PDD financial report analysis: Total revenue increased by 86%, net profit surged, continuing to increase investment in ecosystem construction

On the afternoon of August 26th, Pinduoduo released its second-quarter financial report for the period ending June 30, 2024. The report shows that the company's total revenue was 97.0595 billion yuan, achieving an 86% growth compared to the same period last year. In terms of net profit, the net profit attributable to common shareholders reached a high of 32.0094 billion yuan, a year-on-year increase of 144%. Excluding US GAAP, the net profit attributable to Pinduoduo's common shareholders was 34.4321 billion yuan, a 125% increase year-on-year. Overall, Pinduoduo achieved significant growth in revenue and net profit in the second quarter, demonstrating its strong business momentum.

From the specific business segments of Pinduoduo, its online marketing services and other services generated revenue of 49.1159 billion yuan (approximately 6.7586 billion US dollars), a 29% increase compared to 37.9328 billion yuan in the same period in 2023. At the same time, the transaction services segment achieved revenue of 47.9437 billion yuan (approximately 6.5973 billion US dollars), a significant increase of 234% compared to 14.3479 billion yuan in the same period in 2023.

In terms of expenses, Pinduoduo's sales and marketing expenses were 26.0491 billion yuan (approximately 3.5845 billion US dollars), a 48% increase compared to 17.5422 billion yuan in the same period in 2023.

Overall, Pinduoduo achieved significant growth in all business segments in the second quarter, with the transaction services segment showing particularly outstanding growth. Meanwhile, sales and marketing expenses also increased correspondingly, reflecting the company's active investment in business expansion and market promotion.

Regarding the performance in the second quarter, Pinduoduo stated that during the financial reporting period, the company continued to deepen the implementation of a high-quality development strategy, firmly invested in platform ecosystem construction, continuously improved consumer experience and service system, optimized the quality and efficiency of the upstream supply chain, and further met the diverse consumption needs of the widest range of users.

In addition, Chen Lei, Chairman of Pinduoduo Group and Co-CEO, clearly stated in the financial report that the overall scale of the platform has reached a considerable size, and perfecting ecosystem construction is not an overnight task. The management has reached a consensus to be prepared to sacrifice short-term profits and invest in the long term. Faced with the intensifying competition in the e-commerce industry this year, Pinduoduo platform will invest billions of resources to support new quality merchants, waive 10 billion yuan in fees for high-quality merchants in the next year, continuously improve the quality and efficiency of the supply chain, enhance ecosystem governance to cope with the increasingly fierce industry competition.

Based on the strategy of practicing "long-termism," in the second quarter of 2024, Pinduoduo's R&D investment reached 2.9 billion yuan, a 6% year-on-year increase, mainly due to a new round of investment in operations and R&D. Zhao Jiazhen, Executive Director and Co-CEO of Pinduoduo Group, explained that in order to further strengthen the governance of the merchant ecosystem, the platform optimized the process of merchant entry and product listing, actively inspected products that have been listed through technical means, combined with the rules team for detailed review, cracked down on illegal cheating merchants, and created a better operating environment for high-quality merchants "In the past quarter, we have become more determined on the path of high-quality development. We will continue to strengthen ecological construction, bring more high-quality and cost-effective products to consumers, and help agricultural areas and industrial belts become golden production areas, benefiting more high-quality agricultural products, domestic products, and industrial belt merchants," said Zhao Jiazhen.

It is worth mentioning that in the first half of this year, Pinduoduo's high-quality development strategy has entered a stage of deepening development. The platform continues to be consumer-demand-oriented, increasing support for high-quality merchants and brands, continuously upgrading logistics, after-sales services, and other service experiences, bringing benefits to both supply and demand sides.

According to the financial report, in the second quarter of this year, Pinduoduo's "Rural Cloud Action" has successively entered the fields of major agricultural areas, promoting seasonal fruits such as Xianju bayberries, Guangdong lychees, Shandong cherries, Yangshan peaches, and Xinjiang Hami melons to enter the cities from the villages. It has continuously promoted the branding of origin through billions in subsidies, flash sales, and group purchases.

In the second quarter, Pinduoduo's "Rural Cloud Action" continued to penetrate major agricultural areas, driving local agricultural abundance and income growth. (Photo by Li Yunfeng)

In mid-May this year, during the new lychee season, due to weather factors, the lychee production in major producing areas such as Guangdong and Hainan was significantly reduced, with varieties like Feizixiao experiencing a nearly 40% decrease in production, leading to a significant increase in market prices. In response to this situation, Pinduoduo's "Rural Cloud Action" quickly responded, closely cooperating with local merchants, implementing a billion-yuan subsidy policy for lychees from the source, and providing large subsidies and full cold chain logistics services, effectively helping consumers achieve "Lychee Freedom," enabling them to enjoy high-quality lychee products at more affordable prices."