TMTPost -- China’s leading e-commerce company PDD Holdings Inc. maintained much more robust-than-expected momentum as it aggressively expanded overseas.

Credit：Visual China

For the quarter ended December 31 2023, PDD’s total revenue jumped 123% year-over-year (YoY) to RMB88.88 billion (US12.52 billion), well above the Wall Street expectation of RMB79.87 billion. The data results showcased PDD sales accelerated in the holiday season as the company posted a YoY 94% increase in revenue of RMB68.84 billion in the third quarter, exceeding by about 25% more than the average analysts’ estimate. PDD’s bottom line also beat the estimates. Non-GAAP diluted earnings per share (EPS) gained 107.7% YoY to RMB17.32 in the fourth quarter, versus analysts’ projected RMB11.28. Operating profit that quarter surged 146% YoY to RMB22.395 billion, and adjusted net income climbed 110% YoY to RMB25.477 billion.

PDD attributed its stellar growth to improving consumer spending. “In the fourth quarter, we saw growing demand driven by encouraging consumer sentiment,” said  Executive Director and Co-Chief Executive Officer Jiazhen Zhao. “We will continue our high-quality development strategy, stay dedicated to offer great value and exceptional service, and keep building thriving communities that can benefit all.”  PDD Chairman and Co-Chief Executive Chen Lei concluded 2023 is a year that represents a pivotal chapter in the company’s eight-year history as it began a journey committed to high-quality development.“In 2024, we remain dedicated to further improving consumer experiences, enhancing technology innovations, and generating positive impacts in our communities.” Chen said.

The fourth quarter saw PDD’s online marketing services genearted RMB48.676 billion with a 57% YoY growth, compared with a 39% growth in the previous quarter, and revenue from transaction services soared 357% YoY to RMB40.205 billion, another increase of more than 300% following a growth of 315% a quarter ago.

PDD, as the operator of Chinese discount shopping site Pinduoduo and its overseas sister Temu, is a big winner when consumers became more sensitive to price change amid uncertainty of economic recovery in China.  While PDD didn’t not provide details of Temu in its financial report, the Wall Street believes Temu plays a key role in PDD’s stellar performance in the fourth quarter.  HSBC Global Research estimated 23% of PDD’s revenue for the year 2023 came from Temu, and the contribution would increase to 43% this year and more than 50% next year. Temu’s gross merchandise value (GMV) is expected to double to US$48 billion this year and reach US$140 billion by 2027, under HSBC’s basic consumption.  

Chen told analysts at an earnings call that Temu has expanded into 50 countries and regions since launch in September 2022. When asked about the future plan for global business and how to balance legal and compliance with the business development, Chen said the business is still at a relatively early stage, taking many uncertainties and challenges ahead. To address these uncertainties, Chen said PDD has to constantly improve itself with a genuine desire to learn from consumers in the market, while actively seeking more innovations in technology and operation models to increase market competition and overcome challenges. Despite shifts in the market environment and competitive landscape, Chen believes consumers demand for more savings and better service is universal, and that’s why PDD vows to be dedicated to integrating its high-quality development strategy in global operations and be prepared for long-term investments. As to compliance, Chen said that has always been fundamental to PDD business. He disclosed his company established a legal and compliance committee last year. The committee, chaired by Chen, aims to reinforce PDD’s legal and compliance capabilities across regions.  

Chen stressed research and development (R&D) is at the core of PDD’s growth as a technology company. R&D expenses grew 19% YoY to RMB2.9 billion in the fourth quarter, bringing the annual expense to RMB1.1 billion. “In 2023, our R&D investment exceeded RMB10 billion for the second consecutive year, underscoring our dedication to technology and agricultural advancements,” said Liu Jun, VP of Finance. “Our focus remains on creating lasting value through strategic initiatives with sustainable and positive impacts.”  PDD will continue to channel investments into new drivers of high-quality development this year, and is dedicated to advancing the role of cutting-edge technology in agriculture and in manufacturing, according to Chen.