How to Speak Decently Nonsense? Just Look at Pinduoduo (3Q23 Transcript)
I have roughly summarized the meeting minutes of PDD's 3Q23 earnings conference. As usual, there was a lot of trash talk, and even the analysts didn't bother to ask too many questions. The conference call ended after only three questions.
The main information is that there was a brief mention of the trend of consumer upgrading on the platform, implying that the brand upgrade seems to be gaining momentum. In addition, the overseas business has expanded to 40 countries.
If you really want to know, the core information is as follows, but I recommend reading Dolphin Research's analysis report on the earnings release PDD: "Hall-level" momentum, only skyrocketing can pay tribute!
1. Core financial information:
2. Management's remarks
Seeing strong demand for consumer upgrading, and consumer upgrading is not only about quality, but price is also important.
Through regular promotions, PDD allows users to enjoy discounts that are only available during major promotions.
Investments: agricultural technology, supply chain, core research and development.
Overseas: In the early stages, but there has been substantial progress, helping Chinese factories connect directly with consumers. TEMU has now entered 40 countries.
This year is a year of intense competition, and our strategic direction is clear, emphasizing the efficient execution of a high-quality development strategy.
During Double Eleven, in addition to billions of subsidies, we also offered direct discounts on goods. Currently, there are still many imported goods being subsidized. Double Eleven saw strong consumer spending, with 620 million users benefiting from the billions of subsidies.
In the third quarter, we collaborated with over 100 domestic brands and conducted brand live broadcasts in the billions of subsidies channel. The growth rate of some brands has increased by up to 40 times in the past two years.
(There is too much unnecessary talk, writing it out is a waste of time)
3. Analyst Q&A
Q: How does management view the momentum shown by your strategic focus business in the past quarter? What is the most important key strategy? Please provide a detailed explanation of why agriculture is crucial to the platform. Can management tell us what key measures you have taken in the agricultural field to achieve growth?
A: First of all, on the supply side, we are strengthening our capabilities in agriculture. Looking ahead, we will continue to invest in agricultural technology and supporting infrastructure. This is to improve the overall quality of agricultural products sold on our platform.
At the same time, earlier this year, we launched a 10 billion ecosystem to support high-quality merchants and other ecosystem partners we work with. We are working hard to improve our platform governance, which has been one of my top priorities since taking office. We have made steady progress in areas such as protecting minors and product safety.
From the consumer side, our 10 billion dollar plan is making it easier for our consumers to access some high-value products. During the most recent check-in period, the number of users benefiting from the 10 billion plan exceeded 620 million.From the perspective of consumers, since the beginning of this year, we have been improving our ability to provide better services to users. In the long run, we hope to enhance users' trust in our platform and deepen our commitment to better service by improving customer satisfaction.
Issues with agricultural strategy: Last quarter, we launched the "Plentiful Harvest Season" campaign, which brought agricultural products from over 1,000 production areas directly to consumers nationwide. We allocated more platform resources to improve the quality of agricultural products and shopping experience on our platform.
For the first time, we connected farmers with suitable logistics resources to promote local specialty products to the national market, better meeting consumers' demand for high-quality, fresh, and healthy agricultural products.
At the same time, we understand that improving the supply chain is only one aspect of agricultural modernization. We also need to accelerate the adoption of agricultural technology innovation to improve productivity and product quality. In May of this year, we donated 100 million RMB to establish a special research fund at China Agricultural University to address key research needs in agriculture. In August, we were pleased to welcome Ivonne as an independent director to our board.
Ivonne is an expert in agriculture and food safety. With her, we will invest more targetedly in agricultural research. Our goal is to use cutting-edge research to solve practical problems in China.
Future agriculture will continue to be the cornerstone of our high-quality development strategy. We will continue to leverage our technological and platform resource advantages to connect the agricultural product supply chain, promote agricultural technology innovation and application, and create tangible benefits for our farmers and merchants by enabling more high-quality products to go directly from the farm to the table.
Q: How do you view the intensifying domestic competition? Can you share some information about overseas progress?
A: This year is a year of recovery and intensified competition. It is normal for peers to increase investment to stimulate consumption after macro support policies. There are many e-commerce platforms now, and competition is inevitable.
Regarding competition, there is no one-size-fits-all approach. We will enhance our core competitiveness and work with our ecological partners to create greater value for users.
In the third quarter, while continuing to enhance the "saving money" mindset, we have started to improve our service level, hoping to meet the upgraded consumption needs of users through this.
Whether it is supply-side or service-oriented real economy, we aim to help agriculture and manufacturing industries sell their products directly to domestic and overseas consumers.
Those who do well are prone to attacks in the market competition. For example, the short-selling report in early September was completely unfounded, and the history of the other party's short-selling reports is also very poor.
Our attitude is clear and focused, and we will vigorously execute our plans. We believe that ultimately, users will vote with their wallets.
Regarding overseas expansion: We are replicating our domestic experience overseas, creating new platforms and shopping experiences based on a flexible supply chain that connects factories and consumers directly. We have already expanded to more than 40 countries.
This is still in the very early stages. The team is still learning about the consumption needs in different countries, and the process is challenging yet interesting. We will continue to strive to make shopping more enjoyable for consumers worldwide.
Q: The 94% revenue growth, what contributed to it? What did you do right? What is the sustainability going forward?A: The main reason is the improvement in user sentiment and the implementation of high-quality development strategies. In the past quarter, China's economic growth exceeded expectations, demonstrating strong economic resilience. The growth of the PDD platform illustrates the growth potential of the Chinese economy. We have confidence in the Chinese market and there are many things we can do.
In the third quarter, there were no major promotions in the domestic market, but PDD focused on offering cost-effective products at low prices every day, continuously promoting a money-saving mindset. The cooperation with brands has also been effective, and the National Goods Festival has helped many domestic products gain popularity quickly.
Through our collaboration with various brands, we have achieved multiple goals by using policies to incentivize merchants to provide more cost-effective products and better services. The trust in our platform is growing stronger, and naturally, they are willing to increase their investment in the platform.
Short-term profitability is not our core focus; the key is to execute high-quality growth strategies. In the past quarter, we have increased investments in key areas such as promotions and services, strengthening the mindset of saving money and providing excellent service.
The results have been very good, with great potential for return on investment (ROI). We operate in a rapidly changing market environment, and our business execution may not necessarily align with the timing of earnings reports. Profitability may still fluctuate significantly.
Risk disclosure and statement in this article: Dolphin Research Disclaimer and General Disclosure
