in changes affected uncertainty. And in by a increase we operations develops, and the are we the As improve on better seeing have high-quality continuously more to enjoy accelerating. services our core to is competition noticed of remain disruptions external the significant we the world business. that development global in competition factors, on the environment we the complex and meet business industry And committed to inevitably economy, environment, compliance such e-commerce also strength, with are business. expected intensify. At this focus and of changed. our has the consumers expectations benefits our response in are capabilities customer constant our around increasingly meanwhile, our and nevertheless, some external of will nonbusiness And this a intense consumers will to supply But in digital to to chain, of is in and factors the our the lead theme and combined worldwide not global achieve moment, impact vision

Jiazhen Zhao

[Interpreted] is Jiazhen. Zhao This

me on take competition. Let question your

competition has is environment, a growth few past sector. the such the In quarters, to down. mix natural e-commerce the revenue was been intensifying, competitive Over our which

is to its At moment, consumer substantial need we need. to strength instance, resources own to the on has demand. meet revenue and second path on and platforms e-commerce declined, and adjusting more to our sustainable. Currently, platform this high-quality strength actively our becoming indicating are For that Each commit growth development. strategies cater evolving their growth edge focus continue not and high competitive core our demand in consumer is revenue quarter, this diversified to

merchants innovation in a chain. teams local we medium-sized agricultural the products our To updates second national have quarter, is fundamentals launched have initiatives products robust we continue to production for services essential digitalization. with agricultural product regions, and brands on brands agricultural the niche meet expanded to needs tailored brands and small collective the diversified and major By providing manufacturers for empowering to continuous the high-quality manufacturers, through their bring from categories. our supply and chain successfully higher to helping and good we merchants These developments products, and collaborating In of agricultural through consumers, quality supply the consumers. remain platforms, technological have strive through to achieved efforts. Apart focused core support marketing [indiscernible] innovation. e-commerce For

and and We will merchants dedicated support who strongly innovation. business encourage high-quality are their to

towards significant to that to leverage transaction we help continue we reduction the in chain needs innovative to and and platform plan fully by ecosystem. upgrading optimizing ensuring our offer, fees essential supply chain addition and In capabilities and manufacturers is only that the will and improve high-quality our developments. We the to efficiency supply merchants understand growth quality guide to consumer of meeting platform's deeper healthy long-term

We committed you all. Thank long-term are and patient to making investments.

Unknown Executive

We thank Thank today. you, And Jiazhen, speaking thank look to us for with nice a you next day. you quarter. all have forward again you, and joining

Operator

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

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

PDD (PDD) 26 Aug 242024 Q2 Earnings call transcript