Company Performance - PDD Holdings Inc. reported quarterly earnings of $1.56 per share, missing the Zacks Consensus Estimate of $2.49 per share, and down from $2.83 per share a year ago, representing an earnings surprise of -37.35% [1] - The company posted revenues of $13.18 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 6.93%, compared to $12.02 billion in the same quarter last year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times but has not beaten consensus revenue estimates [2] Stock Performance - PDD Holdings Inc. shares have increased by approximately 22.9% since the beginning of the year, while the S&P 500 has declined by -1.3% [3] - The current consensus EPS estimate for the upcoming quarter is $2.85 on revenues of $15.62 billion, and for the current fiscal year, it is $11.99 on revenues of $64.94 billion [7] Industry Outlook - The Internet - Commerce industry, to which PDD Holdings belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

[PDD Holdings First Quarter 2025 Financial Results](index=1&type=section&id=PDD%20Holdings%20First%20Quarter%202025%20Financial%20Results) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management emphasized strategic ecosystem investments to support merchants and consumers, impacting short-term profitability but fostering long-term growth - The company made substantial investments in its platform ecosystem, weighing on short-term profitability but strengthening long-term platform health[3](index=3&type=chunk) - A slowdown in growth rate is anticipated as the business scales and faces external challenges[3](index=3&type=chunk) - Ecosystem investments were strategically increased to drive sales and reduce costs for SME merchants amid growing uncertainties[3](index=3&type=chunk) [Q1 2025 Financial Performance](index=1&type=section&id=Q1%202025%20Financial%20Performance) Q1 2025 revenue grew 10% to RMB 95.7 billion, but profitability declined due to increased costs and expenses [Key Financial Metrics (Consolidated)](index=1&type=section&id=Key%20Financial%20Metrics%20%28Consolidated%29) | Financial Metric | Q1 2025 (RMB Million) | Q1 2024 (RMB Million) | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | 95,672.2 | 86,812.1 | +10% | | **Operating Profit** | 16,085.6 | 25,973.7 | -38% | | **Net Income** | 14,741.8 | 27,997.8 | -47% | | **Non-GAAP Operating Profit** | 18,259.7 | 28,552.2 | -36% | | **Non-GAAP Net Income** | 16,916.0 | 30,601.8 | -45% | [Revenue Breakdown](index=1&type=section&id=Revenue%20Breakdown) | Revenue Source | Q1 2025 (RMB Million) | Q1 2024 (RMB Million) | YoY Change | | :--- | :--- | :--- | :--- | | Online marketing services and others | 48,722.2 | 42,456.2 | +15% | | Transaction services | 46,950.0 | 44,355.8 | +6% | [Costs and Expenses](index=1&type=section&id=Costs%20and%20Expenses) - Total costs of revenues increased **25%** year-over-year to **RMB 40.9 billion**, primarily due to higher fulfillment and payment processing fees[6](index=6&type=chunk) - Total operating expenses rose **37%** year-over-year to **RMB 38.6 billion**, driven by a **43% increase in sales and marketing expenses** to **RMB 33.4 billion** for promotion and advertising[6](index=6&type=chunk)[8](index=8&type=chunk) - Research and development expenses increased to **RMB 3.6 billion** from **RMB 2.9 billion** in the prior year period[8](index=8&type=chunk) [Profitability and Earnings per Share (EPS)](index=2&type=section&id=Profitability%20and%20Earnings%20per%20Share%20%28EPS%29) | EPS Metric | Q1 2025 (US$) | Q1 2024 (RMB) | | :--- | :--- | :--- | | **Diluted Earnings per ADS (GAAP)** | 1.37 | 18.96 | | **Non-GAAP Diluted Earnings per ADS** | 1.56 | 20.72 | [Financial Position and Cash Flow](index=2&type=section&id=Financial%20Position%20and%20Cash%20Flow) PDD Holdings maintained a robust financial position with strong assets and liquidity, despite decreased operating cash flow [Balance Sheet Summary](index=2&type=section&id=Balance%20Sheet%20Summary) - Cash, cash equivalents, and short-term investments totaled **RMB 364.5 billion** as of March 31, 2025, up from **RMB 331.6 billion** at December 31, 2024[12](index=12&type=chunk) - Total assets grew to **RMB 530.5 billion** from **RMB 505.0 billion** at the end of 2024[21](index=21&type=chunk) - Total liabilities were **RMB 200.8 billion**, and total shareholders' equity was **RMB 329.7 billion** as of March 31, 2025[24](index=24&type=chunk) [Cash Flow Summary](index=2&type=section&id=Cash%20Flow%20Summary) | Cash Flow Item (RMB Million) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash generated from operating activities | 15,516.9 | 21,067.2 | | Net cash used in investing activities | (6,384.0) | (28,290.1) | [Detailed Financial Statements](index=3&type=section&id=Detailed%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2025, details the company's financial position, including assets, equity, and liabilities - Detailed unaudited condensed consolidated balance sheets for March 31, 2025, and December 31, 2024, are provided[21](index=21&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The income statement for Q1 2025 presents detailed financial performance, including revenues, profit, and net income - Detailed unaudited condensed consolidated statements of income for the three months ended March 31, 2025, and March 31, 2024, are provided[26](index=26&type=chunk)[28](index=28&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement for Q1 2025 details net cash from operating and investing activities and period-end cash - Detailed unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2025, and March 31, 2024, are provided[35](index=35&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=6&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles GAAP to non-GAAP financial measures, detailing adjustments for share-based compensation Reconciliation of GAAP to Non-GAAP Measures (RMB Million) | Reconciliation (RMB Million) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Operating profit (GAAP)** | 16,085.6 | 25,973.7 | | Add: Share-based compensation | 2,174.1 | 2,578.5 | | **Non-GAAP operating profit** | 18,259.7 | 28,552.2 | | **Net income (GAAP)** | 14,741.8 | 27,997.8 | | Add: Share-based compensation | 2,174.1 | 2,578.5 | | **Non-GAAP net income** | 16,916.0 | 30,601.8 |

Financial Data and Key Metrics Changes - In Q1 2025, total revenues increased by 10% year over year to RMB 95.7 billion, driven by growth in online marketing services and transaction services [22][23] - Total cost of revenues rose by 25% to RMB 40.9 billion, primarily due to increased fulfillment and payment processing fees [24] - Operating profit decreased significantly, with GAAP operating profit at RMB 16.1 billion compared to RMB 26 billion in the same quarter last year [26] - Net income attributable to ordinary shareholders was RMB 14.7 billion, down from RMB 28 billion in the same quarter last year [27] Business Line Data and Key Metrics Changes - Revenues from online marketing services were RMB 48.7 billion, up 15% year over year [23] - Revenues from transaction services increased to RMB 47 billion, a 6% rise from the previous year [23] - Non-GAAP operating profit margin fell to 19% from 33% in the same quarter last year, reflecting increased investments in ecosystem initiatives [26] Market Data and Key Metrics Changes - The company noted intensified competition in the Chinese e-commerce sector, impacting merchant performance and profitability [8][9] - The global business faced significant pressure due to changes in external policy environments, such as tariffs, affecting merchants' capabilities [9][35] Company Strategy and Development Direction - The company is focusing on a high-quality development strategy, emphasizing merchant support and ecosystem investments [6][7] - A new RMB 100 billion support program was launched to enhance merchant support, particularly for small and medium-sized businesses [15][46] - The strategy includes fee reductions and comprehensive support initiatives aimed at improving the operational efficiency of merchants [16][47] Management Comments on Operating Environment and Future Outlook - Management acknowledged that the slowdown in revenue growth and profit decline are due to external uncertainties and increased competition [8][37] - The company remains committed to long-term investments in its platform ecosystem, prioritizing merchant and consumer needs over short-term profitability [11][40] - Future financial results may continue to reflect the impact of sustained investments in ecosystem support [28] Other Important Information - The company has launched initiatives to support agricultural products and enhance the distribution of local farm products [18] - A new consumer coupon program was introduced to stimulate demand and support high-quality merchants [19][20] Q&A Session Summary Question: What preparations has the company made in response to macro policy changes affecting merchants? - Management emphasized proactive actions and increased support for merchants through the RMB 100 billion support program to help them navigate external uncertainties [34][36] Question: What factors contributed to the significant decline in net profit margins this quarter? - The decline is attributed to a mismatch between business investment and return cycles, compounded by external market changes [38][39] Question: How will the RMB 100 billion support program be delivered to merchants? - The program will extend support to more small and medium-sized merchants, enhancing their operational efficiency and reducing costs [46][47] Question: How does the company view competition in the current market environment? - Management acknowledged the challenges posed by competition and the need for the platform to support merchants to ensure their success [54][56]

Financial Data and Key Metrics Changes - In Q1 2025, total revenues increased by 10% year over year to RMB 95.7 billion, driven by growth in online marketing services and transaction services [23] - Total cost of revenues rose by 25% to RMB 40.9 billion, primarily due to increased fulfillment and payment processing fees [24] - GAAP operating profit decreased to RMB 16.1 billion from RMB 26 billion in the same quarter last year, while non-GAAP operating profit fell to RMB 18.3 billion from RMB 28.6 billion [26] - Net income attributable to ordinary shareholders was RMB 14.7 billion, down from RMB 28 billion in the same quarter last year [27] Business Line Data and Key Metrics Changes - Revenues from online marketing services were RMB 48.7 billion, up 15% year over year, while transaction services revenues were RMB 47 billion, up 6% [23] - Non-GAAP sales and marketing expenses increased by 44% to RMB 32.8 billion, reflecting increased promotional programs and marketing support for merchants [25] Market Data and Key Metrics Changes - The company noted intensified competition in the Chinese e-commerce sector, impacting merchant performance and profitability [10] - The external policy environment, including tariffs, has created significant pressure for merchants, affecting their ability to adapt [11] Company Strategy and Development Direction - The company is focusing on a high-quality development strategy, emphasizing ecosystem investments and merchant support programs, including a RMB 100 billion support initiative [8][17] - The strategy aims to enhance support for small and medium-sized merchants, driving broader supply chain upgrades and improving product offerings [18][46] - The company is committed to long-term intrinsic value over short-term financial results, prioritizing merchant and consumer needs [14][40] Management Comments on Operating Environment and Future Outlook - Management acknowledged that the slowdown in revenue growth and profit decline are due to external uncertainties and the mismatch between investment and return cycles [10][38] - The company expects continued challenges to profitability in the near term but remains focused on long-term investments in the ecosystem [40][41] Other Important Information - The company has launched initiatives to support agricultural products and enhance digital systems for local merchants, aiming to modernize the agriculture supply chain [19][20] - The company is enhancing consumer initiatives, including coupon programs and direct discounts, to stimulate demand and support merchants [21][48] Q&A Session Summary Question: What preparations has the platform made in response to macro policy changes and the decline in net profit margins? - Management emphasized proactive actions and increased support for merchants through the RMB 100 billion support program to help them navigate external uncertainties [34][36] Question: What is the long-term impact of the RMB 100 billion support program on financial performance? - Management believes that investments in the merchant ecosystem will lead to higher quality products and services, fostering long-term healthy development [46][49] Question: How does management view competition in the current market environment? - Management acknowledged the challenges faced by merchants due to competition and the need for the platform to support them to ensure collective success [56] Question: What updates can be provided on overall consumption momentum during the June promotion? - Management highlighted efforts to simplify mechanisms and provide real savings to consumers, enhancing the shopping experience during promotional events [60]

Financial Data and Key Metrics Changes - In Q1 2025, total revenues increased by 10% year over year to RMB 95.7 billion, driven by online marketing services and transaction services [23][28] - Total cost of revenues rose by 25% to RMB 40.9 billion, primarily due to increased fulfillment and payment processing fees [24] - GAAP operating profit decreased to RMB 16.1 billion from RMB 26 billion in the same quarter last year, while non-GAAP operating profit fell to RMB 18.3 billion from RMB 28.6 billion [27][28] - Net income attributable to ordinary shareholders was RMB 14.7 billion, down from RMB 28 billion in the same quarter last year [28] Business Line Data and Key Metrics Changes - Revenues from online marketing services were RMB 48.7 billion, up 15% year over year [23] - Revenues from transaction services increased to RMB 47 billion, a 6% rise from the previous year [23] - Non-GAAP sales and marketing expenses surged by 44% to RMB 32.8 billion, reflecting increased promotional efforts [26] Market Data and Key Metrics Changes - The e-commerce sector in China is experiencing intensified competition, impacting profit margins and growth rates [9][39] - The company is facing challenges in passing on policy incentives to consumers, putting merchants at a disadvantage compared to first-party businesses [10][50] Company Strategy and Development Direction - The company is focusing on a high-quality development strategy, emphasizing merchant support and ecosystem investments [7][8] - A new RMB 100 billion support program has been launched to enhance merchant support, particularly for small and medium-sized businesses [16][49] - The company aims to build a win-win ecosystem that benefits both merchants and consumers, prioritizing long-term intrinsic value over short-term financial results [12][42] Management Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by external policy changes and competition, emphasizing the need for increased support for merchants [36][38] - The company expects profitability to face challenges in the near term due to ongoing investments in the ecosystem [42] - Long-term growth is prioritized, with a focus on building a robust merchant ecosystem to ensure sustainable development [59] Other Important Information - The company has launched initiatives to support agricultural products and enhance supply chain transformation [19][20] - A digital system for agricultural product operations has been developed to modernize traditional supply chains [20] Q&A Session Summary Question: What preparations has the platform made in response to macro policy changes? - Management emphasized proactive actions and increased support for merchants through the RMB 100 billion support program to help them navigate external uncertainties [36][38] Question: What factors contributed to the decline in net profit margins this quarter? - The decline is attributed to a slowdown in revenue growth and increased ecosystem investments, leading to a mismatch between investment and return cycles [39][41] Question: How will the RMB 100 billion support program be delivered to merchants? - The program will extend support to more small and medium-sized merchants, enhancing operational efficiency and reducing costs [48][49] Question: How does the company respond to the National Subsidy Program? - The company has launched a dedicated page for the national subsidy program and is enhancing promotional efforts to provide additional savings to consumers [51]

Core Insights - Pinduoduo's Q1 2025 financial report shows significant underperformance, with total revenue of 95.7 billion yuan, a 10% year-on-year increase, but adjusted net profit of 16.9 billion yuan, down 45% from the previous year, falling short of market expectations by 11 billion yuan [1][2] Revenue Structure - Online marketing services and other revenues accounted for 48.7 billion yuan, up 15% year-on-year, while transaction service revenue was 47 billion yuan, up 6% year-on-year [1] - The growth rate of Pinduoduo's revenue is slowing, particularly in transaction service revenue, which has decreased from a 33% growth rate in the previous quarter [1][4] Cost and Profitability - Sales and marketing expenses surged to 33.4 billion yuan, a 43% increase from 23.4 billion yuan in the same quarter last year, contributing to a significant decline in profits [1][2] - Total operating expenses reached 38.6 billion yuan, a 37% increase, outpacing revenue growth [2] Strategic Initiatives - Pinduoduo has launched initiatives like the "100 Billion Support" plan to improve the business environment, which includes reducing store security deposits for various categories [4][5] - The company aims to explore further commission reduction measures to alleviate costs for merchants, focusing on small and medium-sized businesses [5] Regulatory Environment - Recent regulatory proposals from the market supervision authority may impact Pinduoduo's revenue, as they emphasize reducing fees for platform operators, particularly benefiting small merchants [5] Competitive Landscape - Pinduoduo is facing increased profit costs to compensate for competitive disadvantages, particularly in response to national subsidy policies [5] - The management has indicated a willingness to sacrifice short-term performance to support merchants through market fluctuations [5]

Core Viewpoint - The "Key to Home" initiative, launched by the Central Radio and Television Station and Pinduoduo, addresses the urgent issue of safeguarding elderly individuals, particularly those with Alzheimer's disease, in the context of an aging society in China [1][3]. Group 1: Initiative Overview - The "Key to Home" initiative aims to help families of elderly individuals with Alzheimer's disease by providing a technological solution to prevent them from going missing [1][3]. - Since its launch at the end of 2023, the initiative has reached over 5,000 families across cities like Wuhan, Zhengzhou, and Qingdao, distributing keychains designed to assist in locating missing elderly individuals [1][9]. Group 2: Technological Solution - The keychain features advanced technology, including high-precision positioning via the Beidou system and a dual-mode tracking system that allows family members and passersby to assist in locating missing individuals [6][9]. - Families can apply for the keychain at local police stations, and after registration and assessment, they can receive it for free [8]. Group 3: Social Impact - The initiative not only enhances the safety of elderly individuals but also alleviates the burden on families and public resources, reflecting a collaborative effort among law enforcement, media, and businesses [12]. - The project has been recognized as a model of innovation in addressing the challenges posed by an aging population, promoting dignity and social efficiency [12].

Core Viewpoint - Pinduoduo reported a revenue of 95.7 billion yuan for Q1 2025, reflecting a 10% year-on-year growth, but the growth rate has been slowing for several consecutive quarters [1] Group 1: Business Strategy - The company has increased its investment in high-quality development strategies, upgrading its "100 billion subsidy" initiatives to a "1 trillion support" program to enhance the e-commerce ecosystem [1] - Pinduoduo's management emphasizes the importance of supporting merchants during challenging market conditions, prioritizing their interests to ensure long-term platform health [1][2] Group 2: Merchant Support - The platform is exploring more commission reduction measures to lower costs for merchants, expanding support from top and mid-tier merchants to include small and medium-sized businesses [2] - The company aims to maximize the potential of small and medium-sized merchants, focusing on high-quality development and driving overall industry upgrades [2] Group 3: Consumer Initiatives - The "1 trillion support" initiative has led to various subsidy policies benefiting consumers, including a new "100 billion merchant feedback plan" and 100 billion yuan in consumer vouchers [2] - Pinduoduo is also exploring an innovative "platform direct subsidy" model to enhance consumer purchasing power while ensuring merchant rights, thereby stimulating demand and market competitiveness [2]

"过去这个季度，外部环境的变化给商家带来了新挑战。在这个关键时刻，我们发挥平台企业的社会效 能和责任担当，推出了'千亿扶持'惠商新战略，坚定护航商家穿越周期。"拼多多集团执行董事、联席 CEO赵佳臻表示，我们要求公司上下力出一孔，全面投入这一新战略，优先保证用户和商家的利益，努 力为商家提供更多确定性，助推产业平稳转型。 拼多多发布截至3月31日的2025年第一季度财报。受外部环境变化影响，以及高质量发展的持续投入， 拼多多本季度营收957亿元，同比增长10%，增速有所放缓。 ...

Core Viewpoint - Pinduoduo (PDD.US) reported a revenue of 95.7 billion yuan for Q1 2025, reflecting a 10% year-on-year growth, although the growth rate has slowed down due to external environmental changes and ongoing investments in high-quality development [1] Group 1: High-Quality Development Strategy - Pinduoduo has intensified its high-quality development strategy this year, launching the "100 Billion Subsidy" and the new "100 Billion Support" strategy to reduce costs for merchants and promote industrial transformation [1][2] - The management emphasizes the importance of supporting merchants through short-term challenges, indicating a willingness to sacrifice short-term performance for long-term health of the platform [2] Group 2: Merchant Support Initiatives - The establishment of the "Merchant Rights Protection Committee" aims to address merchant needs and enhance service mechanisms, with initiatives like regular communication and violation warning functions introduced [3][5] - The "100 Billion Support" strategy has led to significant reductions in store security deposits for various categories, alongside increased support for small and medium-sized merchants [5][6] Group 3: Consumer Benefits and Market Dynamics - The "100 Billion Support" plan includes consumer subsidies, with initiatives like the "100 Billion Merchant Feedback Plan" and various coupon campaigns to enhance consumer demand and improve supply-demand matching [6][9] - Pinduoduo is exploring innovative models like "platform direct subsidies" to ensure competitive pricing for consumers while safeguarding merchant interests [6] Group 4: Agricultural and Technological Advancements - The "2025 Good Specialty Products" initiative focuses on enhancing support for agricultural merchants, implementing customized solutions to improve the value of local specialties and boost farmer incomes [9][10] - The establishment of the "Digital Business + New Farmers" technology center aims to drive innovation in agricultural operations, addressing industry pain points through automation and data-driven solutions [10]