PDD PDD Holdings Inc

PDD Holdings Inc. (“PDD Holdings” or the “Company”) (NASDAQ: PDD), today announced its unaudited financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Highlights

• Total revenues in the quarter were RMB97,059.5 million (US$113,355.8 million), an increase of 86% from RMB52,280.7 million in the same quarter of 2023.
• Operating profit in the quarter was RMB32,564.5 million (US$4,481.0 million), an increase of 156% from RMB12,718.8 million in the same quarter of 2023. Non-GAAP2 operating profit in the quarter was RMB34,987.3 million (US$4,814.4 million), an increase of 139% from RMB14,609.4 million in the same quarter of 2023.
• Net income attributable to ordinary shareholders in the quarter was RMB32,009.4 million (US$4,404.6 million), an increase of 144% from RMB13,108.1 million in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB34,432.1 million (US$4,738.0 million), an increase of 125% from RMB15,269.4 million in the same quarter of 2023.

“While encouraged by the solid progress we made in the past few quarters, we see many challenges ahead,” said Mr. Lei Chen, Chairman and Co-Chief Executive Officer of PDD Holdings. “We are committed to transitioning toward high-quality development and fostering sustainable ecosystem. We will invest heavily in the platform’s trust and safety, support high-quality merchants, and relentlessly improve the merchant ecosystem. We are prepared to accept short-term sacrifices and potential decline in profitability.”

“We are committed to nurturing a healthy and sustainable ecosystem where high-quality merchants thrive,” said Mr. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer of PDD Holdings. “We will vigorously support high-quality merchants while firmly tackling low-quality ones, continuously building a healthy and sustainable ecosystem.”

“In the past quarter, our revenue growth rate slowed quarter-on-quarter. Looking ahead, revenue growth will inevitably face pressure due to intensified competition and external challenges,” said Ms. Jun Liu, VP of Finance of PDD Holdings. “Profitability will also likely to be impacted as we continue to invest resolutely.”

_________1 This announcement contains translations of certain Renminbi (“RMB”) amounts into U.S. dollars (“US$”) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.2672 to US$1.00, the noon buying rate in effect on June 28, 2024 as set forth in the H.10 Statistical Release of the Federal Reserve Board.2 The Company’s non-GAAP financial measures exclude share-based compensation expenses, fair value change of certain investments, and interest expenses related to the convertible bonds’ amortization to face value. See “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this press release.

Second Quarter 2024 Unaudited Financial Results

Total revenues were RMB97,059.5 million (US$13,355.8 million), an increase of 86% from RMB52,280.7 million in the same quarter of 2023. The increase was primarily due to the increase in revenues from online marketing services and transaction services.

• Revenues from online marketing services and others were RMB49,115.9 million (US$6,758.6 million), an increase of 29% from RMB37,932.8 million in the same quarter of 2023.
• Revenues from transaction services were RMB47,943.7 million (US$6,597.3 million), an increase of 234% from RMB14,347.9 million in the same quarter of 2023.

Total costs of revenues were RMB33,698.1 million (US$4,637.0 million), an increase of 80% from RMB18,689.8 million in the same quarter of 2023. The increase mainly came from the increased fulfilment fees and payment processing fees.

Total operating expenses were RMB30,796.9 million (US$4,237.8 million), an increase of 48% from RMB20,872.2 million in the same quarter of 2023. The increase was primarily due to the increase in sales and marketing expenses.

• Sales and marketing expenses were RMB26,049.1 million (US$3,584.5 million), an increase of 48% from RMB17,542.2 million in the same quarter of 2023, mainly due to the increased spending in promotion and advertising activities.
• General and administrative expenses were RMB1,838.6 million (US$253.0 million), an increase of 208% from RMB596.0 million in the same quarter of 2023, primarily due to the increase in staff related costs.
• Research and development expenses were RMB2,909.2 million (US$400.3 million), compared with RMB2,734.0 million in the same quarter of 2023.

Operating profit in the quarter was RMB32,564.5 million (US$4,481.0 million), an increase of 156% from RMB12,718.8 million in the same quarter of 2023. Non-GAAP operating profit in the quarter was RMB34,987.3 million (US$4,814.4 million), an increase of 139% from RMB14,609.4 million in the same quarter of 2023.

Net income attributable to ordinary shareholders in the quarter was RMB32,009.4 million (US$4,404.6 million), an increase of 144% from RMB13,108.1 million in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB34,432.1 million (US$4,738.0 million), an increase of 125% from RMB15,269.4 million in the same quarter of 2023.

Basic earnings per ADS was RMB23.14 (US$3.18) and diluted earnings per ADS was RMB21.61 (US$2.97), compared with basic earnings per ADS of RMB9.64 and diluted earnings per ADS of RMB9.00 in the same quarter of 2023. Non-GAAP diluted earnings per ADS was RMB23.24 (US$3.20), compared with RMB10.47 in the same quarter of 2023.

Net cash generated from operating activities was RMB43,792.6 million (US$6,026.1 million), compared with RMB23,396.0 million in the same quarter of 2023, mainly due to the increase in net income.

Cash, cash equivalents and short-term investments were RMB284.9 billion (US$39.2 billion) as of June 30, 2024, compared with RMB217.2 billion as of December 31, 2023.

Other non-current assets were RMB67.8 billion (US$9.3 billion) as of June 30, 2024, compared with RMB48.0 billion as of December 31, 2023, which mainly included time deposits, held-to-maturity debt securities, and available-for-sale debt securities.

Conference Call

The Company’s management will hold an earnings conference call at 7:30 AM ET on August 26, 2024 (12:30 PM IST and 7:30 PM HKT on the same day).

The conference call will be webcast live at https://investor.pddholdings.com/investor-events. The webcast will be available for replay at the same website following the conclusion of the call.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses non-GAAP measures, such as non-GAAP operating profit, non-GAAP net income attributable to ordinary shareholders, non-GAAP diluted earnings per ordinary share and non-GAAP diluted earnings per ADS, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s non-GAAP financial measures exclude the impact of share-based compensation expenses, fair value change of certain investments, and interest expenses related to the convertible bonds’ amortization to face value.

The Company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, fair value change of certain investments, and interest expenses related to the convertible bonds’ amortization to face value, which are non-cash charges. The Company also believes that the non-GAAP financial measures may provide further information about the Company’s results of operations, and enhance the overall understanding of the Company’s past performance and future prospects.

The Company’s non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. These non-GAAP financial measures do not reflect all items of income and expenses that affect the Company’s operations and do not represent the residual cash flow available for discretionary expenditures. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages you to review the Company’s financial information in its entirety and not rely on a single financial measure.

For more information on the non-GAAP financial measures, please see the table captioned “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this press release.Safe Harbor Statements

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue” or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as the Company’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s growth strategies; its future business development, results of operations and financial condition; its ability to understand buyer needs and provide products and services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchants and third-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with merchants; trends and competition in the e-commerce markets globally and in the countries or regions where the Company has operations; changes in its revenues and certain cost or expense items; the expected growth of e-commerce markets globally and in the countries or regions where the Company has operations; developments in the relevant governmental policies and regulations relating to the Company’s industry; and general economic and business conditions globally and in the countries or regions where the Company has operations; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

About PDD Holdings

PDD Holdings is a multinational commerce group that owns and operates a portfolio of businesses. PDD Holdings aims to bring more businesses and people into the digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities.

PDD HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December31, 2023		June 30, 2024
		RMB		RMB		US$
				(Unaudited)		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		59,794,469		56,756,329		7,809,931
Restricted cash		61,985,436		59,360,600		8,168,290
Receivables from online payment platforms		3,914,117		5,491,131		755,605
Short-term investments		157,415,365		228,170,850		31,397,354
Amounts due from related parties		7,428,070		5,989,411		824,170
Prepayments and other current assets		4,213,015		3,957,931		544,629
Total current assets		294,750,472		359,726,252		49,499,979
Non-current assets
Property, equipment and software, net		979,597		863,494		118,821
Intangible assets		21,148		21,056		2,897
Right-of-use assets		4,104,889		4,237,670		583,123
Deferred tax assets		270,738		76,625		10,544
Other non-current assets		47,951,276		67,819,245		9,332,239
Total non-current assets		53,327,648		73,018,090		10,047,624
Total Assets		348,078,120		432,744,342		59,547,603

PDD HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December31, 2023		June 30, 2024
		RMB		RMB		US$
				(Unaudited)		(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Amounts due to related parties		1,238,776		1,152,007		158,521
Customer advances and deferred revenues		2,144,610		2,413,577		332,119
Payable to merchants		74,997,252		78,707,764		10,830,549
Accrued expenses and other liabilities		55,351,399		68,735,001		9,458,252
Merchant deposits		16,878,746		17,958,628		2,471,189
Convertible bonds, current portion		648,570		249		34
Lease liabilities		1,641,548		1,865,878		256,753
Total current liabilities		152,900,901		170,833,104		23,507,417
Non-current liabilities
Convertible bonds		5,231,523		5,264,097		724,364
Lease liabilities		2,644,260		2,634,862		362,569
Deferred tax liabilities		59,829		34,061		4,687
Total non-current liabilities		7,935,612		7,933,020		1,091,620
Total Liabilities		160,836,513		178,766,124		24,599,037
Shareholders’ equity
Ordinary shares		177		179		25
Additional paid-in capital		107,293,091		112,946,397		15,541,941
Statutory reserves		105,982		105,982		14,584
Accumulated other comprehensive income		4,723,760		5,799,882		798,090
Retained earnings		75,118,597		135,125,778		18,593,926
Total Shareholders’ Equity		187,241,607		253,978,218		34,948,566
Total Liabilities and Shareholders’ Equity		348,078,120		432,744,342		59,547,603

PDD HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME   (Amounts in thousands of RMB and US$)
		For the three months ended June 30,									For the six months ended June 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues		52,280,748			97,059,531			13,355,836			89,917,798			183,871,590			25,301,573
Costs of revenues		(18,689,787	)		(33,698,098	)		(4,637,013	)		(29,815,072	)		(66,392,784	)		(9,135,951	)
Sales and marketing expenses		(17,542,209	)		(26,049,137	)		(3,584,481	)		(33,801,897	)		(49,459,792	)		(6,805,894	)
General and administrative expenses		(596,033	)		(1,838,550	)		(252,993	)		(1,412,435	)		(3,661,995	)		(503,907	)
Research and development expenses		(2,733,964	)		(2,909,210	)		(400,321	)		(5,240,621	)		(5,818,830	)		(800,698	)
Total operating expenses		(20,872,206	)		(30,796,897	)		(4,237,795	)		(40,454,953	)		(58,940,617	)		(8,110,499	)
Operating profit		12,718,755			32,564,536			4,481,028			19,647,773			58,538,189			8,055,123
Interest and investment income, net		2,287,741			4,855,592			668,152			3,751,340			9,904,181			1,362,861
Interest expenses		(11,937	)		-			-			(23,624	)		-			-
Foreign exchange gain		155,717			60,165			8,279			139,680			274,683			37,798
Other income, net		1,106,471			493,258			67,875			2,333,991			2,374,506			326,742
Profit before income tax and share of results of equity investees		16,256,747			37,973,551			5,225,334			25,849,160			71,091,559			9,782,524
Share of results of equity investees		9,781			(49,583	)		(6,823	)		116,170			(102,013	)		(14,037	)
Income tax expenses		(3,158,442	)		(5,914,613	)		(813,878	)		(4,756,217	)		(10,982,365	)		(1,511,224	)
Net income		13,108,086			32,009,355			4,404,633			21,209,113			60,007,181			8,257,263

PDD HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended June 30,						For the six months ended June 30,
		2023		2024				2023		2024
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net income		13,108,086		32,009,355		4,404,633		21,209,113		60,007,181		8,257,263
Net income attributable to ordinary shareholders		13,108,086		32,009,355		4,404,633		21,209,113		60,007,181		8,257,263
Earnings per ordinary share:
-Basic		2.41		5.78		0.80		3.96		10.87		1.50
-Diluted		2.25		5.40		0.74		3.63		10.14		1.40
Earnings per ADS (4 ordinary shares equals 1 ADS):
-Basic		9.64		23.14		3.18		15.82		43.47		5.98
-Diluted		9.00		21.61		2.97		14.53		40.57		5.58
Weighted-average number of outstanding ordinary shares (in thousands):
-Basic		5,438,394		5,533,796		5,533,796		5,360,987		5,521,739		5,521,739
-Diluted		5,833,348		5,925,659		5,925,659		5,845,398		5,916,670		5,916,670

PDD HOLDINGS INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$)
		For the three months ended June 30,						For the six months ended June 30,
		2023		2024				2023		2024
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenues
- Online marketing services and others		37,932,831		49,115,866		6,758,568		65,177,257		91,572,109		12,600,742
- Transaction services		14,347,917		47,943,665		6,597,268		24,740,541		92,299,481		12,700,831
Total		52,280,748		97,059,531		13,355,836		89,917,798		183,871,590		25,301,573

PDD HOLDINGS INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$)
		For the three months ended June 30,						For the six months ended June 30,
		2023		2024				2023		2024
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Share-based compensation expenses included in:
Costs of revenues		28,276		37,706		5,189		65,644		55,220		7,599
Sales and marketing expenses		989,326		637,997		87,791		1,478,099		1,310,372		180,313
General and administrative expenses		225,799		1,244,961		171,312		703,861		2,496,729		343,561
Research and development expenses		647,228		502,098		69,091		1,176,427		1,138,983		156,729
Total		1,890,629		2,422,762		333,383		3,424,031		5,001,304		688,202

        

PDD HOLDINGS INC.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of RMB and US$)
		For the three months ended June 30,									For the six months ended June 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net cash generated from operating activities		23,395,981			43,792,640			6,026,068			24,734,003			64,859,819			8,925,008
Net cash used in investing activities		(11,519,860	)		(42,622,100	)		(5,864,996	)		(34,140,107	)		(70,912,221	)		(9,757,846	)
Net cash generated from financing activities		7,233			728			100			7,286			758			104
Effect of exchange rate changes on cash, cash equivalents and restricted cash		881,105			240,744			33,127			532,860			388,668			53,482
Increase/(decrease) in cash, cash equivalents and restricted cash		12,764,459			1,412,012			194,299			(8,865,958	)		(5,662,976	)		(779,252	)
Cash, cash equivalents and restricted cash at beginning of period		70,670,000			114,704,917			15,783,922			92,300,417			121,779,905			16,757,473
Cash, cash equivalents and restricted cash at end of period		83,434,459			116,116,929			15,978,221			83,434,459			116,116,929			15,978,221

PDD HOLDINGS INC.RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES(Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended June 30,						For the six months ended June 30,
		2023		2024				2023		2024
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Operating profit		12,718,755		32,564,536		4,481,028		19,647,773		58,538,189		8,055,123
Add: Share-based compensation expenses		1,890,629		2,422,762		333,383		3,424,031		5,001,304		688,202
Non-GAAP operating profit		14,609,384		34,987,298		4,814,411		23,071,804		63,539,493		8,743,325
Net income attributable to ordinary shareholders		13,108,086		32,009,355		4,404,633		21,209,113		60,007,181		8,257,263
Add: Share-based compensation expenses		1,890,629		2,422,762		333,383		3,424,031		5,001,304		688,202
Add: Interest expenses related to convertible bonds’ amortization to face value		11,937		-		-		23,624		-		-
Add: Loss from fair value change of certain investments		258,704		17		2		738,980		25,454		3,503
Non-GAAP net income attributable to ordinary shareholders		15,269,356		34,432,134		4,738,018		25,395,748		65,033,939		8,948,968
Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands)		5,833,348		5,925,659		5,925,659		5,845,398		5,916,670		5,916,670
Diluted earnings per ordinary share		2.25		5.40		0.74		3.63		10.14		1.40
Add: Non-GAAP adjustments to earnings per ordinary share		0.37		0.41		0.06		0.71		0.85		0.11
Non-GAAP diluted earnings per ordinary share		2.62		5.81		0.80		4.34		10.99		1.51
Non-GAAP diluted earnings per ADS		10.47		23.24		3.20		17.38		43.97		6.04

For investor and media inquiries, please contact:

investor@pddholdings.com
media@pddholdings.com