Investment Rating - The investment rating for the company is "Outperform" [5] Core Views - The company's Q4 revenue was 110.6 billion yuan, a year-on-year increase of 24%, with advertising revenue at 57 billion yuan (up 17% YoY) and payment channel revenue at 53.6 billion yuan (up 33% YoY). However, revenue growth was below expectations due to ongoing investments in platform ecosystem development [1][8] - The non-GAAP net profit for the quarter was 29.9 billion yuan, a 14% increase YoY, with a non-GAAP net profit margin of 25%. The gross profit margin was 57%, down 4 percentage points YoY, primarily due to the company covering full shipping costs for orders in the western regions and a decline in the proportion of high-margin commissions [2][9] - The company is actively addressing overseas uncertainties, with its TEMU platform now operating in over 60 countries, including the US and Germany. The company plans to introduce a third-party platform model to mitigate tariff risks and enhance supply diversity [2][9] Financial Projections - Revenue projections for 2025, 2026, and 2027 are 480.3 billion yuan, 593.5 billion yuan, and 676.6 billion yuan, respectively, with year-on-year growth rates of 22%, 24%, and 14%. Non-GAAP net profit projections for the same years are 130.2 billion yuan, 163.2 billion yuan, and 185.7 billion yuan, with growth rates of 7%, 25%, and 14% [3][12] - The current price-to-earnings (PE) ratio is projected to be 10x, 8x, and 7x for 2025, 2026, and 2027, respectively [3][12]

Core Viewpoint - PDD Holdings reported mixed financial results for Q4 and fiscal 2024, with revenues of $15.15 billion, a 24% year-over-year increase, but missing analyst expectations by approximately $746 million. Earnings per share were $2.78, beating estimates by 6 cents [1][2]. Financial Performance - The company is focusing on high-quality development and ecosystem investments over short-term financial gains, leading to a significant moderation in revenue growth compared to previous quarters [2][6]. - Non-GAAP operating profit increased 14% year-over-year to RMB28 billion, but the operating profit margin declined to 24% from 28% in the same quarter of 2023 due to substantial investments in merchant support and logistics [7][12]. Stock Performance - PDD's stock has gained 11.1% over the past six months, outperforming the Zacks Retail-Wholesale sector's return of 1.9% [3]. Valuation Insights - PDD stock trades at a forward P/E of 10.1x, significantly below the Zacks Internet-Commerce industry average of 21.4x, indicating potential market concerns rather than an overlooked opportunity [8][9]. - The company has a robust cash position of RMB331.6 billion (approximately $45.4 billion) as of December 31, 2024, although cash generated from operating activities declined to RMB29.5 billion in Q4 2024 from RMB36.9 billion in Q4 2023 [12]. Future Outlook - Management has indicated a continued focus on ecosystem investments over immediate financial optimization, with expectations of fluctuations in revenue growth and profits through 2025 [13][14]. - The Zacks Consensus Estimate for 2025 revenues is $65.53 billion, indicating a growth of 19.82% from the previous year, while the consensus for earnings is $12.21 per share, suggesting a 7.86% growth from 2024 [14][15]. Investment Considerations - Current shareholders may consider holding PDD stock during this transitional period, while new investors might benefit from waiting for clearer signs of the company's investments yielding results or a more attractive entry point [18][19].

Core Insights - PDD (NASDAQ: PDD) reported Q4-24 results with revenue 5% below consensus and EBIT 3% below consensus, primarily due to a significant miss in transaction service revenue, which grew by 33% year-over-year compared to the consensus expectation of 52% year-over-year growth [1] - Online marketing service revenue growth was recorded at 17%, indicating a slower growth rate compared to previous expectations [1] Financial Performance - Revenue for Q4-24 was lower than expected, coming in at a 5% shortfall against consensus estimates [1] - EBIT also fell short, being 3% below consensus, highlighting potential challenges in operational efficiency or market conditions [1] - Transaction service revenue growth of 33% year-over-year was significantly below the anticipated 52% growth, suggesting a potential slowdown in this segment [1] - Online marketing service revenue growth of 17% reflects a more stable but slower growth trajectory compared to previous periods [1]

Core Insights - PDD is identified as a potential multibagger investment opportunity due to its rapid growth and market positioning in China's e-commerce sector [1][4]. Company Overview - PDD, founded in 2015, has quickly become one of China's fastest-growing e-commerce companies, attracting hundreds of millions of shoppers with its discount marketplace for group purchases [2]. - The company has expanded into higher-end markets, created an agricultural marketplace connecting farmers directly to consumers, and launched Temu to facilitate overseas sales [2]. Financial Performance - From 2016 to 2023, PDD's revenue grew at a compound annual growth rate (CAGR) of 142%, and it became profitable in 2021, with net income growing at a CAGR of 178% over the next two years [3]. - Despite a stock price drop of over 40% in the following four years, this decline presents a buying opportunity for investors [4]. Growth Strategies - PDD's growth strategies include focusing on lower-income second- and third-tier cities, leveraging initial growth to compete in first-tier cities, and expanding its product offerings to include more brand-name products [5][6][8]. - The company has disrupted traditional retail by connecting farmers directly to consumers through its agricultural marketplace, providing a competitive edge in the online grocery market [9]. - PDD's overseas marketplace, Temu, aims to challenge Amazon by linking Chinese sellers directly to foreign buyers, allowing for lower prices and shorter delivery times [10]. Future Projections - Analysts project PDD's revenue and earnings per share (EPS) to rise by 61% and 87% respectively in 2024, with further growth expected in 2025 [11]. - The growth projections are contingent on the stabilization of China's economy and PDD's ability to gain market share against competitors like Alibaba and JD [12]. - If PDD's performance aligns with analysts' estimates, its stock price could potentially rise to around $2,640 per share by 2035, assuming a more favorable valuation [14]. Investment Considerations - PDD's stock is currently trading at 10 times forward earnings, which is considered attractive given its growth potential [13]. - Investors are encouraged to consider PDD as a viable investment option, especially as many are currently avoiding top growth stocks in China [15].

Core Viewpoint - PDD Holdings Inc reported disappointing fourth-quarter revenues, leading to a decline in share price amid a busy earnings season [1] Revenue Performance - PDD reported quarterly revenues of RMB 111 billion ($15.3 billion), representing a 24% year-on-year increase, but fell short of consensus expectations by RMB 6 billion ($827 million) [2] - Online marketing services revenue grew by 17% year-on-year, aligning with expectations [2] Transaction Revenue Insights - Transaction revenues increased by 33% year-on-year, primarily driven by international expansion and Temu, but also missed consensus by RMB 6 billion [3] - The shift in Temu's business model from a full-entrusted model to a semi-entrusted model has led to a significant shortfall in transaction commission revenue [4] Investor Sentiment - Investors are concerned about the company's investments aimed at building a healthy ecosystem, which negatively impacts short-term profitability [5] - PDD is focusing on developing its platform ecosystem and adapting to domestic competition [5] Analyst Ratings - Benchmark analyst Fawne Jiang reiterated a Buy rating with a price target of $160 [6] - Goldman Sachs analyst Ronald Keung maintained a Buy rating with a price target of $157 [6]

Core Insights - PDD Holdings reported non-GAAP earnings per share of $2.76, slightly above analyst estimates, while revenue of $15.15 billion fell short of expectations by 2.5% [1][2] Financial Performance - Non-GAAP EPS (diluted) for Q4 2024 was $2.76, an increase of 8.7% from Q4 2023's $2.54 [2] - Revenue reached $15.15 billion, a 24.3% increase year over year, but missed the consensus estimate of $15.55 billion [2][5] - Non-GAAP net income was $4.09 billion, up 17.1% from $3.49 billion in Q4 2023 [2] - Operating margin improved to 24.5%, a slight increase of 40 basis points from the previous year [2] Business Strategy - PDD Holdings focuses on diversifying its online marketplaces and integrating into the digital economy as part of its long-term growth strategy [3] - The company emphasizes innovation and platform diversity, with a strategic relocation of its headquarters to Dublin, Ireland, to align with global market ambitions [4] Revenue Drivers - Online marketing services and transaction services were significant contributors to revenue growth, with transaction service revenues increasing by 33% year over year to $7.34 billion [5] - Despite a 36% rise in operating costs to $6.55 billion, operating income grew by 14% to $3.51 billion, indicating effective cost control [6] Strategic Initiatives - Management's strategic moves include enhancing platform functionality and investing in supply chain and digital innovations to build consumer engagement [7] - The company is adjusting to geopolitical movements by strengthening its international market presence [8] Future Outlook - Management emphasizes international expansion and plans to enhance the platform ecosystem to meet growing global demand [9] - Changes in consumer behavior and competitive pressures will be critical areas of focus for the company moving forward [10]

Group 1 - PDD Holdings Inc reported lower-than-expected fourth-quarter earnings and revenue, impacted by strong competition and weak demand in China, but still managed to double its annual profit to $15.4 billion [1] - The stock price of PDD increased by 2% to $128.48, recovering from earlier losses despite a price-target cut from Jefferies from $171 to $156 [2] - Year-to-date, PDD's equity has outperformed the broader market with a 32.5% lead [2] Group 2 - In the options market, PDD has seen a significant increase in trading volume with 57,000 calls and 40,000 puts exchanged, which is four times the typical volume [3] - The most popular options are the March 135 and 130 call contracts, with new positions opening at the weekly 4/25 128-strike put [3] - PDD has consistently outperformed options traders' volatility expectations, reflected in its Schaeffer's Volatility Scorecard (SVS) of 97 out of 100 [3]

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 ...

Financial Performance - Total revenues for Q4 2024 were RMB 110,610.1 million (US$ 15,153.5 million), an increase of 24% from RMB 88,881.0 million in Q4 2023[4] - Operating profit for Q4 2024 was RMB 25,592.2 million (US$ 3,506.1 million), an increase of 14% from RMB 22,395.0 million in Q4 2023[4] - Net income attributable to ordinary shareholders for Q4 2024 was RMB 27,446.6 million (US$ 3,760.2 million), an increase of 18% from RMB 23,280.3 million in Q4 2023[9] - Total revenues for the fiscal year 2024 were RMB 393,836.1 million (US$ 53,955.3 million), an increase of 59% from RMB 247,639.2 million in 2023[12] - Revenues from transaction services for Q4 2024 were RMB 53,599.0 million (US$ 7,343.0 million), an increase of 33% from RMB 40,205.4 million in Q4 2023[7] - Net income for Q4 2024 was RMB 27,446,637, up 17.5% from RMB 23,280,309 in Q4 2023[36] - Operating profit for the year ended December 31, 2024, was RMB 108,422,862, a significant increase of 84.7% compared to RMB 58,698,762 in 2023[34] Expenses and Costs - Total costs of revenues for the fiscal year 2024 were RMB 153,900.4 million (US$ 21,084.3 million), an increase of 68% from RMB 91,723.6 million in 2023[13] - Research and development expenses for Q4 2024 were RMB 3,777.2 million (US$ 517.5 million), compared to RMB 2,864.4 million in Q4 2023[7] - Research and development expenses for the year ended December 31, 2024, were RMB 12,659,361, an increase of 15.6% from RMB 10,952,374 in 2023[34] Earnings and Shares - Basic earnings per ADS for Q4 2024 were RMB 19.76 (US$ 2.71), compared to RMB 17.00 in Q4 2023[10] - Earnings per ordinary share (diluted) for Q4 2024 was RMB 4.63, compared to RMB 3.96 in Q4 2023, indicating a growth of 16.8%[36] - The diluted earnings per ordinary share for the year ended December 31, 2024, increased to RMB 19.00, up from RMB 10.29 in 2023, marking a growth of 84.5%[45] - The non-GAAP diluted earnings per ordinary share for the year ended December 31, 2024, was RMB 20.68, compared to RMB 11.63 in 2023, reflecting a growth of 77.5%[45] Cash and Investments - Cash, cash equivalents, and short-term investments were RMB 331.6 billion (US$ 45.4 billion) as of December 31, 2024, compared to RMB 217.2 billion as of December 31, 2023[11] - Net cash generated from operating activities for the year ended December 31, 2024, was RMB 121,929,292, an increase of 29.5% from RMB 94,162,531 in 2023[43] - The company reported a net cash used in investing activities of RMB (118,356,036) for the year ended December 31, 2024, compared to RMB (55,431,278) in 2023, indicating a significant increase in investment[43] - The increase in cash, cash equivalents, and restricted cash for the year ended December 31, 2024, was RMB 4,414,516, down from RMB 29,479,488 in 2023, showing a decrease in cash growth[43] Assets and Liabilities - Total assets increased to RMB 505,034,316 as of December 31, 2024, up from RMB 348,078,120 in 2023, reflecting a growth of 45%[30] - Total liabilities rose to RMB 191,721,192 as of December 31, 2024, compared to RMB 160,836,513 in 2023, marking a 19.2% increase[32] - Shareholders' equity grew to RMB 313,313,124 as of December 31, 2024, from RMB 187,241,607 in 2023, reflecting a 67.1% increase[32] Other Notable Changes - The company reported a significant increase in online marketing services revenues, which reached RMB 57,011,061 for Q4 2024, up from RMB 48,675,618 in Q4 2023[38] - The non-GAAP net income attributable to ordinary shareholders for Q4 2024 was RMB 29,850.9 million (US$ 4,089.6 million), an increase of 17% from RMB 25,476.5 million in Q4 2023[9] - The non-GAAP net income attributable to ordinary shareholders for the year ended December 31, 2024, was RMB 122,343,561, a significant increase of 80% from RMB 67,899,292 in 2023[45] - The company experienced a loss from fair value change of certain investments amounting to RMB 25,485 for the year ended December 31, 2024[45]

Core Insights - PDD Holdings Inc. reported mixed earnings for Q4 2024, with revenue falling short of expectations while other metrics exceeded analyst forecasts [1] Financial Performance - The company missed revenue targets but achieved better-than-expected results in other financial metrics [1]