2025-03-20 PDD Holdings Inc. (PDD) Q4 2024 Earnings Call Transcript

PDD Holdings Inc. (NASDAQ:PDD) Q4 2024 Earnings Call March 20, 2025 7:30 AM ET

Company Participants

Unidentified Company Representative -

Lei Chen - Chairman & Co-CEO

Jiazhen Zhao - Executive Director & Co-CEO

Jun Liu - VP, Finance

Conference Call Participants

Joyce Ju - Bank of America Securities

Alicia Yap - Citigroup

Kenneth Fong - UBS

Operator

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings Inc. Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [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 go ahead.

各位女士、先生，感谢您耐心等待，欢迎参加PDD控股有限公司2024财年第四季度及全年度业绩电话会议。目前，所有与会者均处于仅听模式。接下来将进行一场演示，随后进入问答环节。[操作员指示]。请注意，今天的会议正在录音。现在，我将把会议交给今天的主持人。先生，请开始。

Unidentified Company Representative

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.

谢谢您，操作员。大家好，感谢您今天的参与。PDD控股的业绩公告已于稍早前发布，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 earnings press release, which 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.

在开始之前，我想请您参考我们业绩公告中的免责条款声明，该声明适用于本次电话会议，因为我们将发表一些前瞻性陈述。此外，本次会议还讨论了某些非GAAP财务指标。请参阅我们的业绩公告，其中包含非GAAP指标与GAAP指标的调节说明。

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 Mr. 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 fourth quarter and fiscal year ended December 31, 2024. During the Q&A session, Lei and Jiazhen will answer questions in Chinese, and we'll help translate. Please kindly note that the English translation is for reference only. In case of any discrepancy, statements in the original language should prevail. Now, it's my pleasure to introduce our Chairman and Co-Chief Executive Officer, Mr. Chen Lei. Lei, please go ahead.

今天加入电话会议的有我们的董事长兼联席首席执行官陈磊先生；执行董事兼联席首席执行官赵佳臻先生；以及财务副总裁刘军先生。陈磊和赵佳臻将对上一季度的业绩及我们的战略重点发表一些总体讲话；随后刘军将向我们详细介绍截至2024年12月31日的第四季度及全年度财务业绩。在问答环节中，陈磊和赵佳臻将用中文回答问题，我们将协助翻译。请注意，英文翻译仅供参考，如有不符，以原语言内容为准。现在，很高兴为大家介绍我们的董事长兼联席首席执行官陈磊先生。磊先生，请开始。

Lei Chen

Hello everyone. Thank you for joining our earnings call for the fourth quarter and the fiscal year of 2024. 2024 is a pivotal year for advancing our high-quality development strategy. To drive the sustainable growth of our platform and supply chain ecosystem, we extended our high-quality development vision for the platform to supply trends through a series of initiatives such as fee reductions which is a part of policy, and the trust and safety updates. We systematically implemented proactive measures in platform operations, merchant services, supply chain and logistic innovations, leading our platforms into a new phase of high-quality driven growth.

大家好，感谢您参加我们2024财年第四季度及全年度的业绩电话会议。2024年是推进我们高质量发展战略的关键一年。为了推动我们平台及供应链生态系统的可持续增长，我们通过一系列举措（如费用降低——这也是政策的一部分，以及信任与安全更新）拓宽了平台对供应趋势的高质量发展愿景。我们在平台运营、商家服务、供应链及物流创新方面系统地实施了积极措施，引领我们的平台进入了一个以高质量驱动增长的新阶段。

We delivered stable results over the past quarter. Our Q4 revenue reached RMB 110.6 billion up 24% year-on-year, and full year 2024 revenue totaled RMB 393.8 billion, growing 59% year-on-year, which represents moderation in revenue growth. As mentioned in previous quarters, our significant ecosystem investments have cultivated fast-changing external environment and intensified competition landscape within short-term financials. However, our commitment to ecosystem investments agreement are wavering and we are confident that these efforts will deliver sustainable long-term returns.

在过去一个季度中，我们取得了稳定的业绩。第四季度收入达到人民币1106亿元，同比增长24%；2024全年收入总计人民币3938亿元，同比增长59%，这反映出收入增长的适度放缓。正如前几个季度所提到的，我们在生态系统方面的大量投资已培育出快速变化的外部环境，并在短期财务表现上加剧了竞争格局。然而，我们对生态系统投资的承诺并未动摇，我们有信心这些努力将带来可持续的长期回报。

In the second half of 2024 we accelerated our high-quality development strategy through several major initiatives, including a 10 billion fee reduction program, logistic support measures to promote e-commerce services in remote regions, and a high-quality merchant support program. We are pleased to see that these initiatives have started to bear fruits. Among these, the 10 billion fee reduction program has enabled over 10 million merchants to enhance operational efficiency and reduce cost, while a promotion service feedback program has begun to deliver significant savings to eligible merchants.

在2024年下半年，我们通过多项重大举措加速了高质量发展战略的实施，包括100亿元费用降低计划、促进偏远地区电商服务的物流支持措施以及高质量商家支持计划。我们很高兴看到这些举措已开始结出成果。其中，100亿元费用降低计划使超过1000万商家提高了运营效率并降低了成本，而推广服务反馈计划也开始为符合条件的商家带来显著的节省。

Our logistics support measures tailored for remote regions drove double-digit order more in growth and extended free shipping to nearly 100 million consumers in these regions. The first phase of high-quality merchant support program supported a large number of high-quality merchants and brands across 1,000 agricultural regions and industrial zones in their transition towards high-quality development. At the same time, we also established the Merchant Rights Protection Committee to formalize communication channels with merchants. We have rolled our upgrades to an upsell service system and introduced a range of improvements and governments' measures to address issues such as order dispute-resolution. This initiative tend to enhance the overall business environment for merchants and build a proper ecosystem that benefits all participants.

我们为偏远地区量身定制的物流支持措施推动了订单量实现两位数增长，并将免运费服务扩展至这些地区近1亿消费者。高质量商家支持计划的第一阶段支持了覆盖1000个农业区域和工业区的大量优质商家和品牌，助力它们向高质量发展转型。同时，我们还成立了商家权益保护委员会，正式建立与商家沟通的渠道。我们已经升级了增销服务系统，并引入了一系列改进措施及政府举措，以解决订单纠纷等问题。这一举措有助于改善商家的整体经营环境，构建一个惠及所有参与者的良好生态系统。

The platform rooted in agriculture, we remain committed to supporting agriculture industry through sustained investments in agriculture technology, supply chain innovation, and training for next-generation farmers. Over the past year, our long-term initiatives such as Pinduoduo Smart Agriculture Competition, global agriculture innovation challenge, Pinduoduo Academy-growing competition, and the agriculture research fund have delivered encouraging results. For example, the six idealist teams in the four Pinduoduo Smart Agriculture Competition achieved breakthroughs in yield, efficiency, and energy consumption through digitally optimized new farmland with the innovations now being applied in real-world settings.

作为一个植根于农业的平台，我们始终致力于通过持续投资于农业科技、供应链创新以及新一代农民培训来支持农业产业。在过去一年中，我们的长期举措，如拼多多智慧农业大赛、全球农业创新挑战赛、拼多多学院成长大赛以及农业研究基金，都取得了令人鼓舞的成果。例如，在第四届拼多多智慧农业大赛中，六支理想主义团队通过数字化优化的新型农田在产量、效率和能耗方面取得了突破，这些创新现已在实际场景中得到应用。

In terms of our global business, our mission to provide global consumers with high-quality products, remain unchanged. Guided by this vision, we will continue to focus on supply chain activity, service innovation, and ecosystem development while observing high compliance standards. Our goal is to build a classic global platform and shopping environment that serves consumers worldwide.

在全球业务方面，我们为全球消费者提供高品质产品的使命保持不变。以这一愿景为指导，我们将继续专注于供应链活动、服务创新和生态系统建设，同时严格遵循高标准的合规要求。我们的目标是打造一个经典的全球平台和购物环境，为全球消费者提供服务。

Looking ahead, high quality development will remain at a core of our strategy in 2025. We will continue to focus on healthy and sustainable development of merchants and supply chain. And certainly a device of high quality development strategy. Once at a time, we will work on strengthening merchant rights protection, backing our support for high-quality merchants, and broadening quality supply on the platforms. In addition to supply chain investments, we aim to accelerate the supply of high-quality products to remote regions and in doing so enhance the product offerings for consumers in less accessible areas and foster a win-win ecosystem for consumers, merchants, and the communities we serve. Together, we will drive a sustainable development of our platform and the broader e-commerce ecosystem. And now, I will hand it over to our co-CEO Jiazhen Zhao to share more about our development plans in 2025.

展望未来，高质量发展将继续是我们2025年战略的核心。我们将继续关注商家和供应链的健康、可持续发展。当然，在高质量发展战略的指引下，我们将逐步加强商家权益保护，支持优质商家，并拓宽平台上优质产品的供应。除了供应链投资之外，我们还计划加速向偏远地区供应高质量产品，从而提升那些难以接触地区消费者的产品选择，并促进消费者、商家及我们服务的社区实现共赢生态。我们将共同推动平台及更广泛电商生态系统的可持续发展。现在，我将把话筒交给我们的联席首席执行官赵佳臻，介绍我们2025年的发展计划。

Jiazhen Zhao

赵佳臻

Thank you, Lei. Hello, everyone. This is Zhao Jiazhen. Thank you for joining our fourth quarter and full year 2024 earnings calls. Over the past year, we remain focused on advancing our high-quality development strategy, driving ecosystem upgrades and supply chain transformation to foster a mutually beneficial environment for consumers, merchants, industries, and society. Supported by sustaining progress with our high-quality development strategy and a steady micro-economy recovery with universal stable performance in quarter four and throughout 2024. Since last year we have rolled out a series of initiatives on the 10 billion fee reduction program and cultivating a wave of quality supplies through a comprehensive merchant support. Our initiative has not only empowered merchants with innovative business models but also through our supply chain upgrades. In addition, our logistics support measures have significantly improved the efficiency and quality of new supplies to Western regions, providing consumers in this region with a more diverse selection of high-quality products.

谢谢，磊先生。大家好，我是赵佳臻。感谢大家参加我们2024财年第四季度及全年度业绩电话会议。过去一年中，我们始终专注于推进高质量发展战略，通过推动生态系统升级和供应链转型，为消费者、商家、产业及社会营造互利共赢的环境。依托持续推进的高质量发展战略和第四季度及整个2024年稳健的微观经济复苏，我们自去年以来推出了一系列举措，包括100亿元费用降低计划和通过综合商家支持培育高质量供应浪潮。这些举措不仅赋能了商家，助力其创新商业模式，同时也推动了我们的供应链升级。此外，我们的物流支持措施大幅提升了向西部地区新供应的效率与质量，为该地区消费者提供了更为多样化的高质量产品选择。

In Q4 our quality merchant support program expanded its reach across agricultural and industrial rooms in China. This include areas known for specialties such as Lula Ann bridal wear, Huidong women’s footwear, Jingpu [ph] Maternal Infant Products by providing comprehensive support throughout the value chain, custom product development, marketing, operations and supply chain management, we have neutral a new generation of merchants and brands with strong innovation capabilities. These trail blazers are leading the industries beyond homogeneous competition towards sustained high-value growth.

在第四季度，我们的优质商家支持计划已覆盖中国的农业和工业领域。这其中包括诸如露拉安婚纱、会东女鞋、京普母婴产品等特色区域，通过在全价值链、定制产品开发、营销、运营及供应链管理等方面提供全方位支持，我们培育出了一代具有强大创新能力的新商家和品牌。这些先行者正引领各行业超越同质化竞争，迈向持续的高价值增长。

For example, Huidong County in Guangdong province was the leading production hub for the Chinese women's footwear industry was newly brought to standstill due to market share. Last winter, local merchants utilizes our platform data analytics to create a free line centers tailored for female consumers. Through the transformation of traditional supply chain, a midsize factory managed to reach a daily output of 15,000 pairs. This not only saves tens of thousands of jobs but also target a path for quality supply chain-driven transformation.

例如，广东省会东县曾是中国女鞋产业的领先生产基地，但由于市场份额原因一度陷入停滞。去年冬天，当地商家利用我们平台的数据分析，打造了专为女性消费者量身定制的免费生产线。通过传统供应链的转型，一家中型工厂实现了每日1.5万双的产量。这不仅挽救了数以万计的就业机会，也为以高质量供应链驱动的转型指明了一条路径。

跟小米的策略有相似的地方，目光所及都是山寨。

To amplify this momentum, we strategically allocate the platform traffic resources. For example, the 10 billion program has rolled out new campaigns like 10 billion consumption brochures and super double savings, accelerating branding building for quoting merchants. Due to last year's double 11 shopping festival, we launched multiple rounds of super double fittings, offering excessive support to quality supply. In just the first two rounds the order volume exceeded 61 million.

为了进一步放大这一势头，我们在战略上分配了平台流量资源。例如，100亿元计划推出了“100亿消费手册”和“超级双重省钱”等新活动，加速了对报价商家的品牌建设。得益于去年的双十一购物节，我们启动了多轮超级双重试装活动，为优质供应提供了强力支持，仅在前两轮中，订单量就超过了6100万。

From the consumer side, our ecosystem investments has enriched their lives by delivering a broader range of broad high-quality products. These products span across categories like fresh produce, snacks, beauty, and baby care, further boosting consumer satisfaction and trust. We are also activating new consumer needs. These offerings have gained traction in both urban and rural markets, providing daily essentials for diverse groups and catering to increasingly segmented demand. During the Chinese New Year, our logistics support management for remote regions drove orders for seasonal specialties with Western regions witnessing remarkable growth in several trending categories.

从消费者角度看，我们的生态系统投资通过提供更广泛的高质量产品，丰富了消费者生活。这些产品涵盖生鲜、零食、美妆和母婴护理等多个类别，进一步提升了消费者满意度和信任度。我们还激发了新的消费需求。这些产品在城乡市场均获得了良好反响，为不同群体提供了日常必需品，并满足了日益细分的需求。在春节期间，我们对偏远地区的物流支持管理推动了季节性特产的订单增长，西部地区在多个热门品类上均呈现出显著增长。

Our long term investments in high quality developments are now bearing fruit. The platform ecosystem continues to create value for both supply and demand side. With tangible outcomes, we enforce our resolve to deepen the investments in ecosystem development. In January 2025, we established the Merchant’s Rights Protection Committee, which I chair. The committee could coordinate efforts across our platform. Our goal is to fully understand merchant needs, systematically collect feedback, optimize their experiences and refine service frameworks, all critical steps towards fortifying our platform ecosystem.

我们在高质量发展领域的长期投资现已开始见到成效。平台生态系统持续为供需双方创造价值。通过取得实质成果，我们坚定了加大生态系统投资的决心。2025年1月，我们成立了由我担任主席的商家权益保护委员会。该委员会将协调我们平台内的各项工作，我们的目标是全面了解商家需求，系统收集反馈，优化商家体验，并完善服务框架，这些都是巩固平台生态系统的重要步骤。

Following its launch, we introduced the pro merchant initiative such as abnormal order alerts and low price risk warnings, alongside upgraded services to boost the net merchant transaction efficiency. These efforts are complemented by granular data and latest tools designed to optimize merchants’ return on investment. Recently, the committee has formalized a regular communication mechanism with merchants in the holding inaugural merchant roundtable. Following extensive consultation with business across sectors, we unveiled four major upgrades, including a non-compliance alert system to intensify protections for merchants’ rights.

在启动后，我们推出了面向商家的专业举措，如异常订单提醒和低价风险预警，并升级了相关服务以提高商家净交易效率。这些努力辅以精细数据和最新工具，旨在优化商家的投资回报。近期，委员会已建立了定期与商家沟通的机制，并召开了首届商家圆桌会议。经过跨行业的广泛磋商，我们公布了四项重大升级措施，其中包括一套违规预警系统，以强化对商家权益的保护。

山寨商品里的狗鱼。

As Chen Lei emphasized, 2025 will see us with double efforts to advance our high quality development strategy. We will leverage our digital capabilities and amplify investments across both supply and demand chains. At the same time, we will accelerate the delivery of high quality products to the Western regions. This will help revitalize economic vitality across regions and build an ecosystem where merchants, industry, consumers and society collectively. I will now hand over to Jun. He will provide you with an update on our quarter four and full year financial performance.

正如陈磊强调的那样，2025年我们将加倍努力推进高质量发展战略。我们将充分利用数字能力，加大对供需链两端的投资。同时，我们将加速向西部地区提供高质量产品，这将有助于振兴各区域的经济活力，并构建一个商家、产业、消费者及社会共同参与的生态系统。现在，我将把话筒交给刘军，他将为大家介绍第四季度及全年度的财务表现。

Jun Liu:

Thank you, Jiazhen. Hello, everyone. Now let me walk you through our financial performance in the fourth quarter and fiscal year ended December 31, 2024. In terms of income statement, in Q4, our total revenues increased 24% year-over-year to RMB 110.6 billion and 59% year-over-year to RMB 393.8 billion for full year 2024. This was mainly driven by an increase in revenues from both online marketing services and transaction services. Revenues from online marketing services and orders were RMB 57 billion this quarter, up 17% compared to the same period of 2023. Our transaction services revenue this quarter were RMB 53.6 billion, up 33% for the same period of 2023.

谢谢，佳臻。大家好。现在让我带大家回顾截至2024年12月31日的第四季度及2024财年的财务业绩。就利润表而言，在第四季度，我们的总收入同比增长24%，达到人民币1106亿元，而2024全年收入同比增长59%，达到人民币3938亿元。主要原因是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订单收入为人民币570亿元，同比上涨17%。本季度交易服务收入为人民币536亿元，同比上涨33%。

Moving on to costs and expenses. Our total cost of revenues increased 36% from RMB 35.1 billion in Q4 2023 to RMB 47.8 billion this quarter. For full year, our total cost of revenues increased 68% to RMB 153.9 billion, mainly due to increased fulfillment fees and payment processing fees. On a GAAP basis, total operating expenses this quarter increased 19% to RMB 37.2 billion from RMB 31.4 billion in the same quarter of 2023. On non-GAAP basis, our total operating expenses increased to RMB 35.1 billion this quarter from RMB 29.3 billion in Q4 2023.

转到成本和费用方面。我们的营业成本从2023年第四季度的人民币351亿元增长36%至本季度的人民币478亿元。全年营业成本增长68%，达到人民币1539亿元，主要由于履约费用和支付处理费用的增加。按照GAAP计算，本季度总营业费用从2023年同季度的人民币314亿元增长19%至人民币372亿元；按照非GAAP计算，本季度总营业费用从2023年第四季度的人民币293亿元增长至人民币351亿元。

During the fourth quarter, we continue to invest in the platform ecosystem through a range of initiatives, including fee reductions, merchant support policies, and trust and safety updates. Our total non-GAAP operating expenses as a percentage of total revenues was 32% in Q4 compared to 33% same quarter 2023. For full year 2024, total non-GAAP operating expenses were RMB 122 billion, up from RMB 90.3 billion in 2023.

在第四季度，我们继续通过一系列举措投资于平台生态系统，包括费用降低、商家支持政策以及信任与安全更新。按非GAAP计算，本季度总营业费用占总收入的比例为32%，而2023年同季为33%。2024全年非GAAP总营业费用为人民币1220亿元，较2023年的人民币903亿元有所上升。

Looking into specific expense items. Our non-GAAP sales and marketing expenses this quarter were RMB 31.1 billion, up 19% versus the same quarter of 2023. During Q4, we continued to give back to consumers through promotional campaigns. We’re keeping up our investment in marketing to strengthen our platform’s visibility. On non-GAAP basis, our sales and marketing expenses as a percentage of our revenues this quarter was 28% versus 30% for the same quarter in 2023. For the full year, non-GAAP sales and marketing expenses increased from RMB 79.8 billion to RMB 109.1 billion in 2024.

具体来看费用项目，本季度非GAAP销售和营销费用为人民币311亿元，同比上涨19%。在第四季度，我们通过促销活动继续回馈消费者，同时持续加大营销投资以增强平台知名度。按非GAAP计算，本季度销售和营销费用占收入比例为28%，而2023年同季为30%。全年非GAAP销售和营销费用从2023年的人民币798亿元增至2024年的人民币1091亿元。

Our non-GAAP G&A expenses were RMB 998 million in Q4 versus RMB 674 million in the same quarter of 2023. Our annual non-GAAP G&A expenses were RMB 2.8 billion in 2024 versus RMB 1.8 billion last year. Our research and development expenses were RMB 3 billion in the fourth quarter on a non-GAAP basis and RMB 3.8 billion on a GAAP basis. We are committed to advancing the core technology capabilities of our platforms and we will continue to increase our investment in R&D, laying a solid foundation for our high quality development strategy and driving ecosystem upgrade and supply chain transformation.

我们的非GAAP一般与行政费用（G&A）在第四季度为人民币9.98亿元，而2023年同季为人民币6.74亿元。2024年全年非GAAP G&A费用为人民币28亿元，而去年为人民币18亿元。第四季度非GAAP研发费用为人民币30亿元，而按照GAAP计算为人民币38亿元。我们致力于提升平台核心技术能力，并将继续加大对研发的投资，为高质量发展战略奠定坚实基础，并推动生态系统升级和供应链转型。

On a GAAP basis, operating profit for the quarter was RMB 25.6 billion, plus RMB 22.4 billion in the same quarter of 2023. Non-GAAP operating profit was RMB 28 billion, versus RMB 24.6 billion in the same quarter of 2023. Non-GAAP operating profit margin was 24% this quarter, compared with 28% for the same quarter of 2023. For the full year, non-GAAP operating profit increased from RMB 65.8 billion to RMB 118.3 billion in 2024. Net income attributable to ordinary shareholders was RMB 27.4 billion for the quarter and RMB 112.4 billion for the full year.

按照GAAP计算，本季度营业利润为人民币256亿元，而2023年同季为人民币224亿元。非GAAP营业利润为人民币280亿元，2023年同季为人民币246亿元。本季度非GAAP营业利润率为24%，而2023年同季为28%。全年非GAAP营业利润从2023年的人民币658亿元增长至2024年的人民币1183亿元。归属于普通股股东的净利润为本季度人民币274亿元，全年为人民币1124亿元.

In the fourth quarter, base earnings per ADS was RMB 19.76 and diluted earnings per ADS was RMB 18.53 versus base earnings per ADS of RMB 17 and diluted earnings per ADS of RMB 15.83 in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders was RMB 29.9 billion for the quarter and RMB 122.3 billion for the full year. In the fourth quarter, non-GAAP diluted earnings per ADS was RMB 20.15 versus RMB 17.32 in the same quarter of 2023. This quarter, we delivered stable financial results supported by the resolute execution of our high quality development strategy. Looking ahead, we will continue to prioritize investments in platform ecosystems as the cornerstone of our long term value creation strategy. That completes the income statement.

在第四季度，每份ADS基本收益为人民币19.76元，稀释后每份ADS收益为人民币18.53元，而2023年同季每份ADS基本收益为人民币17元，稀释后为人民币15.83元。第四季度归属于普通股股东的非GAAP净利润为人民币299亿元，全年为人民币1223亿元。第四季度非GAAP稀释后每份ADS收益为人民币20.15元，而2023年同季为人民币17.32元。本季度，我们通过坚决执行高质量发展战略，交出了稳定的财务业绩。展望未来，我们将继续将平台生态系统投资作为长期价值创造战略的基石。以上即为利润表部分。

Now let me move on to cash flow. Our net cash flow generated from operating activities was RMB 29.5 billion in Q4 and RMB 121.9 billion for the full year of 2024, compared with RMB 36.9 billion in the same quarter of 2023 and RMB 94.2 billion in 2023. As of December 31, 2024, the company had RMB 331.6 billion in cash, cash equivalents and short term investments. Thank you. This concludes my prepared remarks.

接下来，我来说说现金流。本季度经营活动产生的净现金流为人民币295亿元，2024全年为人民币1219亿元，而2023年同季为人民币369亿元，全年为人民币942亿元。截至2024年12月31日，公司持有现金、现金等价物及短期投资总额为人民币3316亿元。谢谢。这就结束了我的准备发言.

Unidentified Company Representative:

Thank you, Jun. Next, we’ll move on to the Q&A session. 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 we will help translate. Operator, we’re open for questions.

未知公司代表：

谢谢，刘军。接下来，我们进入问答环节。今天的问答环节中，陈磊、赵佳臻和刘军将回答在场分析师的问题，每位分析师最多可提两个问题。陈磊和赵佳臻将用中文回答问题，我们将协助翻译。操作员，请开始提问。

Operator

Thank you. [Operator Instructions]. Your first question comes from Joyce Ju from Bank of America. Please go ahead.

谢谢。[操作员指示]。您的第一个问题来自美国银行的Joyce Ju。请开始提问。

Joyce Ju

I will translate my question. First, we noticed that over the past two quarters, the company has taken several major initiatives in platform ecosystem development and merchant support. As management just mentioned, the company plans to further increase investment in these areas. How should we think about the long-term goals for platform ecosystem development and how this will drive the platform’s further growth? My second question is on top of supply side and merchant ecosystem investments, could management also share what has been done on the consumer side recently, for example, when new initiatives were launched during the past fourth quarter e-commerce peak season and what will be the strategic priorities for consumer side in the future? Thank you.

我来翻译一下我的问题。首先，我们注意到在过去两个季度中，公司在平台生态系统发展和商家支持方面采取了几项重大举措。正如管理层刚才所提到的，公司计划进一步加大对这些领域的投资。我们应该如何看待平台生态系统发展的长期目标，以及这将如何推动平台的进一步增长？我的第二个问题是，在供应端和商家生态系统投资之外，管理层能否分享一下近期在消费者方面所做的工作，例如，在上个季度电商旺季期间推出的新举措，以及未来在消费者方面的战略重点是什么？谢谢。

Lei Chen

陈磊

Hi, Joyce. This is Chen Lei. Let me take your question regarding our platform ecosystem. Well, since the second quarter of 2024, in line with the overall direction of high quality development of our platform ecosystem, we have rolled out a series of initiatives that centered around the protection of merchants’ rights. For example, measures such as the RMB10 billion fee reduction program and high quality merchant support program have been effective in lowering the operational costs for merchants.

您好，Joyce，我是陈磊。让我来回答您关于平台生态系统的问题。自2024年第二季度起，按照平台生态系统高质量发展的总体方向，我们推出了一系列以保护商家权益为核心的举措。例如，100亿元费用降低计划和优质商家支持计划已有效降低了商家的运营成本。

Lei Chen

陈磊

By leveraging our platform’s digital technologies and resources, we are also enabling manufacturers to invest in their product innovation and also technology, while at the same time broadening their marketing access. These initiatives are deepening our long-term efforts in building a stronger ecosystem and also extend that into the supply side, driving meaningful supply chain upgrades, which is central to our strategy of pursuing high quality development. We are noticing that in certain industries, some merchants are facing homogeneous competition, which squeeze profits for businesses and also undermines innovation and investments. We as a platform connecting manufacturers, merchants and consumers, we have launched a series of policies to support high quality suppliers. By cutting fees and streamlining operations, we are encouraging merchants to invest more in their products and services. This is leading our platform onto a new stage of quality driven growth.

通过利用我们平台的数字技术和资源，我们还在帮助制造商加大对产品创新及技术的投资，同时拓宽其营销渠道。这些举措正在加深我们建设更强大生态系统的长期努力，并延伸到供应端，推动供应链的实质性升级，这正是我们追求高质量发展的核心战略。我们注意到在某些行业中，一些商家正面临同质化竞争，这不仅压缩了企业利润，也削弱了创新和投资。作为连接制造商、商家和消费者的平台，我们推出了一系列政策支持优质供应商。通过降低费用和优化运营，我们鼓励商家在其产品和服务上加大投资，这正引领我们的平台进入一个由质量驱动的新阶段。

Jiazhen Zhao

赵佳臻

Hello, this is Jiazhen Zhao. Let me take your second question. Our initiatives on the supply side and merchant ecosystem complement our consumer centric strategy. We remain dedicated to serving consumers, providing more values and better services, which has been fundamental to us.

大家好，我是赵佳臻。让我来回答您的第二个问题。我们在供应端和商家生态系统方面的举措是对以消费者为中心战略的有力补充。我们始终致力于服务消费者，提供更多价值和更优质的服务，这一直是我们的根本所在。

Jiazhen Zhao

赵佳臻

During the promotion campaigns in the fourth quarter, we upgraded our super level savings initiative by layering additional savings on top of the discounted price from our RMB10 billion program. This not only provides substantial savings to consumers, but also serves as a new growth engine for brands. Both the number of participating brands and products in the campaigns reached high with total order volume achieving a significant milestone. For the Double Top promotion, we further enhanced the program by launching 10 billion consumption vouchers, reinforcing our focus on consumer benefits.

在第四季度的促销活动中，我们通过在100亿元计划的优惠价格基础上叠加额外的优惠，升级了超级省钱计划。这不仅为消费者提供了可观的节省，还为品牌注入了新的增长动力。参与活动的品牌和产品数量均创下新高，总订单量达到了重要里程碑。对于“双顶”促销活动，我们进一步通过推出100亿元消费券强化了该计划，凸显了我们对消费者利益的关注。

At the same time, our RMB10 billion supply chain investments have prioritized empowering quality merchants and driven our logistics work measures in remote regions, sparking fresh trends. For example, during the Chinese New Year shopping festival this year, the platform accelerated the flow of Chinese New Year specialties into Western regions by offering both traffic support and promotion programs. By investing in both supply and demand, we have seen a surge of quality supply in reaching consumer choices with premium options and fostering a virtuous cycle. Moving forward, we will continue to focus on a long-term high quality investment on the consumer side to build a mutually beneficial platform ecosystem. Thank you.

与此同时，我们的100亿元供应链投资优先赋能优质商家，并推动了偏远地区的物流措施，引发了新的趋势。例如，在今年春节购物节期间，平台通过提供流量支持和促销计划，加速了春节特色产品向西部地区的流通。通过在供应和需求两端加大投资，我们看到优质供应在为消费者提供优选产品方面激增，并形成了良性循环。展望未来，我们将继续专注于消费者端的长期高质量投资，构建互利共赢的平台生态系统。谢谢。

Joyce Ju

Thank you.

谢谢。

Operator:

Thank you. [Operator Instructions]. Your next question comes from Alicia Yap from Citigroup. Please go ahead.

操作员：

谢谢。[操作员指示]。您的下一个问题来自花旗集团的Alicia Yap。请开始提问。

Alicia Yap:

Thank you. So I have two questions. First one is, the competitions in the domestic e-commerce market has been intensifying for some time. Could management share some insights into any recent developments in the competitive landscape and whether there will be any adjustment to the company’s development strategies in the future? The second question is regarding our global business. We noticed that recently the global business may face some changes in macro conditions and policy. Could management share more about these external changes that might impact the company’s business and what measure the company plans to take in response? Thank you.

谢谢。我有两个问题。第一个问题是，国内电商市场的竞争已持续加剧一段时间。请问管理层能否分享近期竞争格局的最新发展情况，以及未来是否会对公司的发展战略做出相应调整？第二个问题涉及我们的全球业务。我们注意到，近期全球业务可能会面临一些宏观环境和政策方面的变化。请问管理层能否进一步介绍这些外部变化可能对公司业务产生的影响，以及公司计划采取哪些应对措施？谢谢。

Jiazhen Zhao:

Hello. This is Zhao Jiazhen. Let me take this question regarding competition. We have consistently emphasized that competition is not only inherent to the e-commerce industry, but also a critical driver of its continuous advancement. Our major platforms are actively refining their strategies and services to better respond to shifting consumer preferences, a dynamic that underscores the sector’s robust and healthy evolution. As industry and technology continue to evolve, e-commerce platforms are actively exploring innovative business models and technological applications to elevate user experiences and operational efficiency. We’re closely monitoring this development and continuously optimizing our platform ecosystem and services to better meet consumer demands under our quality driven strategy.

赵佳臻：

大家好，我是赵佳臻。让我来回答关于竞争的问题。我们始终强调，竞争不仅是电商行业固有的一部分，而且是推动其持续进步的关键驱动力。我们的主要平台正在积极优化其战略和服务，以更好地响应不断变化的消费者偏好，这一动态凸显了行业强劲而健康的演进。随着行业和技术的不断发展，电商平台正积极探索创新的商业模式和技术应用，以提升用户体验和运营效率。我们正密切关注这一发展，并不断优化我们的平台生态系统和服务，以更好地满足消费者在高质量驱动战略下的需求。

跟Amazon的说法一模一样。

Our strategic investments across the consumer side, supply side, and platform ecosystem have delivered tangible results, demonstrating that the viability of hardcore development as a sustainable growth pathway. Over the years, we have cultivated attractive brand reputation and deep consumer loyalty, which remains our core strength. At the same time, we recognize the imperative for profound supply side transformation in the e-commerce industry. Our current investments in merchant welfare and industrial sustainability will over time improve consumer experience. By safeguarding merchant rights, we enhance service quality and satisfaction and diversify quality supply. This in turn will drive the healthy growth of the platform ecosystem. We will continue to strengthen our advantage by making meaningful long-term high quality investments. By doing so, we aim to deliver an expanding range of premium products and a seamless trustworthy shopping experience for consumers. Thank you.

我们的消费端、供应端以及平台生态系统的战略投资已取得了显著成果，证明了以硬核发展作为可持续增长路径的可行性。多年来，我们培养了良好的品牌声誉和深厚的消费者忠诚度，这依然是我们的核心优势。同时，我们也认识到，电商行业亟需在供应端进行深度转型。我们当前在商家福祉和产业可持续性方面的投资，随着时间的推移将改善消费者体验。通过保障商家权益，我们提升了服务质量和满意度，并丰富了优质供应。这将反过来推动平台生态系统的健康增长。我们将继续通过进行有意义的长期高质量投资来巩固我们的优势。通过这样做，我们旨在为消费者提供越来越多的优质产品以及无缝且值得信赖的购物体验。谢谢。

Lei Chen:

Hi, Alicia. This is Chen Lei. Let me answer your question about the global business. For our global business, as we discussed in recent quarters, changes in the external environment have been accelerating and competition remains fierce. And in addition, there may be changes in macro policies that are related to our operations. And in response to this, first and foremost, we will strictly comply with the laws and regulations to ensure full compliance in our operations. And on that basis, we are also proactively communicating with external parties across the market to continuously refine our services and compliance standards. However, these external changes taken together will inevitably bring some challenges to our global business. And despite the changes in the external environment, we remain very committed to delivering high quality products to the global consumers. This will not change.

陈磊：

您好，Alicia，我是陈磊。让我来回答关于全球业务的问题。正如我们在最近几个季度所讨论的那样，外部环境的变化正在加速，竞争依然激烈。此外，可能还会有与我们运营相关的宏观政策变化。对此，首先，我们将严格遵守法律法规，确保运营全程合规。在此基础上，我们也在积极与市场各方沟通，不断优化我们的服务和合规标准。然而，这些外部变化综合起来不可避免地会给我们的全球业务带来一些挑战。尽管外部环境在变化，我们仍然坚守为全球消费者提供高质量产品的承诺，这一承诺不会改变。

We will stay focused on our business, investing in supply chain improvement, service quality, and platform ecosystems, while ensuring high quality growth and upholding compliance standards. By doing so, we strive to further deepen our core strength in supply chain efficiency and operations capabilities that we have accumulated over the years. And furthermore, we will continue to explore new business models, experiment with innovative localized supply chain solutions, deepen our market presence, introduce new product categories and services, and to build a more robust and sustainable platform infrastructure for the long run.

我们将继续专注于自身业务，在提升供应链效率、服务质量和平台生态系统方面加大投资，同时确保高质量增长并坚守合规标准。通过这样做，我们努力进一步深化多年来积累的供应链效率和运营能力这一核心优势。此外，我们还将持续探索新的商业模式，尝试创新的本地化供应链解决方案，深化市场存在感，推出新产品类别和服务，并构建更稳健、更可持续的长期平台基础设施。

Our commitment to high quality sustainable development applies equally to our global business. Beyond offering high quality products at affordable prices, we aim to meet global consumers’ rising expectations of us. As highlighted in previous quarters, we implemented merchant support policies and trust and safety updates across the supply chain and platform ecosystem, empowering innovative high quality merchants. At the same time, we firmly regulate merchants who violate platform rules and harm consumer interests. These efforts have started to yield positive results, and we are committed to executing them for the long-term.

我们对高质量可持续发展的承诺同样适用于我们的全球业务。除了以实惠价格提供高质量产品外，我们还旨在满足全球消费者对我们的不断提升的期望。正如前几个季度所强调的，我们在供应链和平台生态系统中实施了商家支持政策以及信任与安全更新，赋能于那些具有创新能力的优质商家。同时，我们严格监管那些违反平台规则、损害消费者利益的商家。这些举措已开始显现正面成果，我们承诺将长期贯彻执行。

At the same time, as a growing e-commerce platform, we are aware of the rising attention our global consumers are paying to corporate social responsibility. We are actually seeking opportunities to utilize our technological capabilities and platform resources to create greater value for the communities we serve. We have launched several initiatives in global corporate social responsibility and have a few new ideas for the future. Our team is dedicated to exploring this area and taking concrete steps towards becoming a responsible corporate citizen on a global scale. There is much more we can do and our team is very excited about the opportunities ahead. And through the long-term investments and consistently doing the right things, we hope to strengthen our core competitive advantages and build long lasting trustworthy relationship with merchants and global consumers. This is my thinking on the global business.

与此同时，作为一家不断成长的电商平台，我们也意识到全球消费者对企业社会责任日益关注。我们正寻求利用我们的技术能力和平台资源为所服务的社区创造更大价值的机会。我们已经在全球企业社会责任方面启动了几项举措，并对未来有一些新构想。我们的团队致力于探索这一领域，并采取切实措施，努力成为全球范围内负责任的企业公民。我们还能做的远不止这些，团队对未来的机会感到非常兴奋。通过长期投资和持续践行正确的做法，我们希望能够巩固我们的核心竞争优势，并与商家和全球消费者建立持久可信的关系。这就是我对全球业务的看法。

Alicia Yap:

Thank you.

谢谢。

Operator:

Thank you. Your next question comes from [Operator instructs next question, if any].

操作员：

谢谢。接下来请……

Kenneth Fong

Thank you management for taking my questions. We noticed that the company’s revenue growth has slowed in the recent quarters and profit have been fluctuating. So how should we think about the revenue and profits trend in the near term? And my second question is, in the past two quarters, management has talked about taking on more social and platform responsibility. And this topic can also be mentioned by management today. So can management share more about what company hopes to achieve with platform responsibility in the long run and how to balance that with its duties to shareholders? Thank you.

谢谢管理层回答我的问题。我们注意到公司最近几个季度的收入增长有所放缓，利润也出现了波动。那么，我们应该如何看待近期的收入和利润趋势？我的第二个问题是，在过去两个季度中，管理层提到要承担更多的社会责任和平台责任，而这一话题今天也可以提及。请问管理层能否分享更多关于公司长期希望通过平台责任实现的目标，以及如何在履行对股东责任的同时平衡这一目标？谢谢。

Jun Liu

Hi, Kenneth. This is Jun. Let me take your first question regarding growth and profits. Well, regarding this quarter’s financial performance, as mentioned earlier in the prepared remarks, external uncertainties and intense competition have impacted our short-term revenue growth. And at the same time, our increased investments in merchant support and platform ecosystem development may create fluctuations in profitability. We expect to see fluctuations in revenue growth and profits while we begin this investment as products, building a high quality platform ecosystem and achieving sustainable growth. Short-term ups and downs will not shake our confidence in long-term goals. We believe that through sustained investments and optimization we can create a healthy e-commerce ecosystem. Currently, our efforts have already received positive feedback from merchants and supply side optimizations are driving new consumption trends on the consumer side, which has started to foster a virtuous cycle. Going forward, we will keep focusing on our high quality development strategy, investing rapidly and patiently to ensure long-term sustainable development. Thank you.

你好，Kenneth，我是刘军。让我回答您关于增长与利润的第一个问题。关于本季度的财务表现，如之前准备发言中提到的，外部不确定性和激烈的竞争影响了我们短期的收入增长。同时，我们在商家支持和平台生态系统发展方面的加大投资可能会引起利润的波动。我们预计，在我们开始这项投资、构建高质量平台生态系统并实现可持续增长的过程中，收入增长和利润将会出现波动，但短期的起伏不会动摇我们对长期目标的信心。我们相信，通过持续投资和优化，我们能够构建一个健康的电商生态系统。目前，我们的努力已经获得了商家的积极反馈，供应端的优化正在推动消费者端出现新的消费趋势，并开始形成良性循环。展望未来，我们将继续专注于高质量发展战略，既快速又耐心地进行投资，确保长期可持续发展。谢谢。

Jiazhen Zhao

Hello Ken, this is Zhao Jiazhen. Let me take your second question. Over the past few quarters, we have noted that assessing the company’s performance solely through short-term financial metrics or capital returns does not capture where we are in our development stage. As a global company in the new era, we’re embracing innovation, adapting to change, and taking on more social responsibility in the regions where we operate. This aligns with our long-term accountability to shareholders and reflects thoughtful leadership decisions. For example, our recent focus on supporting quality merchants has provided comprehensive support across product development, marketing, operations, and supply chain, thereby fostering a group of quality merchants with strong products and technological capabilities, empowering independent entrepreneurs to streamline their operations and driving supply chain transformation.

您好，Ken，我是赵佳臻。让我来回答您的第二个问题。过去几个季度中，我们注意到，仅仅通过短期财务表现或资本回报来评估公司的表现，并不能准确反映我们目前的发展阶段。作为一家新时代的全球公司，我们正在拥抱创新、适应变革，并在我们运营的地区承担更多社会责任。这既符合我们对股东的长期责任，也体现了深思熟虑的领导决策。例如，我们最近在支持优质商家方面的重点举措，通过在产品开发、营销、运营和供应链方面提供全方位支持，培育了一批具备强大产品与技术能力的优质商家，赋能独立创业者优化运营，并推动供应链转型。

Additionally, our logistics support measures tailored for remote regions have spurred double-digit order growth in Western China and extended free shipping to nearly 100 million consumers in remote areas. This strategy unlocked new opportunities for merchants in Western China, expanding their business and benefiting consumers across different regions. In agriculture, we remain committed to supporting the industry through sustained investments in agricultural technology, supply chain innovation, and training for the next generation of farmers. Overall, the e-commerce industry is shifting towards quality, service, experience, and innovation. Our focus on safeguarding merchant rights, supporting quality merchants, and reforming the supply chain is both cost-driven and aligned with growing e-commerce demand. In the long run, building an inclusive ecosystem that creates value for all participants will set us up for sustainable growth and long-term returns. Thank you.

此外，我们为偏远地区量身定制的物流支持措施推动了中国西部订单的两位数增长，并将全国近1亿偏远地区消费者的免运费服务延伸至更广区域。这一策略为西部地区商家开启了新的业务机遇，不仅扩展了商机，也惠及不同区域的消费者。在农业方面，我们始终致力于通过持续投资于农业科技、供应链创新及新一代农民培训来支持该行业。总体来看，电商行业正朝着质量、服务、体验和创新方向转变。我们在保障商家权益、支持优质商家以及推进供应链改革方面的举措，既是基于成本考虑，也是为满足日益增长的电商需求而设。长远来看，构建一个为所有参与者创造价值的包容性生态系统，将为我们实现可持续增长和长期回报奠定基础。谢谢。

Unidentified Company Representative

Thank you, Jiazhen Zhao. And thank you all for joining us today. We look forward to speaking with you next quarter. Thank you and have a great day.

谢谢，赵佳臻。也感谢各位今天的参与。我们期待下个季度与大家再见。谢谢，祝大家度过愉快的一天。

Operator

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

各位女士、先生，今天的会议到此结束。感谢各位的参与。现在各位可以断开连接。

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