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]

Core Viewpoint - PDD Holdings is expected to report first-quarter 2025 results on May 27, with revenue estimates at $14.17 billion, reflecting a 17.82% year-over-year growth, while earnings per share are projected at $2.49, indicating a 12.01% decline from the previous year [1]. Financial Performance - The Zacks Consensus Estimate for earnings per share (EPS) for the current quarter is $2.49, with no changes in estimates over the past 30, 60, and 90 days [2]. - PDD has a history of earnings surprises, with a 7.81% surprise in the last quarter and an average surprise of 22.35% over the last four quarters [3]. Earnings Expectations - The current Earnings ESP for PDD is 0.00%, and it holds a Zacks Rank of 3 (Hold), indicating uncertainty regarding an earnings beat this time [4]. Strategic Factors - PDD is navigating strategic transitions and competitive pressures, with a notable deceleration in revenue growth to 24% year-over-year in Q4 2024, down from 59% for the full year [5]. - The company has intensified investments in its "high-quality development strategy," including a 10 billion RMB fee reduction program and merchant support initiatives [6]. - These strategic investments are expected to create near-term pressure on profitability margins and revenue growth [7]. Competitive Landscape - The competitive dynamics in China's e-commerce market have intensified, leading PDD to increase marketing expenditures to maintain its market position against competitors like Amazon, eBay, and Alibaba [8]. - Sales and marketing expenses accounted for 28% of revenues in Q4 2024, suggesting continued elevated spending levels into Q1 2025 [9]. Global Operations - PDD's global business segment faces complexities due to external environment changes and potential macro policy shifts, which may have impacted overseas performance [10]. Overall Outlook - The combination of strategic investments, competitive intensity, and external uncertainties suggests that PDD's first-quarter results may show continued revenue growth moderation and margin fluctuations [11]. - PDD shares have increased by 22.9% year-to-date, outperforming the industry growth of 0.5% and the S&P 500 index's decline of 1.8% [12]. - Currently, PDD is trading at a forward 12-month P/E of 9.46X, significantly lower than the industry average of 22.79X, indicating a potential investment opportunity [15]. Investment Thesis - PDD presents a compelling risk-reward proposition with discounted valuations amid strategic transformation challenges, although competitive pressures and investment uncertainties suggest careful timing for entry points [18]. - Current shareholders are advised to maintain positions due to ecosystem investments, while prospective investors may benefit from waiting for clearer execution evidence [19].

PDD Holdings (PDD) Q4 2024 Earnings Call March 20, 2025 05:42 PM ET Company Participants None - ExecutiveLei Chen - General Counsel, Co-CEO & ChairmanJun Liu - VP of Finance Conference Call Participants Joyce Ju - Analyst Operator Ladies and gentlemen, thank you for standing by, and welcome to the PDD Holdings Inc. Fourth Quarter and Fiscal Year twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answe ...