Three months after its last stellar performance, Pinduoduo has once again delivered impressive quarterly results. In the first quarter, the company's revenue grew by 131%, with net profit surging 202% year over year. Transaction services income, which soared by 327% to $44.36 billion, has surpassed online marketing services to become Pinduoduo's largest revenue source.
On Wednesday, May 22, Pinduoduo announced its financial results for the first quarter of 2024. The figures showed that the company's revenue for the quarter increased by 131% year over year to 86.81 billion yuan ($11.95 billion), exceeding market expectations of 76.86 billion yuan. Operating profit rose by 275% to 25.97 billion yuan, while net profit attributable to ordinary shareholders increased by 246% to 28 billion yuan. The non-GAAP adjusted net profit, which soared by 202% to 30.6 billion yuan, significantly outperformed the anticipated 15.53 billion yuan.
This marks the fifth consecutive quarter that Pinduoduo's earnings have exceeded market expectations.
The earnings report also revealed that Pinduoduo's earnings per ADS (American Depositary Share) after dilution were 18.96 yuan, up from 5.55 yuan in the same period in 2023, roughly doubling. The non-GAAP diluted earnings per ADS were 20.72 yuan, compared to 6.92 yuan in the same period last year. The net cash generated from operating activities in the first quarter was 21.07 billion yuan, significantly higher than the 1.34 billion yuan reported in the same period in 2023, primarily due to the increase in net profit.
Following the announcement, Pinduoduo's pre-market stock price in the U.S. initially fell by 8% but quickly recovered, currently up by 6.1%.
"In the first quarter, we continued to invest in key areas of our high-quality development strategy," said Liu Jun, CFO of Pinduoduo Holdings. "We are more focused on creating long-term value rather than short-term performance and will continue to invest heavily in the future."
Revenue Pillars: Transaction Services Take the Lead Pinduoduo attributed its revenue growth primarily to increases in online marketing services and transaction services income. Transaction services income, which jumped by 327% to 44.36 billion yuan, has now overtaken online marketing as Pinduoduo's biggest revenue generator. Specifically:
- Online marketing services and other income totaled 42.46 billion yuan, up 56% year over year.
- Transaction services income reached 44.36 billion yuan, a 327% increase year over year.
Costs Double as Business Grows With the substantial increase in revenue, Pinduoduo's total costs for the first quarter rose by 194% year over year to 32.69 billion yuan.
The increase in costs was mainly due to higher fulfillment expenses, payment processing fees, maintenance costs, and call center expenses. Specifically, in the first quarter:
- Total operating expenses were 28.14 billion yuan, up 44% year over year, mainly due to increased sales and marketing expenses;
- Sales and marketing expenses were 23.41 billion yuan, up 44% year over year, primarily due to increased spending on promotions and advertising campaigns;
- General and administrative expenses were 1.82 billion yuan, up 123% year over year, mainly due to increased staff-related costs;
- Research and development spending was 2.91 billion yuan, with an estimated 3.31 billion yuan, compared to 2.51 billion yuan in the same period in 2023.
