PDD Holdings Announces Second Quarter 2023 Unaudited Financial Results


DUBLIN and SHANGHAI, Aug. 29, 2023 (GLOBE NEWSWIRE) -- 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
  December
31, 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
  December
31, 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. 

 

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