Blue Whale News, November 22nd - On November 21st, Pinduoduo released its third quarter financial report as of September 30th. The financial report data showed that the company's revenue in Q3 2024 was 99.35 billion yuan, a year-on-year increase of 44%, which was lower than the market expectation of 102.83 billion yuan; The net profit attributable to the parent company was 24.998 billion yuan, a decrease of 22% compared to the previous period; After adjustment, the net profit attributable to the parent company was 27.459 billion yuan, a year-on-year increase of 61%. After the financial report conference, Pinduoduo's stock price plummeted by over 10%.
Pinduoduo financial data, screenshot from Futu Niu Niu
Pinduoduo financial data, screenshot from Futu Niu Niu
The revenue of the company's online marketing services and other business segments in Q3 2024 was 49.351 billion yuan, a year-on-year increase of 24%; The transaction service revenue was 50 billion yuan, a year-on-year increase of 72%.
In terms of cash flow, in Q3 2024, Pinduoduo's cash and cash equivalents, as well as short-term investment balance, reached a new high of 308.5 billion yuan (approximately 44 billion US dollars). In the 2023 financial report, this figure was 217.2 billion yuan by the end of the year.
At the financial report meeting, Pinduoduo executives stated that high-quality development is still the current focus, and mentioned that the platform's launch of a series of "reduction+support" measures has received positive feedback on both supply and demand sides, reducing business operating costs and improving operational efficiency.
During the conference call, Chen Lei, Chairman and Co CEO of Pinduoduo, stated that the slowdown in revenue growth and the decline in profits are due to intensified competition in the e-commerce sector and various challenges faced by the business. As pointed out in the previous quarter, ecosystem development investments are expected to affect short-term financial results, which is within our expectations. He mentioned that in addition to financial results, the company places higher emphasis on the value or long-term benefits of ecosystem investments.
The executives stated that they have increased their efforts in ecological investment this quarter and have already received positive feedback on both the supply and demand sides. During the Harvest Festival, Pinduoduo invested 1 billion yuan in subsidy funds and 2 billion yuan in traffic resources to support new quality merchants. Chen Lei said, "In the coming quarters, we will firmly make long-term investments, continue to focus on ecological construction such as' new quality supply 'and' e-commerce westward ', and promote the acceleration of platforms and industries towards high-quality development
During the Q&A session, Zhao Jiazhen, co CEO of Pinduoduo, bluntly stated that the current industry competition is intensifying, and the slowdown in revenue growth is inevitable, and the company is indeed facing challenges. His original words were: "Constrained by the natural path of business development, the growth rate of our business will not be linearly extrapolated in the long run. In such an environment, we believe that the slowdown in revenue growth is inevitable
Zhao Jiazhen stated that the team itself has also led to missing out on some macro opportunities, and mentioned that due to the limitations of our platform's operating model and the team's historical experience and insufficient capabilities, our disadvantage compared to peers will significantly exist for a period of time, which will affect the current and future profitability of the company.
Since the beginning of this year, macro policies that have had a significant positive impact on some industries and consumers have been limited by the historical capabilities of third-party platform operations. Our team has not fully grasped the benefits of macro policies, which has led us to incur huge costs for channel platforms in order to maintain the competitiveness of the same products. This will inevitably affect our current and future profitability levels, "said Zhao Jiazhen.
He also mentioned that in order to cope with the current competitive environment, we will further raise our standards for ourselves, strengthen our core business capabilities, continue to seek new investment opportunities in the supply chain and platform ecology, make long-term high-quality investments, and transform these capabilities into more efficient, cost-effective products and higher quality services provided to consumers.
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