PDD - Earnings call transcript Q3 2024

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Operator

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

Third 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 begin.

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

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

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

Lei Chen

the was income XX.X various CNY several These up extended quarter, to strategy encouraged This program sector have building within a stepped serve We our for development out in to the expected to When we initiatives regions cost delivered and ecosystem the faced efforts high-quality business. call moderation the in industrial firmly At profits high-quality we have million in by growth due and during for RMB reaching RMB whole results competition merchant and agricultural efforts development. This third process, gains investments embark same as are XX also fee billion new of the reduction earnings financial program. that Hello, XXXX. In platform last to compared noted upgrade our and XX we and respectively. XX with And efficiency quarter, you. a our belts this brought savings merchants. quarter, low. support e-commerce over supply chain, phase joining to of ecosystem is such Thank impact of the and past trended Thank that last ecosystem. intensified to expectation. results, invested you revenue billion in and challenges third partly on a the a short-term all everyone. in rolled and time, seen quarter healthy and high-quality our we net as the the quarter, development robust revenues billion, our our execution

results, greater long-term we Beyond the ecosystem placed value on the benefits of financial investments.

Over from initiatives for reduction fee the merchant we fee such merchants, past easier lower fee manufacturers consumers. service an deposits policies now, later security well which process. buy reductions launched the and billion the measures, withdrawal XX several first fee program, reduction included from as CNY in positive pay mid-August, In support received as as quarter, feedback and our have refunds, services, fund

and which injected benefits transformation flash In service efforts brings after and into growth that opportunities we for while merchants These energy our industry the serve. and quality. sales support created improving addition, upgraded merchants, both ecosystem cost also service for further they savings, our

with the e-commerce first marks villages initiatives Programs to measures covered which As these the further in that fulfillment remote to benefit markets, to builds our across like that underserved among not the local adopted these link innovation regions. such to Western transshipment consumers, strengthens also platform. this our Last early economic merchants services also promote some Western logistic costs but enter orders experience the fees enable first support the all China. shipping the we on to between China. provide only by different e-commerce eliminated the free upgrade quarter, regions in regions platform, we This for the

launched comprehensive fee In compared strong our to these supply for merchant creating support At last addition in merchants to enables quarter. preferences and also with long The management. support merchant greater set driving brands over implemented for has support fee more and platform serve shift development, regions from covers quality billion Meanwhile, reaffirms capabilities. has supply by demand meet chain chain agricultural and been the high-quality innovation. to merchants operations make empower them that time, the XX moment, growth order a force agriculture product consumers innovation regions already future. At RMB dozens reductions product run. these program new This merchant for logistic and reduction planned digital quality products, are drive positive technology aims brands products. On personalization. same reductions, capabilities, belts consumers in the as their our better to we This the commitment on results on a of continue demand more which that side, the driving zones, a and we also high-quality and in platform, growth to the consumer merchants demonstrates and impactful from experiencing marketing, the program, the our the transformation the significant policies in product with coming Leveraging investments cycle. examples posed demands enriching offer reductions focus of supply encouraging the areas, fee to categories quality support XX year. behind benefit which innovate, high-quality over chain program regions initiatives thereby remote to all fee in on CNY billion and the volume The industrial production measures support and the industrial in are

and benefits consumers, brings and merchants strategy high-quality to execute manufacturers. development the our nurture healthy chain which supply will and continue a to We sustained platform to ecosystem, firmly

in in technology XX, on finalist and final teams innovation. platform in the we a Smart As hosted fourth Agriinno make September agricultural September innovative hosted the real-world a to agriculture applications. On collaboration technologies presented digitization farmers experimented faced rooted tackle our continue XXXX research with explored XX, cutting-edge Competition, the of by world. X particular leading contributions from entrepreneurs round Agriculture where Global and to advancing Batches On young in field, own we Challenge the challenges agriculture, with institutes. this of focus world we with digital around solutions research around

global new trend. drive adapting to as the and As a area, committed to quarter, mentioned company in last we innovation are

to across also sectors to and responsibilities back more and globe. give the to on to the region support are do take prepared agriculture in the social We to greater society other industry

And to Co-CEO, Jiazhen, now, our in over it I'll talk details more Zhao plan. to about development hand our

Jiazhen Zhao

you earnings steady Lei. is [Interpreted] joining robust. Zhao Jiazhen. third Thank for Hello, performance business recovery third consumption, all our for our of the everyone. This quarter the to call XXXX. In thanks macro the remained of Thank you, quarter,

ensuring reductions support to demand supply we and includes platform our execute Lei As ecosystem. merchants, aimed high-quality been to initiatives just to optimizing the side. of firmly series have continue our This benefits mentioned, fee and actively development a as we all the both for strategy,

take some moment in to now Let me share efforts supporting of our a merchants.

in areas. investment last ecosystem As we X focus key platform on discussed our quarter,

for fees have merchants. reduced high-quality we transaction First,

the to of play strong of committed industrial In innovation series quarter, clusters On introduced the allows to fee ]. product key upgrades, empower resources a in refunds improve merchants and and [ XX billion their product agriculture high-quality and technology our and This resources for up national lower more merchants of reductions the growth. which other the measures, and we a thousands helping Many hand, capabilities. have costs. third emerging fee billions program development largely CNY with substantial reduction role reducing RMB merchants, and saved through free of phase technology hundreds a industry new goods, efficiency towards especially driving year, operating them costs

Once not have also the appeal we fully green merchants. the on for merchants merchants relevant alongside overall after-sales for system app compensates environments approved, the experience, but improves only and orders. the sales customer dissatisfaction. a channel orders, dedicated platform. the Additionally, team the enhanced abnormal service introduced merchant's is We with the This to complaints support business service platform a

we of fees transshipment part Western delivery reduces our cost substantially support This cover all for China. across As logistics these regions. initiative, in orders

infrastructure essentials, Quality and For development fees the country promoting Western cut and reaching now new up XX%, national daily to agricultural China, for greatly from markets. products encouraging delivery region's further markets. products to opportunities e-commerce like also access logistics. resources opens in were abundant the these categories by to enter are across It merchants

high-quality fee reduction program, billion also XX support CNY our merchant program. launched Following the we

X RMB markets high-quality yields income from online billion This seasonal communities. September, early to in festival effort in harvest the resources during products subsidies regions. boosting RMB we X agricultural agricultural allocated billion example, urban reach in and traffic agricultural support have various merchants helped and For in

Beyond high-quality leveraging word support agricultural industrial capabilities. its platform's extended regions, communities, program to the the other also merchant digital

drive and billion We're In supply them CNY chain recently our high-quality manufacturing with helps national models. advance program the process, customized explore collaborating numerous This shopping recognition for we partnered industrial towards national more brand high-quality XX to our with and to festival, industries initiative growth manufacturers will full concluded strengthen XX quarter-on-quarter. high-quality In and developments. of and than brands launch Double led rising impressive advancement. new to tenfold This regions to both covering broaden quarters, drive more transformation established, coming merchants, sales products. support agricultural with brands, the industry further

has consumers preferences. in trends, cosmetics more smartphones, on professionals and evolving of addressing expanded the offerings team new brand investment younger firm of have Our top supply selection cities, healthy response personalized provide of to users second-tier diverse the urban and to with food and generations. aligning us shifting a high-quality consumption their demands first products, we In enabled side

offering fourth a For on those and premium focused products and cities fresh driving we home produce, rural of consumption maternity in baby upgrades. third more and have wave tier areas, and appliances,

the over to next As high-quality will our we few strategy. Lei noted, stay development quarters, committed

reductions to on improving enhance ecosystem carry and We our keep navigate challenges the capabilities will fee support and initiatives, ahead. merchant further the with our

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

Jun Liu

you, everyone. Jiazhen. Hello, Thank

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

RMB from from top Revenues were from mainly from in the of income last quarter intensified increased this same RMB our year. an marketing revenues challenges. the to XX% were increase transaction in of year-over-year quarters quarter, XX.X XXXX. transaction RMB XX% services. third growth moderated in QX, line competition orders up quarter, revenues our the total has services further marketing statements, services and terms online few amid Revenues and was XX.X by XX billion, XX% comparison In up last external quarter same and the In billion. online from services This driven billion to

XXXX. operating high-quality and revenues cost expenses and a to RMB expenses, XX.X billion RMB total fees. RMB total billion XX.X XXXX in same the a fulfillment increased mainly QX from billion operating On our on quarter of billion RMB further billion total XX% Moving platform to RMB our in increase billion processing this basis, quarter, In promote this XX.X due we quarter increased GAAP On a XX% expenses quarter from cost XX.X to QX, to sustainable to QX to development fees from ecosystem. XX.X in basis, XX.X increased of non-GAAP XXXX. this payment increased of investments in RMB

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

were platforms. and sales quarter RMB to marketing the to our non-GAAP promote expenses on the last our year. marketing Throughout a quarter expenses remain campaigns in items, to promotional a this continue percentage invest XX% expense XX.X QX, focused quarter we and On basis, billion, and sales quarter XX% for year. non-GAAP versus was this of same our consumers up our as back versus giving revenues specific same throughout marketing last to XX% Looking

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

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

core our reflecting focus reached platform. technology R&D strengthening high our the a expenses on new quarter, capabilities Our of this

profit XX.XX our in compared in operating RMB for ADS Non-GAAP billion quarter earnings last per was XX.XX was of was earnings trustworthy billion and XX.X per Base income RMB compared the Non-GAAP same the same with same same attributable RMB quarter margin and versus quarter we XX.X the per quarter operating RMB XX.XX innovation to quarter billion RMB ADS diluted quarter XXXX. RMB R&D. increasing diluted same per diluted Non-GAAP foundation chain the XX.X RMB net was in year. year. to XX.XX committed profit last XX.X the On XX was earnings quarter last attributable XX for year. year. in per compared in RMB this ordinary billion quarter same was in supply same profit was ADS basic RMB year. Net the environment, Non-GAAP versus for billion basis, billion XXXX. RMB are RMB billion a versus to ADS last further our XX.XX for the earnings was a investment the operating XX.X of billion RMB of RMB quarter As of versus earnings income ordinary -- the XX.X shopping GAAP XX.XX shareholders to shareholders versus and RMB XX% to in quarter XX% ADS last

continue gradually merchants we to a platform sustainable may over profitability As ecosystem. long as promote trend and to lower noted quarter, run high-quality invest the support last our

long-term forward, ecosystem, completes statements. a ecosystem sustained other consumers, the build bringing committed platform income to healthy Moving benefits we merchants remain partners. to to investments and will That

Now to let on me cash move flow.

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

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

Unknown Executive

Thank Jun. you,

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

Operator

Instructions] [Operator Kenneth question our Fong UBS. will And from come with first

Kenneth Fong

elaborate management merchant current a this support to invest And implementing Can the Last ecosystem. emphasis of since forward? placed Language] the in management have series moving progress plans also initiatives quarter, your and the great [Foreign the on commitment share merchant then. initiative we company of on seen

and we time, on share future actively seeing that the is noted your is on from the Could business update global the plans are for this are an evolving, And the But environment external company my on we second we management here in new business. question provide at views different that in stakeholder. same global external and is, also markets the still exploring business? thoughts this also

Jiazhen Zhao

[Interpreted] This Zhao Jiazhen. is

me question Let take merchant your support initiative. our on

to consumers. merchant As collaborate this consumers, ecosystem as fundamental ecosystem are essential for closely healthy always crucial it's we partners have along us The high-quality encouraging values our for is serving in emphasized, effort. with all sustainable to therefore Merchants, partners development. in and vital our

the giving To this end, we support merchants have made substantial investments in the fee merchant to ecosystem strong through this reduction XX billion quarter, CNY program. high-quality

regions have As enhancing merchants. for for implementation lower guide ], over fee growth including from deposits, term. just security remote high-quality through towards service merchants mentioned, transhipment [ we fees policy aim refunds implemented several this and support We orders [indiscernible] sustainable to after-sales of long the policies, consistent

China, also in in merchants are encouraging improve It turn, our empowers notable logistics These charged reduction as shipped but regions. their a over costs, quarter, to high-quality services merchants lower at only extend for fees customer to logistics more Western refunds also operational efforts, strategy no received the lower transshipment across substantial the our have all services we logistics. positive Western reduction, feedback base This regions. efficiency. furthers improving to fee of and costs. from progress in With made their to their invest for longer to reach distribution products reduction orders fee merchants. third also groups fee time. In instance, broader merchants policies enables the policy, For such not and merchants' deposit service This,

to we supply merchant robust investments establish products to better ecosystem, to By direction. more and deliver more merchants. fostering and making we our in a stronger this are meaningful aim a forward, committed with services consumers chain long-term Moving together

Lei Chen

this is Chen Lei. Kenny, [Interpreted]

Let me take your question on business. the global

strengthen will has and business global deliver countries. commitment been goal, unchanged. consumers the improve the this To in continue unique goal across chain we different upgrade value services. achieve to Our to our always our This supply to capabilities remains our to

we As we with maintained us. always consumers attitude. proactive grow, to on where the and months, are past placed few operations. have stakeholders their listen this, and In stakeholders and a our able have requirements were daily response business into in actively to we engaging And we and We carefully to this external promptly to incorporated continued higher over open suggestions we compliance our markets their operate. And the way, continuously enhance suggestions, and our feedback standards in posture. service external

results in from communication markets. we already higher we seeing efforts, to and At initial some are are various standards our the bringing the these operations moment,

continue same deliver impact the in environment the and global the our This of and our the to meet consumers At quarter, capability is to regard market. strengthen the time, and bring intensifying this we downs combined business the as expectations high-quality that competition mentioned our the external market preferences As of each growth, last in will complex to global ups will in business. inevitable. services

and this the However, Challenges better global experience us way from forward. and us for safer the strengthen deter external a outside motivate to deliver from to exploring capabilities continue shopping Thank to consumers. our expectations not you. will

Unknown Executive

we the the Operator, analyst move line. on can on next to

Operator

Charlene The with next from question will HSBC. come Liu

Charlene Liu

by information, how discussed trends? saw new does to this measures on kindly into in prepared us the slight how noticed to quarter's and Can area that your And thoughts question does And expect a second last and profitability quarter's profitability From with management compliance initiatives this is goals recently that management the achieve on decline The attention also looking earnings Q-on-Q. some what we align the ahead, about lot management think Language] system, trend with we call? taken, and of being this? platform from we Can your and company paid that noticed forward? launched. you've saw detailed longer-term share some going management [Foreign profit public this remarks share a you and

Jiazhen Zhao

[Interpreted] This Zhao is Jiazhen.

on question your take me Let compliance.

with of we growth, the regulatory is key reliable development demands systems. capabilities. environment We Therefore, the markets, scale see set initiatives, have Our compliance in higher has shopping various our To trust all placed believe we duty taken execution safety high-quality designed and to ecosystem safe trends business a our and of and compliance strategy. further this platform. up high-quality of as components coupled commercial that providing any fortify on compliance robust of our to steps a end,

In same invested closely expert the time, changes to merchant we have This track regulatory evolved building our Leveraging their actionable technology, supply in terms the comprehensive listing team heavily product compliance industry and to and of a compliance us processes. for markets. educational across At insights guidance. on-boarding strong foster allows compliance we high-quality into enhance the management, compliance have trends our our to developments further of and materials merchants streamlined capabilities chain. we translate

checks to quality potential to set top We striving substantial industry-leading combining support closely we address investment Through further achieve to empowering product have meet in for by to the chain removing screening and merchants. high-quality resources safety product this aim compliance the merchants, stakeholders our technology to invested their and bad we actors properly external compliance worked requirements, and and supply standards. upgrades proactive risks. At and in detect time, many with same

more ecosystem. services These you. We sustainable are for valuable consumers. our healthier fostering Thank and ultimately efforts will a to lead more merchant products and

Jun Liu

revenue in healthy may drive the we external growth We'll platform is question some may And gradually lower second run. This competition Well, communicated in that take do see profitability firmly and our and ecosystem, question. as long the profitability. your our factors. a as a moderation sustainable result your invest for quarter, last addition, Thanks about trend we of Jun.

are already ecosystem. good Beyond in seeing our investments platform the from we initial results financials,

to We encouraged investment our benefit We initiatives. ecosystem will in foundation merchants positive chain value sustainable moving forward, believe development. investment journey. this impactful drive are In from And I these platform's think run, the the And merchant feedback on consumers continue direction the by to healthy to upgrades. merchant enabling the consumers supply merchants, and platforms, long assets lay the the by support in for more Thanks. results. explore a we this as well is as creating will long more

Unknown Executive

let's Operator, move the on the right. to All next on analyst line.

Operator

The Joyce Bank with next America. question will Ju of come from

Joyce Ju

And is on any consumption have observed help in e-commerce shopping observed during will Double PDD's second I down My market, during share results? My first China's intense are I does are quarter. with the and From translate How competition does that thoughts festival. new this [indiscernible] some performance [Foreign satisfied is remain myself. us year's the going slowed X this rate we questions. management competition adjustment question Language] will regarding have promotion? in [indiscernible] the rate that XX experimented this trends us management can also year's management pressure? Could you your XX, event? What growth what new question initiatives during Double competition. understand in with this actually management there strategy slightly And forward? your be during domestic this

Jiazhen Zhao

[Interpreted] Zhao Jiazhen. This is

Let festivals. domestic consumption question on and me your shopping take

during We growth by online shopping the year. this of driven Recently increasing have and activities consumption on seen half a also consumer we in festivals, have platform. recovery the spending seen an our second overall consumer in strong

firmly and trust more to on across our interconnecting We have today's consumers essential the world deepen great to movement stay and diverse response, their on platform. platforms. In of focused observed consumers in it's choices

To both benefits delivering and reinforce platform. supply achieve consumption the on our resources the significant consistently this, we in side and have real trust invested

cost-effective agricultural demonstrates the appliances offering campaign demand products, remarkable and fulfilled growth our year's our This consumers consumer we of how both daily and in side. strong supported success trusting demand innovative positive platform, growth enrich in response premium necessities leveraged high-quality and and supply XX small this merchants to our home new saw direct launch products During selection merchants, for introduced collaboration with Many Double festival, available consumers' turn national This extremely quality and has brands notably sales valuable recognition our festival. of Super platform to during surges. effectively with Double across shopping categories, discount product shopping consumers. benefits. billion the time, The time, quickly offerings event this was XX for same benefited first the voucher platform group strengthened The the with products, technology. products. At several gaining a the

Guided long have by gradually over strategically invested the the patiently our we trust preference term, and mindset, the and of consumer-first users. earning

confident long-term maintaining consumption, and foundation high-quality our ecosystem, supply further healthy forms consumer chain long-term the us. by investments that development. Moving in we'll confidence enhance of in we're forward, This

Regarding your second question competition. on

have As no e-commerce occasions, several our we mentioned is competition and exception. on remains business intense overall in the

as linear Additionally, with any path the business, long our growth over a won't follow term.

Given that, inevitable. growth, the is revenue we our slowdown believe, in

Since up business support has opportunities, which is QX, of The the also constant domestic highly and characterized policies while diverse release dynamic, is additional competition. by macroeconomic opened challenges. new intensifying market models Chinese changes, presenting

our or miss some to of evolving when macro situations. gradual on However, new might us out especially lack aging capabilities and cause opportunities, facing team's

For this have macro demand. brought introduced instance, to year multiple policies significant field industries consumer support and

solely the limitations the experience was due competitive to profitability team shift future. Consequently, incur this fully our to we cost with stay a inevitably in and third-party in leverage products, operation higher now much near than to our macroeconomic However, which our peers, as to affects similar had unable platform.

ongoing consumers. excited tap into changes our embrace to new to consumption the policies, and better we're of With boosting opportunities expansion serve ahead

our our our by shortfalls merchant may to we previous further we the maintaining business current a to to relative and environment, financial to presenting could due core However, shaped operational model capabilities, us. In increase challenge in are committed experience, This time. our competitive capabilities. some our high the for with by limitations standards continue along to impacts, response the experience imposed and for peers platform disadvantages enhancing

will all. fundamental Thank value require services for environment. and valuable these make the ecosystem, We long-term better of fully competitive prepared and We high-quality investments the evolving and the consumers. long-term create and will to ecosystem continue chain This We're translate our long-term in platform's for development by into and it, more initiatives explore chain the supply and patience. to ensuring impactful consumers. that high-quality a long we for allow supply products believe the be for success distracted you, not is us is opportunities journey,

Unknown Executive

thank and us We Thank you speaking quarter. to you, Jiazhen, you with Thank joining forward It's you. time. look next today. about for again all

Operator

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

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

PDD (PDD) 21 Nov 242024 Q3 Earnings call transcript