2024-05-22 PDD Holdings Inc. (PDD) Q1 2024 Earnings Call Transcript

PDD Holdings Inc. (NASDAQ:PDD) Q1 2024 Earnings Conference Call May 22, 2024 7:30 AM ET

PDD Holdings Inc. (NASDAQ: PDD) 2024 年第一季度财报电话会议 2024 年 5 月 22 日上午 7:30 ET

Company Participants 公司参与者

Lei Chen - Chairman and Co-CEO

雷晨 - 主席兼联合首席执行官

Jiazhen Zhao - Executive Director and Co-CEO

赵家珍 - 执行董事兼联合首席执行官

Jun Liu - VP of Finance

刘军 - 财务副总裁

Conference Call Participants

会议电话参与者

Alicia Yap - Citigroup 艾莉西亚·叶 - 花旗集团

Yang Bai - CICC

杨白 - 中金公司

Kenneth Fong - UBS

Kenneth Fong - 瑞银

Operator 操作符

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings Inc. First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

女士们，先生们，感谢您们的耐心等待，欢迎参加 PDD Holdings Inc. 2024 年第一季度财报电话会议。[操作员指示] 请注意，今天的会议正在录音。

I would now like to hand the conference over to your host today. Sir, please go ahead.

我现在想把会议交给今天的主持人。先生，请继续。

Unidentified Company Representative

未识别的公司代表

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

谢谢你，操作员。大家好，感谢你们今天的参与。PDD Holdings 的财报已提前发布，并可在我们的网站 investor.pddholdings.com 以及通过 GlobeNewswire 服务获取。

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

在我们开始之前，我想请您参考我们在收益新闻稿中的安全港声明，该声明同样适用于本次电话会议，因为我们将会做出某些前瞻性陈述。此外，本次电话会议还包括对某些非公认会计原则（non-GAAP）财务指标的讨论。请参考我们的收益发布，其中包含非公认会计原则指标与公认会计原则指标的对账。

Joining us today on the call are Mr. Chen Lei, our Chairman and Co-Chief Executive Officer; Mr. Zhao Jiazhen, our Executive Director and Co-Chief Executive Officer, as well as Ms. Liu Jun, our VP of Finance. Lei and Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus. Jun will then walk us through our financial results for the first quarter ended March 21st -- 31st, 2024, and during the Q&A session, Lei and Jiazhen will answer questions in Chinese and will help translate. Please note that the English translation is for reference only and in case of any discrepancy, statement in the original language should prevail.

今天参加电话会议的有我们的董事长兼联合首席执行官陈雷先生，我们的执行董事兼联合首席执行官赵家珍先生，以及我们的财务副总裁刘军女士。雷先生和家珍先生将对我们过去一个季度的表现和战略重点做一些总体说明。刘军女士将带我们回顾截至 2024 年 3 月 21 日至 31 日的第一季度财务结果。在问答环节中，雷先生和家珍先生将用中文回答问题并提供翻译。请注意，英文翻译仅供参考，如有任何不一致，以原语言的表述为准。

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

现在我很高兴介绍我们的董事长兼首席执行官陈磊。陈，请开始。

Lei Chen 雷晨

Hello, everyone. Thank you all for joining our earnings call for the first quarter of 2024. 2023 was the first year on our journey towards high-quality development. We are encouraged by the positive feedback from our users and merchants and are more confident in our strategic direction. 2024 is a critical year to deepen our execution. In the first quarter, we benefited from an improving macro environment and achieved steady growth. Our total revenue reached RMB86.8 billion, which represents a 131% year-on-year increase.

大家好。感谢大家参加我们 2024 年第一季度的财报电话会议。2023 年是我们迈向高质量发展的第一年。我们受到用户和商家的积极反馈的鼓舞，对我们的战略方向更加自信。2024 年是深化我们执行力的关键年。在第一季度，我们受益于改善的宏观环境，实现了稳定增长。我们的总收入达到了 868 亿元人民币，同比增长 131%。

Looking ahead, we will continue to work on the fundamentals of our business through our investments in supporting high-quality consumption, broadening high-quality supply, and promoting a high-quality ecosystem. Our proactive transition to high-quality development will inevitably bring challenges and difficulties, but still we decided to embark on this journey and are determined to execute it well because we are seeing a few irreversible long-term market shifts.

展望未来，我们将继续通过投资支持高质量消费、拓宽高质量供应和促进高质量生态系统来巩固我们的业务基础。我们积极转型为高质量发展不可避免地会带来挑战和困难，但我们仍然决定踏上这段旅程，并决心将其执行好，因为我们看到了一些不可逆转的长期市场变化。

First of all, we clearly see a trend of consumption upgrade and in response to this, we are innovating our service offering to cover more consumption scenarios and at the same time actively engaging with our merchants to broaden our product selection. For example, this year, we are deepening our cooperation with top brands from around the world to bring a new product launch down to our platform. In addition to meeting consumers' demand for more savings and better services, we hope to deepen connections with our consumers and strengthening our platform with [Myshare] in new product categories and among new customer groups.

首先，我们清楚地看到消费升级的趋势。为此，我们正在创新我们的服务产品，以覆盖更多的消费场景，同时积极与我们的商家合作，扩大我们的产品选择。例如，今年，我们正在加深与全球顶级品牌的合作，将新产品发布带到我们的平台。除了满足消费者对更多节省和更好服务的需求，我们希望加深与消费者的联系，并通过[Myshare]在新产品类别和新客户群体中增强我们的平台。

High-quality consumption will not be possible without strong supply chain capabilities, and over the years, we have built out valuable experience across the entire e-commerce supply chain. Through technology innovation and investments in research and development, our supply chain know-how is transformed into easy-to-use tools and services to empower our merchants with cost-saving digital solutions. This measure has proven -- proved to be effective in terms of attracting more merchants to our platform, broadening our product selection and reducing product costs, all of which are essential to support high-quality consumption.

高质量消费离不开强大的供应链能力，多年来，我们在整个电子商务供应链中积累了宝贵的经验。通过技术创新和研发投资，我们的供应链专业知识转化为易于使用的工具和服务，以帮助我们的商家实现节省成本的数字解决方案。这一措施已被证明有效，吸引了更多商家加入我们的平台，扩大了我们的产品选择并降低了产品成本，这些都是支持高质量消费的关键。

And lastly, an ecosystem that encourages compliance. Business conduct is the foundation to long-term growth of our platform. As commerce integrates with digital technology at a record pace, consumers and regulators are holding e-commerce platforms accountable for higher standards and we are taking the initiative to build an industry-leading compliance program and to leverage our technology capabilities to empower SME businesses with our compliance know-how. This is to foster a healthy environment that attracts quality merchants that are willing to play by the rules and drive out bad actors thereby creating a positive feedback loop.

最后，一个鼓励合规的生态系统。商业行为是我们平台长期增长的基础。随着商业以创纪录的速度与数字技术融合，消费者和监管机构对电子商务平台提出了更高的标准，我们正在主动建立行业领先的合规计划，并利用我们的技术能力，借助合规知识赋能中小企业。这是为了营造一个健康的环境，吸引愿意遵守规则的优质商家，驱逐不良行为者，从而创造一个积极的反馈循环。

When it comes to consumer well-being and economic interest, we always stand behind the former. We are focused on building long-lasting trust with our consumers and not on short-term gains. We also adopt a similar long-term orientation in other aspects of our business. As a company that is still in the growth mode, we will continue to focus on long-term value creation and invest firmly into opportunities with great potential. We are not guided by short-term goals and this is also reflected in how we manage our global business.

当涉及到消费者福祉和经济利益时，我们始终站在前者一边。我们专注于与消费者建立持久的信任，而不是追求短期利益。我们在业务的其他方面也采取类似的长期导向。作为一家仍处于增长阶段的公司，我们将继续专注于长期价值创造，并坚定地投资于具有巨大潜力的机会。我们不受短期目标的指导，这也体现在我们如何管理全球业务上。

Our global business is still in the exploration stage and there's plenty of room for improvement. We are prepared to respond positively to challenges and we view these as important opportunities to improve ourselves. We are in this for the long term and we will not be distracted by short-term results. Instead, we will focus our efforts on building our key capabilities.

我们的全球业务仍处于探索阶段，还有很大的改进空间。我们准备积极应对挑战，并将这些视为提升自我的重要机会。我们是为了长期发展而努力，不会被短期结果分心。相反，我们将把精力集中在建设我们的关键能力上。

Firstly, supply chain capabilities. We will continue to roll out tailored fulfillment solutions in different markets to improve supply chain efficiency and reduce cost. We welcome quality merchants from around the world to join us in providing a rich variety of quality products for consumers worldwide.

首先，供应链能力。我们将继续在不同市场推出量身定制的履行解决方案，以提高供应链效率并降低成本。我们欢迎来自世界各地的优质商家加入我们，为全球消费者提供丰富多样的优质产品。

Secondly, legal and compliance capabilities. With the goal of building an industry-leading compliance program, we will make firm investment to create a safe and trustworthy shopping environment for our users. To uphold our compliance standards, we will conduct forward-looking research into laws and regulations in the market we operate and transform our know-how into tools that can be easily assessed at our merchants.

其次，法律和合规能力。我们旨在建立行业领先的合规程序，将进行坚定的投资，以为我们的用户创造一个安全可靠的购物环境。为了维护我们的合规标准，我们将对我们所运营市场的法律法规进行前瞻性研究，并将我们的专业知识转化为可以在我们的商家中轻松评估的工具。

非常特别！

And thirdly, service capabilities. In response to diverse needs and quality standards of global users, we will keep up our investments, technology and operations to improve overall user experience. As we bring more value to consumers and merchants around the globe, we are hopeful that our platform will be increasingly recognized and welcomed by local communities we serve. We do not expect this to be easy as we are prepared for investment over the long run.

第三，服务能力。为了满足全球用户多样化的需求和质量标准，我们将继续加大投资、技术和运营，以改善整体用户体验。随着我们为全球消费者和商家带来更多价值，我们希望我们的平台能够得到我们服务的当地社区越来越多的认可和欢迎。我们并不期望这会很容易，因为我们已准备好进行长期投资。

Finally, I would like to say that we are operating in a constantly evolving industry with competition and opportunities are both emerging at rapid pace. Competition can be intensifying in the past -- has been intensified in the past quarter, which will inevitably increase our expenses and affect some organic growth. On the other hand, new technologies and new markets also offer us tremendous opportunity for growth.

最后，我想说我们正处于一个不断发展的行业，竞争和机会都在快速出现。竞争在过去几个月中加剧，这不可避免地会增加我们的开支并影响一些有机增长。另一方面，新技术和新市场也为我们提供了巨大的增长机会。

At this moment, I want to revisit our first shareholder letter when the company went public. We are not a conventional company and we hope to show you the true colors of our company no matter how bumpy or rough the numbers may seem to be. Our business does not follow a linear path and our earnings will almost certainly fluctuate. Therefore, we suggest our shareholders not to measure our overall performance with results from a few quarters. Our financial performance may beat or miss market expectation at times, but as long as we keep focusing on long-term value creation and ultimately this short-term fluctuation will converge to our growing intrinsic value.

此刻，我想重温我们公司上市时的第一封股东信。我们不是一家传统公司，我们希望向您展示我们公司的真实面貌，无论数字看起来多么波动或粗糙。我们的业务并不遵循线性路径，我们的收益几乎肯定会波动。因此，我们建议我们的股东不要仅凭几个季度的结果来衡量我们的整体表现。我们的财务表现有时可能会超出或低于市场预期，但只要我们继续专注于长期价值创造，最终这种短期波动将会收敛到我们不断增长的内在价值。

And now I will hand it over to our Co-CEO, Jiazhen. Jiazhen, please.

现在我将把它交给我们的联合首席执行官，佳珍。佳珍，请。

Jiazhen Zhao 赵家珍

[Foreign Language] Thank you, Lei. Hello, everyone. This is Zhao Jiazhen. Thank you all for joining our earnings call for the first quarter of 2024.

谢谢你，雷。大家好。我是赵佳珍。感谢大家参加我们 2024 年第一季度的财报电话会议。

This year is a year for consumption promotion. The consumer market in the first quarter has made a good start. Online consumption remains strong and online retail penetration continues to rise. We proactively responded to the consumption promotion policies and launched a series of promotional activities to meet users' shopping needs during the spring festival and other seasonal events. This further relieved consumption potential and benefits merchants. Driven by both macro environment and our effective promotional events, we achieved solid growth in the first quarter. We are confident in the consumer market in China.

今年是消费促进年。第一季度的消费市场开局良好。在线消费保持强劲，在线零售渗透率持续上升。我们积极响应消费促进政策，推出了一系列促销活动，以满足用户在春节和其他季节性活动期间的购物需求。这进一步释放了消费潜力，惠及商家。在宏观环境和我们有效的促销活动的双重推动下，我们在第一季度实现了稳健增长。我们对中国的消费市场充满信心。

As Lei mentioned, this year we will step up our investment to deepen the execution of high-quality development strategy. High-quality development is our long-term strategy. Going forward, we will continue to direct our efforts into three key areas which are consumption, supply, compliance and platform ecosystem while offering more savings to consumers. We also focus on delivering high-quality supply and services to more consumers.

正如雷所提到的，今年我们将加大投资，深入执行高质量发展战略。高质量发展是我们的长期战略。未来，我们将继续把精力集中在消费、供应、合规和平台生态系统这三个关键领域，同时为消费者提供更多的节省。我们还专注于为更多消费者提供高质量的供应和服务。

Guided by this strategy, on the consumer side, in the first quarter, we remain committed to putting consumers first. Focusing on more savings and better services, we continue to give back the most tangible rewards to our users. For example, we step up our investment in a RMB10 billion program and partner with millions of quality merchants during the spring festival shopping season and the May Day shopping festival to fulfill consumers' demand for more savings.

在这一战略的指导下，在消费者方面，我们在第一季度继续致力于以消费者为中心。专注于更多的节省和更好的服务，我们继续为用户提供最实在的回报。例如，我们加大了对 100 亿元人民币项目的投资，并在春节购物季和五一购物节期间与数百万优质商家合作，以满足消费者对更多节省的需求。

As for better services, the consumer goods trading program is one of the initiatives driving this year's nationwide consumption promotional efforts. We have been actively working with third-party service platforms to provide users with convenient trading services covering mobile phones, electronics, air conditioners, refrigerators, washing machines, TVs and other categories. Today, we have served more than 10 million customers. Our trading services also extend to popular products under the RMB10 billion program, which offered consumers attractive discounts. As we make it even easier for consumers to upgrade their consumption, their shopping experience is further enhanced.

关于更好的服务，消费品交易计划是推动今年全国消费促销工作的举措之一。我们一直在积极与第三方服务平台合作，为用户提供涵盖手机、电子产品、空调、冰箱、洗衣机、电视等类别的便捷交易服务。今天，我们已经服务了超过 1000 万客户。我们的交易服务还扩展到 100 亿人民币计划下的热门产品，为消费者提供了吸引人的折扣。随着我们让消费者更容易升级消费，他们的购物体验得到了进一步提升。

In addition, we wanted to make sure that consumers in remote areas could also enjoy the free shipping shopping experience. So, in the first quarter, we upgraded our shopping and shipping services and pioneered free shipping to villages in remote provinces. Our efforts brought last-mile delivery posts even closer to the consumers, with most now within two kilometers radius. Such innovation led to a rapid year-on-year growth of order volume from these regions. We're happy to see that our service improvements are further driving our growth.

此外，我们希望确保偏远地区的消费者也能享受免运费购物体验。因此，在第一季度，我们升级了购物和运输服务，并率先在偏远省份的村庄提供免运费服务。我们的努力使最后一公里的配送点更靠近消费者，现在大多数配送点距离消费者在两公里范围内。这种创新导致这些地区的订单量实现了快速的同比增长。我们很高兴看到我们的服务改进进一步推动了我们的增长。

On the supply side, we continue our investment to support and grow together with the brands and merchants. In the first quarter, we focused on the theme of trending national brands and allocated platform resources such as traffic support to high-quality merchants. This not only ensures the high-quality supply but it also help boost our merchants' businesses.

在供应方面，我们继续投资以支持和与品牌及商家共同成长。在第一季度，我们专注于流行国家品牌的主题，并将平台资源如流量支持分配给优质商家。这不仅确保了高质量的供应，还帮助提升了商家的业务。

For example, during the spring festival shopping season, a dairy product brand launched a limited edition offering for the Years of the Dragon inspired by New Year traditions and chose our platform for the product launch. With the support of our platform's resources, the product quickly gained popularity and became a top seller in the dairy category.

例如，在春节购物季，一家乳制品品牌推出了一款受新年传统启发的限量版产品，灵感来自龙年，并选择我们的平台进行产品发布。在我们平台资源的支持下，该产品迅速获得了人气，成为乳制品类别的畅销商品。

模仿的结果，但别人是有名有姓的。

Agriculture is our foundation. We are committed to invest in this important sector over the long run. In the first quarter, we continue to support agriculture technology innovation by launching the fourth smart agriculture competition and the second Duo Duo Academy growing competition. This helps to explore new productive forces in agriculture.

农业是我们的基础。我们致力于长期投资这个重要领域。在第一季度，我们继续通过举办第四届智能农业竞赛和第二届多多学院成长竞赛来支持农业技术创新。这有助于探索农业中的新生产力。

At the same time, our agriculture cloud initiative has been steadily advancing in production regions such as Anhui, Yunnan, Guangxi and Shandong to bring e-commerce training and one-on-one consultation to local farmer merchants. In addition, during our spring festival shopping season, we collaborated with more than 1,000 quality agricultural production regions across the nation, which not only brought more specialty agricultural products to our platform but also boosts farmers' income. During the May Day shopping festival, we launched dedicated live-streaming sessions under the RMB10 billion program for agriculture products, with a particular focus on Yunnan agriculture specialties such as blueberries and flowers. We supported the scaling of regional production and the branding of local agricultural products.

与此同时，我们的农业云计划在安徽、云南、广西和山东等生产地区稳步推进，为当地农民商户提供电子商务培训和一对一咨询。此外，在我们的春节购物季期间，我们与全国超过 1,000 个优质农业生产地区合作，不仅为我们的平台带来了更多特色农产品，还提高了农民的收入。在五一购物节期间，我们在 100 亿元人民币的农业产品计划下推出了专门的直播活动，特别关注云南的农业特产，如蓝莓和花卉。我们支持区域生产的规模化和地方农产品的品牌化。

A high-quality ecosystem is critical to our transformation to high-quality development. Only a healthy ecosystem with well-designed platform policies can support the long-term sustainable growth of an e-commerce platform. In the first quarter, we continue to invest in the RMB10 billion ecosystem initiative and carry out a series of compliance projects. For example, our trust and safety team utilized the technological means to further enhance the efficient automated review of product information on our platform.

高质量的生态系统对我们向高质量发展转型至关重要。只有健康的生态系统和精心设计的平台政策才能支持电子商务平台的长期可持续增长。在第一季度，我们继续投资 100 亿人民币的生态系统计划，并开展一系列合规项目。例如，我们的信任与安全团队利用技术手段进一步增强了对平台上产品信息的高效自动审核。

As an e-commerce platform serving a vast and diverse consumer base, we also actively utilize our own unique resources to take on more social responsibilities. Since the beginning of this year, we have continued to support the Key to Home nationwide campaign, caring for the elderly and help law seniors return home safely. Around the world Reading day, we launched the Seventh Duo Duo Reading Month and provided direct discount to tens of thousands of book products, enabling more people to enjoy the benefits of knowledge sharing.

作为一个服务于广泛多样消费者群体的电子商务平台，我们也积极利用自身独特的资源承担更多社会责任。自今年年初以来，我们持续支持全国性的“回家钥匙”活动，关心老年人并帮助他们安全回家。在全球阅读日，我们推出了第七届多多阅读月，并对数万种图书产品提供直接折扣，使更多人能够享受知识分享的好处。

假。

Our high-quality development strategy is a long-term, massive and complex project. We will bring together the efforts and resources from all ecosystem participants to deepen our execution and create more value for our consumers and merchants.

我们的高质量发展战略是一个长期、大规模和复杂的项目。我们将汇聚所有生态系统参与者的努力和资源，深化我们的执行，为我们的消费者和商家创造更多价值。

Now let me hand it over to Jun. She will provide you with an update on our financial performance in the first quarter.

现在我把时间交给 Jun。她将为您提供我们第一季度财务表现的更新。

Jun Liu 刘俊

Thank you, Jiazhen. Hello, everyone. Let me walk you through our financial performance for the first quarter ended March 31st, 2024. In terms of income statements, in the first quarter, our total revenues increased 131% year-over-year to RMB86.8 billion. This was mainly driven by an increase in revenues from online marketing services and transaction services. Revenues from online marketing services and others for RMB42.5 billion this quarter, up 56% from the same quarter of 2023. Revenues from transaction services were RMB44.4 billion, up 327% from the same quarter last year.

谢谢你，佳珍。大家好。让我为大家介绍一下截至 2024 年 3 月 31 日的第一季度财务表现。在收入报表方面，第一季度我们的总收入同比增长 131%，达到 868 亿元人民币。这主要是由于在线营销服务和交易服务收入的增加。本季度在线营销服务及其他收入为 425 亿元人民币，比 2023 年同季度增长 56%。交易服务收入为 444 亿元人民币，同比增长 327%。

Moving on to costs and expenses. Our total cost of revenues increased 194% from RMB11.1 billion in Q1 2023 to RMB32.7 billion this quarter, mainly due to increase in fulfillment fees, payment processing fees, maintenance cost and call center expenses. On a GAAP basis, total operating expenses this quarter increased 44% to RMB28.1 billion from RMB19.6 billion in the second quarter of 2023. On a non-GAAP basis, total operating expenses increased to RMB25.6 billion this quarter from RMB18.1 billion in Q1 2023.

接下来谈谈成本和费用。我们的总收入成本从 2023 年第一季度的人民币 111 亿元增加了 194%，达到本季度的人民币 327 亿元，主要由于履约费用、支付处理费用、维护成本和呼叫中心费用的增加。在 GAAP 基础上，本季度的总运营费用从 2023 年第二季度的人民币 196 亿元增加 44%，达到人民币 281 亿元。在非 GAAP 基础上，本季度的总运营费用从 2023 年第一季度的人民币 181 亿元增加到人民币 256 亿元。

In the fourth quarter, we invested decisively in key strategic initiatives such as giving back to the consumers, investing in our service offerings, promoting brand awareness, and R&D. Our total non-GAAP operating expenses as a percentage of total revenue this quarter was 29% compared to 48% in the same quarter last year.

在第四季度，我们果断投资于关键战略举措，例如回馈消费者、投资我们的服务产品、提升品牌知名度和研发。本季度我们的总非 GAAP 运营费用占总收入的百分比为 29%，而去年同期为 48%。

Looking to specific expense items, our non-GAAP sales and marketing expenses this quarter were RMB22.7 billion, up 44% versus the same quarter last year. Throughout the past quarter, we continue to give back to consumers over a series of seasonal promotion campaigns and increased advertising to promote our brands.

针对特定的费用项目，我们本季度的非 GAAP 销售和营销费用为 227 亿元人民币，比去年同期增长了 44%。在过去的一个季度中，我们继续通过一系列季节性促销活动和增加广告投入来回馈消费者，推广我们的品牌。

On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenues this quarter was 26% versus 42% for the same quarter last year. Our non-GAAP general and administrative expenses were RMB572 million versus RMB338 million in the same quarter of 2023. Our research and development expenses were RMB2.3 billion this quarter on a non-GAAP basis and RMB2.9 billion on a GAAP basis, up 16% year-over-year.

在非 GAAP 基础上，我们本季度的销售和营销费用占收入的百分比为 26%，而去年同期为 42%。我们的非 GAAP 一般和行政费用为人民币 5.72 亿元，而 2023 年同期为人民币 3.38 亿元。我们的研发费用在非 GAAP 基础上为人民币 23 亿元，在 GAAP 基础上为人民币 29 亿元，同比增长 16%。

Technologies are the core of our high-quality development strategy. We will continue our investment in R&D to provide our users with a more satisfying shopping experience, improve supply chain efficiency, and to build a robust compliance program. On a GAAP basis, operating profit for the quarter was RMB26 billion versus RMB6.9 billion in the same quarter last year. Non-GAAP operating profit was RMB28.6 billion versus RMB8.5 billion in the same quarter last year. Non-GAAP operating profit margin was 33% this quarter, compared with 22% for the same quarter last year.

技术是我们高质量发展战略的核心。我们将继续投资于研发，为用户提供更满意的购物体验，提高供应链效率，并建立健全的合规程序。在 GAAP 基础上，本季度的营业利润为 260 亿元人民币，而去年同期为 69 亿元人民币。非 GAAP 营业利润为 286 亿元人民币，而去年同期为 85 亿元人民币。非 GAAP 营业利润率本季度为 33%，而去年同期为 22%。

1块钱的广告赚2块钱。

Net income attributable to ordinary shareholders was RMB28 billion for the quarter compared to the RMB8.1 billion in the same quarter last year. Basic earnings per ADS was RMB20.33 and the low earnings per ADS was RMB18.96 versus basic earnings per ADS of RMB6.13 and diluted earnings per ADS of RMB5.55 in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders was RMB30.6 billion versus RMB10.1 billion in the same quarter last year. Non-GAAP diluted earnings per ADS was RMB20.72 versus RMB6.92 in the same quarter of 2023.

归属于普通股东的净收入为 280 亿元人民币，与去年同期的 81 亿元人民币相比。每 ADS 的基本收益为 20.33 元人民币，低收益为 18.96 元人民币，而 2023 年同季度的每 ADS 基本收益为 6.13 元人民币，稀释收益为 5.55 元人民币。归属于普通股东的非 GAAP 净收入为 306 亿元人民币，而去年同期为 101 亿元人民币。非 GAAP 稀释每 ADS 收益为 20.72 元人民币，而 2023 年同季度为 6.92 元人民币。

As Lei mentioned, our business does not follow a linear path. This quarter's financial data does not represent the future. Fluctuations are inevitable. We suggest investors not to forecast our growth solely based on results from a few quarters.

正如雷所提到的，我们的业务并不遵循线性路径。本季度的财务数据并不代表未来。波动是不可避免的。我们建议投资者不要仅仅根据几个季度的结果来预测我们的增长。

That completes the income statement. Now let me move on to cash flow. Our net cash generated from operating activities was RMB21.1 billion compared with RMB1.3 billion in the same quarter last year. As of March 31st, 2024, we have RMB242.1 billion in cash, cash equivalents and short-term investments.

这完成了收入声明。现在让我继续谈谈现金流。我们来自经营活动的净现金为 211 亿元人民币，而去年同期为 13 亿元人民币。截至 2024 年 3 月 31 日，我们拥有现金、现金等价物和短期投资 2421 亿元人民币。

Thank you. This concludes my prepared remarks.

谢谢。这是我准备的发言的结束。

Unidentified Company Representative

未识别的公司代表

Thank you, Jun. Now let's move on to the Q&A session. In today's Q&A session, Lei, Jiazhen and Jun will take questions from analysts on the line. We could take a maximum of two questions from each analyst. Lei and Jiazhen will answer questions in Chinese and will help translate for convenience purposes.

谢谢你，Jun。现在我们进入问答环节。在今天的问答环节中，Lei、Jiazhen 和 Jun 将回答在线分析师的问题。我们每位分析师最多可以提两个问题。Lei 和 Jiazhen 将用中文回答问题，并会提供翻译以方便理解。

Operator, we are open for questions.

操作员，我们欢迎提问。

Question-and-Answer Session

问答环节

Operator 操作符

[Operator Instructions] Your first question comes from Alicia Yap from Citigroup. Please ask your questions.

[操作员说明] 您的第一个问题来自花旗集团的 Alicia Yap。请提出您的问题。

Alicia Yap 阿莉西亚·叶

Hi, thank you. [Foreign Language] Thanks, management, for taking my questions. Congrats on the strong results. Two questions. First is regarding the domestic competition. So over the past year, we have seen e-commerce platform actively adjusting their strategies in terms of the pricing and service. Can management share your view on how you evaluate the competitive landscape? In such an environment, what would be the strategic focus for Pinduoduo business going forward?

嗨，谢谢。感谢管理层回答我的问题。恭喜你们取得了强劲的业绩。两个问题。第一个是关于国内竞争的。在过去一年中，我们看到电子商务平台积极调整他们在定价和服务方面的策略。管理层能否分享一下你们对竞争格局的看法？在这样的环境下，拼多多未来的战略重点将是什么？

Second question is related to compliance. I think we noticed on the recent earnings call, management spend quite a bit of time talking about compliance-related matters. Obviously, markets is also paying close attention to the work that you are doing in this area. Can management explain a little bit more about the efforts you have made so far and what goals you wanted to achieve? Thank you.

第二个问题与合规性有关。我想我们在最近的财报电话会议上注意到，管理层花了相当多的时间讨论与合规相关的事项。显然，市场也在密切关注你们在这一领域所做的工作。管理层能否详细说明一下你们迄今为止所做的努力以及你们希望实现的目标？谢谢。

Lei Chen 雷晨

[Foreign Language] Hi, Alicia, this is Chen Lei. Let me take your question. And regarding your first question on strategy and competition, as for competition, we find that consumers are getting used to making purchases from different platforms. And before they decide on which platform to choose from, to shop from, consumers compare the overall shopping experience across different platforms in a few areas. For example, on product selection, pricing, and also on services. And given this trend during the first quarter, we are seeing that our industry peers have significantly stepped up their efforts.

嗨，艾丽西亚，我是陈雷。让我来回答你的问题。关于你第一个问题的战略和竞争，关于竞争，我们发现消费者越来越习惯于从不同的平台进行购买。在他们决定选择哪个平台购物之前，消费者会在几个方面比较不同平台的整体购物体验。例如，在产品选择、定价以及服务方面。鉴于这一趋势，在第一季度，我们看到我们的行业同行显著加大了他们的努力。

And we welcome healthy competition. And in response to competition, we always put our consumers first. Our survival depends on the value we create for our users. And with our continued investments over the years, we are very pleased to see that our value proposition of more savings and better services is being increasingly recognized and accepted by our consumers. But at the same time, we also realized that consumer demand is constantly changing and we must do our best to keep up with it.

我们欢迎健康的竞争。面对竞争，我们始终将消费者放在首位。我们的生存依赖于我们为用户创造的价值。随着多年来的持续投资，我们很高兴看到我们的价值主张——更多的节省和更好的服务——正越来越受到消费者的认可和接受。但与此同时，我们也意识到消费者需求在不断变化，我们必须尽力跟上这一变化。

And currently, consumer demands are becoming more rational and also more diversified. And this means in addition to offering more savings, we are also expected to meet consumers' need for higher quality products and also more varied consumption scenarios. And therefore, on top of deepening our more savings and better services capabilities. We are also working on boosting the supply of high-quality products on our platform. And by improving the overall shopping experience, we hope we can further deepen our users' trust in us.

目前，消费者的需求变得更加理性和多样化。这意味着除了提供更多的节省外，我们还需要满足消费者对更高质量产品和更多样化消费场景的需求。因此，在深化我们的节省和更好服务能力的基础上，我们还在努力提升平台上高质量产品的供应。通过改善整体购物体验，我们希望能够进一步加深用户对我们的信任。

And regarding your second question on compliance, as our business grows, consumers and regulatory bodies are holding us accountable for ever higher compliance requirements and also on the merchants doing business with us. And in order to create a trustworthy shopping environment for our users, compliance is an area where we're committed to improve and where we have invested significant resources over the past few quarters. Major regulatory frameworks around the world are evolving and new laws and regulations are being introduced. And therefore we see compliance capability as an important aspect of our high-quality development strategy and also compliance capabilities as one of our core capabilities of our platform.

关于您第二个问题的合规性，随着我们的业务增长，消费者和监管机构对我们提出了越来越高的合规要求，同时也对与我们合作的商家提出了要求。为了为我们的用户创造一个值得信赖的购物环境，合规性是我们致力于改善的领域，并且在过去几个季度我们在这方面投入了大量资源。全球主要的监管框架正在演变，新的法律法规也在不断出台。因此，我们将合规能力视为我们高质量发展战略的重要方面，并将合规能力视为我们平台的核心能力之一。

And during last quarter's earnings call, we also communicated that, with the learning method, we are actively engaging with regulatory parties in various countries. And during this process, we are proactively strengthening our compliance capabilities. We are also investing heavily in researching and understanding the regulations of each market, and we have dedicated teams to apply these research findings to all aspects of our business.

在上个季度的财报电话会议中，我们还传达了通过学习方法，我们正在积极与各国的监管方进行沟通。在此过程中，我们正在主动加强我们的合规能力。我们还在大量投资于研究和理解每个市场的法规，并且我们有专门的团队将这些研究成果应用于我们业务的各个方面。

And our initiatives in the compliance area not only cover those regulations related to our platform's own operations, for example, data-related regulations, but it also include those related to merchant operations as well, for example, product compliance and consumer protection. And at the same time, we're also providing the necessary incentives for our small-sized and medium-sized merchants to conduct their businesses in a more compliant and high-quality manner, which benefits the sustainable development of our platform ecosystem.

我们的合规领域的举措不仅涵盖与我们平台自身运营相关的法规，例如数据相关法规，还包括与商户运营相关的法规，例如产品合规和消费者保护。同时，我们也为中小型商户提供必要的激励，以便他们以更合规和高质量的方式开展业务，这有利于我们平台生态系统的可持续发展。

And the growing high-quality merchant base will bring more quality product offerings onto our platforms and while compliant operations and a healthy ecosystem are fundamental to long-term development of our platforms, both of which will support us in better satisfying consumers' diverse needs for high-quality consumption and thereby forming a virtuous cycle. And this is my view on compliance matters. Thank you.

不断增长的高质量商家基础将为我们的平台带来更多优质产品供应，而合规运营和健康生态系统是我们平台长期发展的基础，这两者将帮助我们更好地满足消费者对高质量消费的多样化需求，从而形成良性循环。这是我对合规问题的看法。谢谢。

Alicia Yap 阿莉西亚·叶

Thank you. 谢谢。

Unidentified Company Representative

未识别的公司代表

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

操作员，我们可以继续下一个在线分析师。

Operator 操作符

Thank you. Your next question comes from Yang Bai with CICC. Please ask your question.

谢谢。您的下一个问题来自中金公司的杨白。请提问。

Yang Bai 杨白

[Foreign Language] I have two questions. The first one is about the growth. The company delivered decent top-line growth for this quarter. Please can the management share your thoughts on the growth potential of the business? Is there still room to grow? How should we think about its growth rate going forward? And my second question is about the global business. Could the management talk a bit more about your latest thinking around the strategy of your global business? How would this business look like in five years? Thank you.

我有两个问题。第一个是关于增长的。公司在本季度实现了不错的收入增长。管理层能否分享一下对业务增长潜力的看法？还有增长的空间吗？我们应该如何看待未来的增长率？我的第二个问题是关于全球业务的。管理层能否多谈谈你们对全球业务战略的最新思考？五年后这个业务会是什么样子？谢谢。

Jun Liu 刘俊

Hi Bai Yang, this is Jun. Thanks for your questions. I will take your first question about the growth. Well, rather than being captivated by short-term financial results, we have always focused on long-term investments and creating long-lasting value. And in the long run, we still see many areas to improving the consumption market. The consumption market actually offers plenty of opportunities for platforms and merchants.

嗨，白杨，我是俊。感谢你的提问。我将回答你的第一个问题，关于增长。我们一直专注于长期投资和创造持久价值，而不是被短期财务结果所吸引。从长远来看，我们仍然看到消费市场有许多改进的领域。消费市场实际上为平台和商家提供了大量机会。

And in addition to the potential of the overall consumer market, we also see that the online retail industry is growing quickly. E-commerce infrastructure continues to improve and new e-commerce models continue to emerge. We are actively innovating and exploring new models to create greater value for our consumers. In the long term, we believe there's still large potential in online retail penetration. We will keep improving our services to consumers.

除了整体消费市场的潜力外，我们还看到在线零售行业正在快速增长。电子商务基础设施不断改善，新的电子商务模式不断涌现。我们正在积极创新和探索新模式，以为消费者创造更大的价值。从长远来看，我们相信在线零售渗透仍然有很大的潜力。我们将继续改善对消费者的服务。

From the merchant side, we are also improving the scope and value of our services. We continue to allocate resources to support high-quality merchants who are willing to do business properly. By doing so, we hope to grow together with the merchants and further broaden the selection of quality production of our platform. A positive feedback loop is achieved when these factors work together. In such a rising industry, we need to keep our heads down and focus on execution. Faced with more competition, our constant focus is to deliver more value for our consumers and merchants. We believe that the value we create for consumers and merchants will ultimately be reflected in our financial results. Thank you.

从商家方面来看，我们也在改善服务的范围和价值。我们继续分配资源，以支持愿意认真做生意的高质量商家。通过这样做，我们希望与商家共同成长，进一步拓宽我们平台上优质产品的选择。当这些因素共同作用时，就会形成一个积极的反馈循环。在这样一个蓬勃发展的行业中，我们需要低头专注于执行。面对更多的竞争，我们始终关注为消费者和商家提供更多的价值。我们相信，我们为消费者和商家创造的价值最终会反映在我们的财务业绩中。谢谢。

Lei Chen 雷晨

[Foreign Language] Hi, Bai Yang. This is Lei. Let me take your question on a global business strategy. And first of all, our global business is still quite new and we are working very hard to grow the business in a high-quality way, while at the same time still learning more about new business model. And, we are a company that focuses heavily on execution and after setting a strategic direction, we'll do our best to execute.

嗨，白杨。我是雷。让我来回答你关于全球商业战略的问题。首先，我们的全球业务仍然相当新，我们正在努力以高质量的方式发展业务，同时还在学习更多关于新商业模式的知识。我们是一家非常注重执行的公司，在设定战略方向后，我们会尽力去执行。

Looking ahead, we will continue to focus on enhancing our supply chain capabilities, our service capabilities and compliance capabilities. And in terms of supply chain, our goal is to further extend and deepen our supply chain to connect with high-quality merchants and high-quality suppliers around the world and to further broaden the product offerings on our platforms. And at the same time, we'll improve the efficiency of the supply chain to make it easier for merchants to sell their products and also to lower their cost of doing business. And therefore we can -- all consumers and merchants worldwide will be able to benefit from this.

展望未来，我们将继续专注于增强我们的供应链能力、服务能力和合规能力。在供应链方面，我们的目标是进一步延伸和深化我们的供应链，以便与全球高质量的商家和高质量的供应商连接，并进一步拓宽我们平台上的产品供应。同时，我们将提高供应链的效率，使商家更容易销售他们的产品，并降低他们的经营成本。因此，全球所有消费者和商家都将能够从中受益。

And in terms of service capabilities, we are exploring different fulfillment solutions to improve efficiency and also to serve more diverse consumption scenarios. And in addition, we are also leveraging our technology capabilities to improve our customer service and the overall shopping experience.

在服务能力方面，我们正在探索不同的履行解决方案，以提高效率并满足更多样化的消费场景。此外，我们还利用我们的技术能力来改善客户服务和整体购物体验。

And as for compliance, we have talked about it earlier on this call that this is the key to the high quality and sustainable development of our platforms and it is also the foundation for creating a safe shop environment for our users. And we will continue to invest firmly in this area.

关于合规性，我们在本次通话中早些时候提到过，这是我们平台高质量和可持续发展的关键，也是为用户创造安全购物环境的基础。我们将继续在这一领域坚定投资。

And finally, the purpose of us doing all these investments is always to bring more quality products at affordable prices to consumers worldwide and to offer them a safe, enjoyable and unique shopping experience.

最后，我们进行所有这些投资的目的是始终为全球消费者提供更多高质量的产品，以实惠的价格，并为他们提供安全、愉快和独特的购物体验。

Unidentified Company Representative

未识别的公司代表

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

而且，操作员，我们继续下一个在线分析师。

Operator 操作符

Thank you. Your next question comes from Kenneth Fong from UBS. Please ask your question.

谢谢。您的下一个问题来自瑞银的 Kenneth Fong。请问您的问题。

Kenneth Fong 方凯宁

[Foreign Language] Thank you management for taking my question. I have two questions. The first is on profitability. The company can still achieve profitability growth in the first quarter despite intensified competition. We are also seeing good operating leverage in terms of sales and marketing expenses. Does it mean the company is slowing down the investment in marketing? More broadly, can management talk about your plan in resources allocation?

感谢管理层回答我的问题。我有两个问题。第一个是关于盈利能力的。尽管竞争加剧，公司在第一季度仍能实现盈利增长。我们在销售和营销费用方面也看到了良好的经营杠杆。这是否意味着公司正在减缓对营销的投资？更广泛地说，管理层能否谈谈你们在资源分配方面的计划？

看上去是单纯的使用广告，跟汽车保险的策略有点类似，用最简单的策略打开局面。

And my second question is on agriculture strategy. Regarding agriculture, could management share how you think about the growth potential of agricultural product category? And also how do you evaluate your key competitive advantage in this area? Thank you.

我的第二个问题是关于农业战略的。关于农业，管理层能否分享一下你们对农业产品类别增长潜力的看法？此外，你们如何评估在这一领域的关键竞争优势？谢谢。

Jun Liu 刘俊

Hi, Kenny, thanks for your question. This is Jun. Let me first answer your question about profitability. Well, regarding profitability, we mentioned in our prepared remarks that the company's business does not follow a linear path. It will beat market expectation in some quarters and lease expectation orders. We suggest investors not to forecast our future growth completely based on results from a few quarters. We always focus on the long-term growth of the company's intrinsic value and we're not smooth out short-term financial data.

嗨，肯尼，谢谢你的问题。我是俊。首先让我回答你关于盈利能力的问题。关于盈利能力，我们在准备的发言中提到公司的业务并不是线性发展的。在某些季度，它会超出市场预期，而在其他季度则会低于预期。我们建议投资者不要完全根据几个季度的结果来预测我们的未来增长。我们始终关注公司内在价值的长期增长，而不是平滑短期财务数据。

In business execution, we compelled return of investment in different markets and make prudent plans for a resources allocation. We'll not increase or decrease in expense items solely based on a preset budget. The company's investment in each quarter depends on the specific investment opportunities we see in the market. Currently, we are still in growth phase. If we seek value-creation opportunities in the future, we will investment firmly. These investments might bring fluctuations to short-term profitability, but will help us grow intrinsic value in the long term run. This is our view on profitability. Thank you.

在业务执行中，我们在不同市场上强制实现投资回报，并为资源分配制定审慎的计划。我们不会仅仅基于预设预算来增加或减少费用项目。公司的季度投资取决于我们在市场上看到的具体投资机会。目前，我们仍处于增长阶段。如果我们在未来寻求创造价值的机会，我们将坚定投资。这些投资可能会给短期盈利带来波动，但将有助于我们在长期内增长内在价值。这是我们对盈利能力的看法。谢谢。

Jiazhen Zhao 赵家珍

[Foreign Language] Hi, this is Zhao Jiazhen. Let me take your question on agriculture. Agriculture is our foundation. We started our business with retailing of agriculture products. We have been investing in agriculture for many years and we initiated the new model of group purchase for agriculture products. We have also innovated many agriculture solutions such as the direct delivery of agricultural products from the place of origin and our Duo Duo Grocery, building up a platform that connects local supply to local demand.

嗨，我是赵家珍。让我来回答你关于农业的问题。农业是我们的基础。我们从农业产品的零售开始我们的业务。我们已经在农业领域投资多年，并且我们启动了农业产品的团购新模式。我们还创新了许多农业解决方案，例如从产地直接配送农业产品和我们的多多杂货，建立了一个连接本地供应与本地需求的平台。

Agriculture is a challenging industry with low product standardization and decentralized supply. Storing and transporting agricultural products can be quite difficult. Currently, the online penetration rate of agricultural products remains relatively low, and there's still plenty of room for improvement in digitalizing farmers' operations. Therefore, we have taken it upon ourselves to invest in this industry and dive deep into transforming the agricultural supply chain. Throughout this journey, we have accumulated a lot of valuable experience and enhanced our team's capabilities.

农业是一个具有挑战性的行业，产品标准化程度低，供应分散。储存和运输农产品可能相当困难。目前，农产品的在线渗透率仍然相对较低，农民的数字化运营仍有很大的改进空间。因此，我们决定投资这个行业，深入转型农业供应链。在这个过程中，我们积累了大量宝贵的经验，提升了团队的能力。

Agricultural products are now a very important high-frequency category, and Pinduoduo has always been a full-category e-commerce platform featuring agricultural products. We're still making firm investment in agriculture. In the fourth smart agriculture competition launched last month, we focus on AI planting and encourage participants to explore optimization and commercialization of agriculture production. Our agriculture cloud initiative also continue to bring digital solutions to farmers in various agricultural production regions. We will continue to invest in diverse aspects of agricultural production and supply chain in the future.

农业产品现在是一个非常重要的高频类目，而拼多多一直是一个以农业产品为特色的全品类电商平台。我们仍在农业领域进行坚定的投资。在上个月启动的第四届智能农业大赛中，我们专注于人工智能种植，鼓励参与者探索农业生产的优化和商业化。我们的农业云计划也继续为各个农业生产区域的农民带来数字解决方案。未来，我们将继续在农业生产和供应链的各个方面进行投资。

Through continued investment in agriculture, we hope to promote modernization of the agricultural industry and enhance the quality and efficiency of the supply chain. At the same time, we help farmers increase their value and income, create local jobs, thereby supporting the overall revitalization of rural communities. Thank you.

通过对农业的持续投资，我们希望促进农业产业的现代化，提高供应链的质量和效率。同时，我们帮助农民增加他们的价值和收入，创造当地就业机会，从而支持农村社区的整体振兴。谢谢。

Unidentified Company Representative

未识别的公司代表

Thank you, Jiazhen. And also thank you, Kenny. Thank you all once again for joining us today. And it's about time. And if you have any further questions, please reach out to our Investor Relations team. And, thank you and have a great day.

谢谢你，佳珍。也谢谢你，肯尼。再次感谢大家今天的参与。是时候了。如果你有任何进一步的问题，请联系我们的投资者关系团队。谢谢，祝你有美好的一天。

Operator 操作符

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

各位女士们、先生们，今天的会议到此结束。感谢大家的参与。你们可以断开连接。

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