Earnings Digest | Pinduoduo shocked Wall Street!
Just now, $PDD Holdings Inc(PDD)$ released their Q4 results, and their performance was out of this world! Their revenue and profits have significantly exceeded Wall Street's expectations.
And look at that, their share price skyrocketed 16.6% in pre-market, pushing their market cap to $197.8 billion, closing in on the $200-billion mark and surpassing $Alibaba(BABA)$ $Alibaba(09988)$ 's $187.9 billion. PDD is back on top as China's e-commerce king!
Specifically, PDD revenue was 88.88 billion yuan for Q4, a whopping 123.2% increase year-on-year, significantly exceeding analyst expectations of 79.87 billion yuan. This growth rate is the highest since Q2 of 2021!
By business, Online marketing services and Others revenue hit 48.68 billion yuan, up 57.2% year-on-year, while Commission revenue soared 357% to 40.2 billion yuan.
And check out their expenses. Sales and marketing expenses were 26.64 billion yuan, up 50.2%, which is still lower than the growth rate of revenue. The sales and marketing expense rate fell from 44.5% in Q4 2022 to 30%. The R&D expense was 2.86 billion yuan, an increase of only 19% year-on-year, and the R&D expense rate dropped to 3.2% :
Clearly, PDD's growth wasn't just about increasing cost investment. The macro environment, especially consumer downgrading in China and the allure of low-cost products amid high inflation overseas, was also playing a role.
Driven by this revenue surge, PDD's Q4 net income hit 23.28 billion yuan, up 146% year-on-year, outpacing the growth in revenue, thanks to the decline in expense rate.
Compared to Alibaba and $JD.com(JD)$ $JD-SW(09618)$ , PDD completely beat these two big brothers in terms of growth:
And profitability? Even better! PDD's net profit margin hit 26%, while JD.com is scraping by with a low single-digit margin and Alibaba is hovering around 10%.
Looking at sales and marketing expenses, JD.com grew 9.4% year-on-year, higher than their 3.6% revenue growth. Alibaba rose 10.3%, significantly outpacing their 5.1% revenue growth. But PDD managed to achieve over 120% revenue growth with just a 50% increase in sales and marketing expenses.
Alibaba and JD.com, you guys should be embarrassed!
While PDD's growth momentum is insane, their P/E ratio is only 22. The management doesn't provide earnings guidance, but analysts expect revenue growth of 36% in 2024. With such growth potential, that 17% pre-market surge isn't hard to understand.
After the last earnings report, PDD briefly overtook Alibaba as China's e-commerce king. But based on Q4 report, it looks like PDD's throne is secure!
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