PDD Holdings Announces Third Quarter 2023 Unaudited Financial Results


DUBLIN and SHANGHAI, Nov. 28, 2023 (GLOBE NEWSWIRE) -- PDD Holdings Inc. (“PDD Holdings” or the “Company”) (NASDAQ: PDD), today announced its unaudited financial results for the third quarter ended September 30, 2023.

Third Quarter 2023 Highlights

  • Total revenues in the quarter were RMB68,840.4 million (US$19,435.4 million), an increase of 94% from RMB35,504.3 million in the same quarter of 2022.
  • Operating profit in the quarter was RMB16,656.0 million (US$2,282.9 million), an increase of 60% from RMB10,436.6 million in the same quarter of 2022. Non-GAAP2 operating profit in the quarter was RMB18,125.8 million (US$2,484.4 million), an increase of 47% from RMB12,301.5 million in the same quarter of 2022.
  • Net income attributable to ordinary shareholders in the quarter was RMB15,537.1 million (US$2,129.5 million), an increase of 47% from RMB10,588.6 million in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB17,027.1 million (US$2,333.8 million), an increase of 37% from RMB12,447.2 million in the same quarter of 2022.

“We are dedicated to generating value through innovations, which forms the foundation of our high-quality development,” said Mr. Lei Chen, Chairman and Co-Chief Executive Officer of PDD Holdings. “We continued to invest decisively in areas such as agritech, supply chain technology, and core R&D capabilities. Through these efforts, we aim to create our unique value.”

“Last month, we celebrated our eighth anniversary. We sincerely thank all stakeholders for the support we received,” said Mr. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer of PDD Holdings. “Throughout the past third quarter, consumption vitality kept improving. We continued to provide consumers with more savings and better service through increased investments.”

“Under our ‘high-quality development’ strategy, we increased our investment in technology and further deepened user mindshare in the third quarter. Our financial performance reflects the early results we have achieved,” said Ms. Jun Liu, VP of Finance at PDD Holdings. “Going forward, we will continue to invest decisively to support our high-quality development.”

Third Quarter 2023 Unaudited Financial Results

Total revenues were RMB68,840.4 million (US$9,435.4 million), an increase of 94% from RMB35,504.3 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 RMB39,687.7 million (US$5,439.7 million), an increase of 39% from RMB28,482.0 million in the same quarter of 2022.
  • Revenues from transaction services were RMB29,152.7 million (US$3,995.7 million), an increase of 315% from RMB7,022.3 million in the same quarter of 2022.

Total costs of revenues were RMB26,830.2 million (US$3,677.4 million), an increase of 262% from RMB7,414.1 million in the same quarter of 2022. The increase mainly came from the increased fulfilment fees, payment processing fees, maintenance costs and call center expenses.

Total operating expenses were RMB25,354.1 million (US$3,475.1 million), an increase of 44% from RMB17,653.6 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 RMB21,748.5 million (US$2,980.9 million), an increase of 55% from RMB14,048.8 million in the same quarter of 2022, mainly due to the increased spending in promotion and advertising activities.
  • General and administrative expenses were RMB758.3 million (US$103.9 million), compared with RMB906.6 million in the same quarter of 2022.
  • Research and development expenses were RMB2,847.3 million (US$390.3 million), compared with RMB2,698.2 million in the same quarter of 2022.

Operating profit in the quarter was RMB16,656.0 million (US$2,282.9 million), an increase of 60% from RMB10,436.6 million in the same quarter of 2022. Non-GAAP operating profit in the quarter was RMB18,125.8 million (US$2,484.4 million), an increase of 47% from RMB12,301.5 million in the same quarter of 2022.

Net income attributable to ordinary shareholders in the quarter was RMB15,537.1 million (US$2,129.5 million), an increase of 47% from RMB10,588.6 million in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB17,027.1 million (US$2,333.8 million), an increase of 37% from RMB12,447.2 million in the same quarter of 2022.

Basic earnings per ADS was RMB11.38 (US$1.56) and the diluted earnings per ADS was RMB10.60 (US$1.45), compared with basic earnings per ADS of RMB8.38 and diluted earnings per ADS of RMB7.34 in the same quarter of 2022. Non-GAAP diluted earnings per ADS was RMB11.61 (US$1.55), compared with RMB8.62 in the same quarter of 2022.

Net cash generated from operating activities was RMB32,537.9 million (US$4,459.7 million), compared with RMB11,651.8 million in the same quarter of 2022, mainly due to the increase in net income and the changes in working capitals.

Cash, cash equivalents and short-term investments were RMB202.8 billion (US$27.8 billion) as of September 30, 2023, compared with RMB149.4 billion as of December 31, 2022.

Conference Call

The Company’s management will hold an earnings conference call at 7:30 AM ET on November 28, 2023 (12:30 PM GMT and 8:30 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
 September 30, 2023
   RMB  RMB  US$
     (Unaudited)
     
ASSETS      
Current assets      
Cash and cash equivalents 34,326,192 54,939,761 7,530,121
Restricted cash 57,974,225 56,413,498 7,732,113
Receivables from online payment platforms 587,696 2,547,134 349,114
Short-term investments 115,112,554 147,906,904 20,272,328
Amounts due from related parties 6,318,830 6,138,625 841,369
Prepayments and other current assets 2,298,379 3,629,894 497,518
Total current assets  216,617,876 271,575,816 37,222,563
       
Non-current assets      
Property, equipment and software, net 1,044,847 1,065,180 145,995
Intangible assets 134,002 21,900 3,002
Right-of-use assets 1,416,081 3,662,756 502,022
Deferred tax assets 1,045,030 1,631,825 223,660
Other non-current assets 16,862,117 36,293,655 4,974,459
Total non-current assets  20,502,077 42,675,316 5,849,138
       
Total Assets  237,119,953 314,251,132 43,071,701


 
PDD HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
  
 As of
 December
31, 2022
 September 30, 2023
  RMB  RMB  US$
    (Unaudited)
    
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities     
Amounts due to related parties1,676,391 2,028,787 278,068
Customer advances and deferred revenues1,389,655 2,043,857 280,134
Payable to merchants63,316,695 68,099,716 9,333,843
Accrued expenses and other liabilities20,960,723 43,936,446 6,021,992
Merchant deposits15,058,229 16,282,948 2,231,764
Convertible bonds, current portion13,885,751 14,351,445 1,967,029
Lease liabilities602,036 1,381,067 189,291
Total current liabilities 116,889,480 148,124,266 20,302,121
      
Non-current liabilities     
Convertible bonds1,575,755 1,623,726 222,550
Lease liabilities870,782 2,397,222 328,567
Deferred tax liabilities13,025 55,903 7,662
Total non-current liabilities 2,459,562 4,076,851 558,779
      
Total Liabilities 119,349,042  152,201,117 20,860,900
      
      
Shareholders’ equity     
Ordinary shares170 177 24
Additional paid-in capital99,250,468 104,152,729 14,275,319
Statutory reserves5,000 5,000 685
Accumulated other comprehensive income3,322,238 5,952,839 815,904
Retained earnings15,193,035 51,939,270 7,118,869
Total Shareholders’ Equity117,770,911 162,050,015 22,210,801
      
Total Liabilities and Shareholders’ Equity 237,119,953 314,251,132 43,071,701
      


 
PDD HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(Amounts in thousands of RMB and US$)
     
  For the three months ended September 30, For the nine months ended September 30,
  2022  2023  2022  2023 
  RMB RMB US$ RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues 35,504,304  68,840,371  9,435,358  90,737,561  158,758,169  21,759,617 
Costs of revenues (7,414,132) (26,830,233) (3,677,390) (22,535,593) (56,645,305) (7,763,885)
Sales and marketing expenses (14,048,820) (21,748,449) (2,980,873) (36,611,335) (55,550,346) (7,613,808)
General and administrative expenses (906,573) (758,345) (103,940) (2,324,408) (2,170,780) (297,530)
Research and development expenses (2,698,166) (2,847,323) (390,258) (7,978,039) (8,087,944) (1,108,545)
Total operating expenses (17,653,559) (25,354,117) (3,475,071) (46,913,782) (65,809,070) (9,019,883)
             
Operating profit 10,436,613  16,656,021  2,282,897  21,288,186  36,303,794  4,975,849 
             
Interest and investment income, net 1,092,150  2,127,356  291,578  2,645,402  5,878,696  805,742 
Interest expenses (13,646) (12,208) (1,673) (39,434) (35,832) (4,911)
Foreign exchange gain/ (loss) 53,374  94,860  13,002  (125,891) 234,540  32,146 
Other income, net 546,528  290,384  39,800  2,052,533  2,624,375  359,701 
             
Profit before income tax and share of results of equity investees  12,115,019  19,156,413  2,625,604  25,820,796  45,005,573  6,168,527 
Share of results of equity investees 10,732  (105,811) (14,503) (76,377) 10,359  1,420 
Income tax expenses (1,537,177) (3,513,480) (481,563) (3,660,054) (8,269,697) (1,133,456)
Net income 10,588,574  15,537,122  2,129,538  22,084,365  36,746,235  5,036,491 


 
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 September 30, For the nine months ended September 30,
  2022 2023 2022 2023
   RMB   RMB   US$  RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
             
Net income 10,588,574 15,537,122 2,129,538 22,084,365 36,746,235 5,036,491
Net income attributable to ordinary shareholders 10,588,574 15,537,122 2,129,538 22,084,365 36,746,235 5,036,491
             
             
Earnings per ordinary share:            
-Basic 2.10 2.84 0.39 4.38 6.81 0.93
-Diluted 1.84 2.65 0.36 3.86 6.28 0.86
             
Earnings per ADS (4 ordinary shares equals 1 ADS ):            
-Basic 8.38 11.38 1.56 17.52 27.24 3.73
-Diluted 7.34 10.60 1.45 15.43 25.13 3.44
             
Weighted average number of outstanding ordinary shares (in thousands):            
-Basic 5,051,256 5,462,542 5,462,542 5,043,522 5,395,211 5,395,211
-Diluted 5,776,165 5,865,102 5,865,102 5,733,453 5,853,748 5,853,748


 
PDD HOLDINGS INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)
     
  For the three months ended September 30, For the nine months ended September 30,
  2022 2023 2022 2023
   RMB   RMB   US$  RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues            
- Online marketing services and others 28,482,052 39,687,678 5,439,649 71,907,695 104,864,935 14,372,935
- Transaction services 7,022,252 29,152,693 3,995,709 18,829,866 53,893,234 7,386,682
Total 35,504,304 68,840,371 9,435,358 90,737,561 158,758,169 21,759,617
             


 
PDD HOLDINGS INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)
     
  For the three months ended September 30, For the nine months ended September 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 5,841 20,422 2,799 22,011 86,066 11,796
Sales and marketing expenses 608,462 464,950 63,726 1,623,126 1,943,049 266,318
General and administrative expenses 680,252 355,053 48,664 1,724,567 1,058,914 145,136
Research and development expenses 570,327 629,394 86,266 1,862,276 1,805,821 247,508
Total 1,864,882 1,469,819 201,455 5,231,980 4,893,850 670,758

        

 
PDD HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$)
     
  For the three months ended September 30, For the nine months ended September 30,
  2022  2023
 2022  2023
  RMB RMB US$ RMB RMB US$
  (Unaudited)  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net cash generated from operating activities 11,651,823  32,537,857  4,459,684  21,957,598  57,271,860  7,849,762 
Net cash used in investing activities (356,394) (4,820,500) (660,704) (13,801,754) (38,960,607) (5,339,995)
Net cash generated from financing activities 258  385  53  569  7,671  1,051 
Effect of exchange rate changes on cash, cash equivalents and restricted cash 250,227  201,058  27,557  209,551  733,918  100,591 
             
Increase in cash, cash equivalents and restricted cash 11,545,914  27,918,800  3,826,590  8,365,964  19,052,842  2,611,409 
Cash, cash equivalents and restricted cash at beginning of period 62,864,021  83,434,459  11,435,644  66,043,971  92,300,417  12,650,825 
Cash, cash equivalents and restricted cash at end of period 74,409,935  111,353,259  15,262,234  74,409,935  111,353,259  15,262,234 


 
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 September 30, For the nine months ended September 30,
  2022  2023 2022 2023
  RMB RMB US$ RMB RMB US$
  (Unaudited)  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating profit 10,436,613  16,656,021 2,282,897 21,288,186 36,303,794 4,975,849
Add: Share-based compensation expenses 1,864,882  1,469,819 201,455 5,231,980 4,893,850 670,758
Non-GAAP operating profit  12,301,495  18,125,840 2,484,352  26,520,166 41,197,644 5,646,607
             
Net income attributable to ordinary shareholders 10,588,574  15,537,122 2,129,538 22,084,365 36,746,235 5,036,491
Add: Share-based compensation expenses 1,864,882  1,469,819 201,455 5,231,980 4,893,850 670,758
Add: Interest expenses related to convertible bonds’ amortization to face value 13,646  12,208 1,673 39,434 35,832 4,911
Add: (Gain)/ loss from fair value change of certain investments (19,886) 7,935 1,088 68,173 746,915 102,373
Non-GAAP net income attributable to ordinary shareholders         12,447,216  17,027,084 2,333,754 27,423,952 42,422,832 5,814,533
             
Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands) 5,776,165  5,865,102 5,865,102 5,733,453 5,853,748 5,853,748
             
Diluted earnings per ordinary share 1.84  2.65 0.36 3.86 6.28 0.86
Add: Non-GAAP adjustments to earnings per ordinary share 0.31  0.25 0.03 0.92 0.97 0.13
              
Non-GAAP diluted earnings per ordinary share 2.15  2.90 0.39 4.78 7.25 0.99
Non-GAAP diluted earnings per ADS 8.62  11.61 1.55 19.13 28.99 3.96

____________________________

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 RMB7.2960 to US$1.00, the noon buying rate in effect on September 29, 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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