Core Viewpoint - Pinduoduo's recent financial performance reflects a strategic shift towards supporting merchants through significant subsidies, which has impacted short-term profitability but is expected to yield long-term benefits for the platform and its ecosystem [2][10][31]. Financial Performance - In Q1 2025, Pinduoduo reported revenues of RMB 956.72 billion, a 10% year-on-year increase, but the growth rate has slowed compared to previous quarters [2][4]. - Operating profit decreased to RMB 160.86 billion, down 38% year-on-year, falling short of market expectations, leading to a nearly 14% drop in stock price on the earnings release day [2][4]. - Sales and marketing expenses surged by approximately RMB 100 billion year-on-year, indicating a substantial investment in merchant support [1][9]. Merchant Support Initiatives - The "100 Billion Reduction" initiative, launched in August of the previous year, aimed to reduce fees and provide subsidies to merchants, which has directly impacted Pinduoduo's profit margins [5][9]. - The recent "1000 Billion Support" plan is set to invest over RMB 100 billion in the next three years to further assist small and medium-sized merchants, expanding the scope of support [14][15]. - These initiatives are designed to help over 10 million merchants reduce costs and enhance their market reach, ultimately fostering a healthier merchant ecosystem [10][15]. Long-term Strategy - Pinduoduo's management emphasizes a long-term vision, prioritizing sustainable growth over short-term financial results, with a focus on creating high-quality products and services for consumers [10][31]. - The company believes that the current investments in merchant support will lead to a more robust and competitive platform in the future, despite the immediate financial pressures [10][31][32]. Market Impact and Future Outlook - The ongoing support measures are expected to influence revenue growth and expenditures, with management viewing these costs as long-term investments [10][11]. - As the market evolves, Pinduoduo anticipates that the benefits of its merchant support initiatives will become more apparent, potentially stabilizing and improving financial performance in subsequent quarters [32].

Core Viewpoint - Pinduoduo's revenue growth has slowed down, with operating profit dropping to 16.09 billion RMB, a 38% decrease year-over-year, which fell short of market expectations, leading to a significant drop in stock price [1][4][5] Financial Performance - For the three months ended March 31, 2025, Pinduoduo reported revenues of 95.67 billion RMB, with online marketing services and other income contributing 48.72 billion RMB, a 15% year-over-year increase, while transaction service revenue was 46.95 billion RMB, up 6% [3][5] - Operating profit decreased to 16.09 billion RMB, reflecting the company's investment in merchant subsidies, with total operating expenses rising significantly [3][7] - The gross margin fell by 5.1 percentage points to 57% due to increased sales expenses, which rose by 43% year-over-year to 334.03 billion RMB [7][8] Strategic Initiatives - Pinduoduo has implemented the "100 Billion Subsidy" program to support merchants by reducing fees and providing subsidies, which has impacted short-term profits but is seen as a long-term investment [4][9] - The company has expanded its support initiatives to a "1,000 Billion Support" plan, aiming to invest over 1,000 billion RMB in resources for small and medium-sized merchants over the next three years [9][15] - The management emphasizes that these initiatives are designed to foster a healthier merchant ecosystem, which will ultimately benefit the platform in the long run [8][13] Market Impact - The company's commitment to supporting merchants has been reiterated despite short-term financial pressures, with a focus on long-term value rather than quarterly results [8][14] - Pinduoduo's approach is expected to create a positive cycle of supply and demand, enhancing the overall consumer experience and strengthening the platform's competitive position [13][19] Future Outlook - As the effects of the platform's investments and subsidies begin to materialize, Pinduoduo anticipates an improvement in performance, especially as the rapid growth phase stabilizes [20]