PDD Holdings Inc. (“PDD Holdings” or the “Company”) (NASDAQ: PDD), today announced its unaudited financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Highlights

  • Total revenues in the quarter were RMB52,280.7 million (US$17,209.8 million), an increase of 66% from RMB31,439.6 million in the same quarter of 2022.
  • Operating profit in the quarter was RMB12,718.8 million (US$1,754.0 million), an increase of 46% from RMB8,697.2 million in the same quarter of 2022. Non-GAAP2 operating profit in the quarter was RMB14,609.4 million (US$2,014.7 million), an increase of 39% from RMB10,541.5 million in the same quarter of 2022.
  • Net income attributable to ordinary shareholders in the quarter was RMB13,108.1 million (US$1,807.7 million), an increase of 47% from RMB8,896.3 million in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB15,269.4 million (US$2,105.7 million), an increase of 42% from RMB10,776.3 million in the same quarter of 2022.

“Technology serves as a pivotal driving force of sustainable, high-quality development,” said Mr. Lei Chen, Chairman and Co-Chief Executive Officer of PDD Holdings. “We remain unwaveringly committed to leveraging our resources and technology background to spearhead innovation, champion digital inclusion and generate a positive impact on society at large.”

“Over the recent quarter, we saw a positive shift in consumer sentiment, leading to a rise in demand across various product sectors,” stated Mr. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer of PDD Holdings. “We are deeply dedicated to high-quality development to create values for every party of our ecosystem.”

“In Q2, we seized the opportunities of favorable consumption trends and invested firmly and responsibly,” said Ms. Jun Liu, VP of Finance at PDD Holdings. “Looking ahead, we will continue to invest with determination and patience to execute our high-quality development strategy.”

Second Quarter 2023 Unaudited Financial Results

Total revenues were RMB52,280.7 million (US$7,209.8 million), an increase of 66% from RMB31,439.6 million in the same quarter of 2022. The increase was primarily due to an increase in revenues from online marketing services and transaction services.

  • Revenues from online marketing services and others were RMB37,932.8 million (US$5,231.2 million), an increase of 50% from RMB25,223.4 million in the same quarter of 2022.
  • Revenues from transaction services were RMB14,347.9 million (US$1,978.7 million), an increase of 131% from RMB6,216.2 million in the same quarter of 2022.

Total costs of revenues were RMB18,689.8 million (US$2,577.4 million), an increase of 135% from RMB7,961.9 million in the same quarter of 2022. The increase mainly came from the increased fulfilment fees and payment processing fees.

Total operating expenses were RMB20,872.2 million (US$2,878.4 million), an increase of 41% from RMB14,780.5 million in the same quarter of 2022. The increase was primarily due to an increase in sales and marketing expenses.

  • Sales and marketing expenses were RMB17,542.2 million (US$2,419.2 million), an increase of 55% from RMB11,343.4 million in the same quarter of 2022, mainly due to the increased spending in promotion and advertising activities.
  • General and administrative expenses were RMB596.0 million (US$82.2 million), compared with RMB825.7 million in the same quarter of 2022.
  • Research and development expenses were RMB2,734.0 million (US$377.0 million), compared with RMB2,611.4 million in the same quarter of 2022.

Operating profit in the quarter was RMB12,718.8 million (US$1,754.0 million), an increase of 46% from RMB8,697.2 million in the same quarter of 2022. Non-GAAP operating profit in the quarter was RMB14,609.4 million (US$2,014.7 million), an increase of 39% from RMB10,541.5 million in the same quarter of 2022.

Net income attributable to ordinary shareholders in the quarter was RMB13,108.1 million (US$1,807.7 million), an increase of 47% from RMB8,896.3 million in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB15,269.4 million (US$2,105.7 million), an increase of 42% from RMB10,776.3 million in the same quarter of 2022.

Basic earnings per ADS was RMB9.64 (US$1.33) and the diluted earnings per ADS was RMB9.00 (US$1.24), compared with basic earnings per ADS of RMB7.06 and diluted earnings per ADS of RMB6.22 in the same quarter of 2022. Non-GAAP diluted earnings per ADS was RMB10.47 (US$1.44), compared with RMB7.54 in the same quarter of 2022.

Net cash generated from operating activities was RMB23,396.0 million (US$3,226.5 million), compared with RMB19,373.9 million in the same quarter of 2022.

Cash, cash equivalents and short-term investments were RMB179.5 billion (US$24.8 billion) as of June 30, 2023, compared with RMB149.4 billion as of December 31, 2022.

Recent Development

Independent Director Appointment

PDD Holdings today announced the appointment of Ms. Ivonne M.C.M. Rietjens to serve as an independent director of the Company, effective on August 29, 2023. Ms. Rietjens has more than 25 years of experience in food safety. She has been a full professor at Wageningen University since 2001 and is currently head of the division of toxicology. She is also an elected member of the Royal Netherlands Academy of Arts and Sciences (KNAW) and the chairperson of the KNAW Scientific Council for Natural Sciences and Engineering. Adding Ms. Rietjens to the Board increases the total number of board members to 7, of which 4 are independent directors.

Legal and Compliance Committee

PDD Holdings has formed a Legal and Compliance Committee, chaired by Mr. Lei Chen, which replaces the General Counsel role and function, effective on August 29, 2023.

Conference Call

The Company’s management will hold an earnings conference call at 7:30 AM ET on August 29, 2023 (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$”))
    As of
    December31, 2022   June 30, 2023
    RMB   RMB   US$
        (Unaudited)
         
ASSETS            
Current assets            
Cash and cash equivalents   34,326,192   31,379,326   4,327,407
Restricted cash   57,974,225   52,055,133   7,178,731
Receivables from online payment platforms   587,696   1,559,765   215,101
Short-term investments   115,112,554   148,129,260   20,427,959
Amounts due from related parties   6,318,830   5,097,426   702,967
Prepayments and other current assets   2,298,379   2,985,263   411,687
Total current assets   216,617,876   241,206,173   33,263,852
             
Non-current assets            
Property, equipment and software, net   1,044,847   1,064,374   146,784
Intangible assets   134,002   22,651   3,124
Right-of-use assets   1,416,081   2,121,964   292,632
Deferred tax assets   1,045,030   1,544,634   213,015
Other non-current assets   16,862,117   28,325,561   3,906,273
Total non-current assets   20,502,077   33,079,184   4,561,828
             
Total Assets   237,119,953   274,285,357   37,825,680
PDD HOLDINGS INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
    As of
    December31, 2022   June 30, 2023
    RMB   RMB   US$
        (Unaudited)
         
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities            
Amounts due to related parties   1,676,391   1,832,025   252,648
Customer advances and deferred revenues   1,389,655   1,639,290   226,068
Payable to merchants   63,316,695   60,115,463   8,290,301
Accrued expenses and other liabilities   20,960,723   30,889,820   4,259,900
Merchant deposits   15,058,229   16,131,012   2,224,568
Convertible bonds, current portion   13,885,751   14,431,092   1,990,139
Lease liabilities   602,036   955,395   131,755
Total current liabilities   116,889,480   125,994,097   17,375,379
             
Non-current liabilities            
Convertible bonds   1,575,755   1,634,852   225,456
Lease liabilities   870,782   1,248,107   172,122
Deferred tax liabilities   13,025   64,222   8,857
Total non-current liabilities   2,459,562   2,947,181   406,435
             
Total Liabilities   119,349,042   128,941,278   17,781,814
             
             
Shareholders’ equity            
Ordinary shares   170   176   24
Additional paid-in capital   99,250,468   102,681,784   14,160,466
Statutory reserves   5,000   5,000   690
Accumulated other comprehensive income   3,322,238   6,254,971   862,600
Retained earnings   15,193,035   36,402,148   5,020,086
Total Shareholders’ Equity   117,770,911   145,344,079   20,043,866
             
Total Liabilities and Shareholders’ Equity   237,119,953   274,285,357   37,825,680
             
PDD HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME   (Amounts in thousands of RMB and US$) 
    For the three months ended June 30,   For the six months ended June 30,
    2022   2023   2022   2023
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Revenues   31,439,568     52,280,748     7,209,844     55,233,257     89,917,798     12,400,231  
Costs of revenues   (7,961,866 )   (18,689,787 )   (2,577,439 )   (15,121,461 )   (29,815,072 )   (4,111,686 )
Gross profit   23,477,702     33,590,961     4,632,405     40,111,796     60,102,726     8,288,545  
                         
Sales and marketing expenses   (11,343,447 )   (17,542,209 )   (2,419,181 )   (22,562,515 )   (33,801,897 )   (4,661,495 )
General and administrative expenses   (825,722 )   (596,033 )   (82,197 )   (1,417,835 )   (1,412,435 )   (194,784 )
Research and development expenses   (2,611,366 )   (2,733,964 )   (377,031 )   (5,279,873 )   (5,240,621 )   (722,715 )
Total operating expenses   (14,780,535 )   (20,872,206 )   (2,878,409 )   (29,260,223 )   (40,454,953 )   (5,578,994 )
                         
Operating profit   8,697,167     12,718,755     1,753,996     10,851,573     19,647,773     2,709,551  
                         
Interest and investment income, net   756,991     2,287,741     315,494     1,553,252     3,751,340     517,333  
Interest expenses   (13,148 )   (11,937 )   (1,646 )   (25,788 )   (23,624 )   (3,258 )
Foreign exchange (loss)/ gain   (199,349 )   155,717     21,474     (179,265 )   139,680     19,263  
Other income, net   1,266,235     1,106,471     152,589     1,506,005     2,333,991     321,872  
                         
Profit before income tax and share of results of equity investees   10,507,896     16,256,747     2,241,907     13,705,777     25,849,160     3,564,761  
Share of results of equity investees   (53,493 )   9,781     1,349     (87,109 )   116,170     16,021  
Income tax expenses   (1,558,063 )   (3,158,442 )   (435,569 )   (2,122,877 )   (4,756,217 )   (655,912 )
Net income   8,896,340     13,108,086     1,807,687     11,495,791     21,209,113     2,924,870  
PDD HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Amounts in thousands of RMB and US$, except for per share data) 
    For the three months ended June 30,   For the six months ended June 30,
    2022   2023   2022   2023
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                         
Net income   8,896,340   13,108,086   1,807,687   11,495,791   21,209,113   2,924,870
Net income attributable to ordinary shareholders   8,896,340   13,108,086   1,807,687   11,495,791   21,209,113   2,924,870
                         
Earnings per ordinary share:                        
-Basic   1.76   2.41   0.33   2.28   3.96   0.55
-Diluted   1.56   2.25   0.31   2.02   3.63   0.50
                         
Earnings per ADS (4 ordinary shares equals 1 ADS):                        
-Basic   7.06   9.64   1.33   9.12   15.82   2.18
-Diluted   6.22   9.00   1.24   8.07   14.53   2.00
                         
Weighted average number of outstanding ordinary shares (in thousands):                        
-Basic   5,042,417   5,438,394   5,438,394   5,039,591   5,360,987   5,360,987
-Diluted   5,716,947   5,833,348   5,833,348   5,708,590   5,845,398   5,845,398
PDD HOLDINGS INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$)  
    For the three months ended June 30,   For the six months ended June 30,
    2022   2023   2022   2023
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Revenues                        
- Online marketing services and others   25,223,361   37,932,831   5,231,176   43,425,643   65,177,257   8,988,354
- Transaction services   6,216,207   14,347,917   1,978,668   11,807,614   24,740,541   3,411,877
Total   31,439,568   52,280,748   7,209,844   55,233,257   89,917,798   12,400,231
                         
PDD HOLDINGS INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$) 
    For the three months ended June 30,   For the six months ended June 30,
    2022   2023   2022   2023
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Share-based compensation expenses included in:                        
Costs of revenues   6,989   28,276   3,899   16,170   65,644   9,053
Sales and marketing expenses   513,559   989,326   136,435   1,014,664   1,478,099   203,838
General and administrative expenses   661,019   225,799   31,139   1,044,315   703,861   97,067
Research and development expenses   662,781   647,228   89,257   1,291,949   1,176,427   162,237
Total   1,844,348   1,890,629   260,730   3,367,098   3,424,031   472,195
PDD HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of RMB and US$) 
    For the three months ended June 30,   For the six months ended June 30,
    2022   2023   2022   2023
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Net cash generated from operating activities   19,373,871     23,395,981     3,226,453     10,305,775     24,734,003     3,410,975  
Net cash used in investing activities   (8,593,271 )   (11,519,860 )   (1,588,661 )   (13,445,360 )   (34,140,107 )   (4,708,136 )
Net cash generated from financing activities   268     7,233     997     311     7,286     1,005  
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (50,839 )   881,105     121,510     (40,676 )   532,860     73,484  
                         
Increase/ (decrease) in cash, cash equivalents and restricted cash   10,730,029     12,764,459     1,760,299     (3,179,950 )   (8,865,958 )   (1,222,672 )
Cash, cash equivalents and restricted cash at beginning of period   52,133,992     70,670,000     9,745,839     66,043,971     92,300,417     12,728,810  
Cash, cash equivalents and restricted cash at end of period   62,864,021     83,434,459     11,506,138     62,864,021     83,434,459     11,506,138  
PDD HOLDINGS INC.RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES(Amounts in thousands of RMB and US$, except for per share data) 
    For the three months ended June 30,   For the six months ended June 30,
    2022   2023   2022   2023
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Operating profit   8,697,167   12,718,755   1,753,996   10,851,573   19,647,773   2,709,551
Add: Share-based compensation expenses   1,844,348   1,890,629   260,730   3,367,098   3,424,031   472,195
Non-GAAP operating profit   10,541,515   14,609,384   2,014,726   14,218,671   23,071,804   3,181,746
                         
Net income attributable to ordinary shareholders   8,896,340   13,108,086   1,807,687   11,495,791   21,209,113   2,924,870
Add: Share-based compensation expenses   1,844,348   1,890,629   260,730   3,367,098   3,424,031   472,195
Add: Interest expenses related to convertible bonds’ amortization to face value   13,148   11,937   1,646   25,788   23,624   3,258
Add: Loss from fair value change of certain investments   22,459   258,704   35,677   88,059   738,980   101,910
Non-GAAP net income attributable to ordinary shareholders   10,776,295   15,269,356   2,105,740   14,976,736   25,395,748   3,502,233
                         
Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands)   5,716,947   5,833,348   5,833,348   5,708,590   5,845,398   5,845,398
                         
Diluted earnings per ordinary share   1.56   2.25   0.31   2.02   3.63   0.50
Add: Non-GAAP adjustments to earnings per ordinary share   0.32   0.37   0.05   0.60   0.71   0.10
Non-GAAP diluted earnings per ordinary share   1.88   2.62   0.36   2.62   4.34   0.60
Non-GAAP diluted earnings per ADS   7.54   10.47   1.44   10.49   17.38   2.40

 

_____________________

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 RMB7.2513 to US$1.00, the noon buying rate in effect on June 30, 2023 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. 

For investor and media inquiries, please contact:

investor@pddholdings.com
media@pddholdings.com
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