To The Moon

Q&A（Question-and-Answer Session）is a session after the company's prepared remarks where institutional investors and analysts ask management questions. In this dialogue, you may find some valuable information that might affect the stock price in the following weeks.

Now let's look at some key points from $Pinduoduo Inc.(PDD)$ Q2 2022 Q&A Session Transcript

Q:I have two questions. First, on the second quarter growth rate, we noticed very strong online marketing service revenue that record, a strong growth of 39% year-on-year. And this reaccelerated from the previous two quarters. What's the reason behind this quarter strong growth?

And the second question is on the brands. Can management speak more about the progress on bringing more brands onto our platform? We saw many brands participate in our future events. How does this help our growth for this quarter? And what's your overall plan for the brand recruitment? Thank you.

A: Kenneth, I am happy to take your questions. First, about our revenue growth, starting from the second half of May, we saw a trend of consumption recovery. Also, we actually made efforts to facilitate consumer spending by offering various forms of promotion to help with consumption recovery.

And during this year's June 2018 event, we saw many merchants as well as brands actively participating. We also saw solid demand coming from consumers. Given this background on our platform many categories including FMCG products, agricultural produce, consumer electronics and cosmetics these categories all had a decent growth on our platform.

In addition, we always try our best to satisfy consumer demand. And -- this is inseparable from many of our team members hard-work during the past period of time. They worked very hard to help many consumers meet their essential demand. And we are grateful towards our team's hard-work during this process.

At the same time, we also saw that competition landscape is still very intense. And in terms of satisfying our consumers' needs, we have many areas that we can further improve. And as I mentioned earlier, due to outside reserve, our overall investment activity during the second quarter was impacted and this is actually not beneficial to our long-term competitiveness. And therefore, we need to further step up our efforts and also strengthen our core capability, so that we can create more value for consumers, as well as for other society.

And as for your second question, our brand we see that the needs from our consumers on our platform are becoming more and more diversified. And different consumers, they have different needs in different product categories and across different consumption scenarios. Therefore, it is very natural for them to need more choices and more products. And our goal is always to better serve our consumers and to bring them more savings, more shopping experience.

And in terms of how to serve the consumers we believe that essentially, the brands goal and our goal are well aligned. That is to serve consumers well. So we would continue to focus on our own part and remain to be very down to earth and patient. Thank you. Okay. Operator, we may now move on to the next analyst.

Q:Good evening management. Thanks for taking my questions. My first question is related to the overseas expansion. Could management share some colors on the reported new initiatives in the overseas market with the latest status, any main target market and what's the core value proposition of this new business? And my second question is related to the transaction service revenue. Transaction service revenue continued to grow faster than the online marketing revenue this quarter. Also, we actually see it accelerated from the last quarter to a triple digit year-over-year growth. I mean we know like what's the reason behind?

A: Joyce. So let me address your first question, and I will hand it over to Jun to answer your other questions. First, on our overseas business, first of all, we are a young company with a relatively young team. And everyone is continuing to grow and searching for new opportunities during our growth process.

And overseas business is one of the opportunities that we see, and we also see that the possibility of creating value in this opportunity. At the same time, we also see that many peers in the industry achieving good results. So we believe that it is a direction that is worth trying out for us.

And with that said, we will not just simply repeat what others have done in this field. What is important to us is that we will start from the needs of consumers and strive to create our own unique value.

And at the same time, we are sufficiently aware that overseas business will be, of course, challenges, and it will require constant trials and experimentation. This process would not just happen overnight. But the experience gained along the way would prove to be very valuable to our company as well as to our team. Thank you.

A:Okay. Thanks for your question, Joyce. Your question about transaction services revenue. Well, first, we always remain consumer-centric, operating metrics and the financial metrics natural results from how we reserve consumers. And over the past quarter, because of consumption recovery, we had use engagement and transactions. This contributed to the revenue growth. And in addition, for us, our business cycle does not always matched exactly to our quarterly financial reporting cycle. And we are not managing our business on a quarterly basis. So it is common to see fluctuations between quarters, we remain focused on serving consumers better and investing creates a long-term value. Thank you.

Q: Thanks management for taking my question. My first question is about cost control and efficiencies, given the macro uncertainties right now, and we are seeing a lot of Internet companies exercising sort of cost control. I just want to get some color from management about our cost control strategies.

And my second question is about our profitability. Given the second quarter earnings comes in better than expected market expectations, how should we think about the profitability trend in the second half? Thank you.

A:Hi, Thomas. So let me address your first question. First of all, I believe that we are still in the development stage, not the stabilized stage. And at this point in time, we still have allow it to go and a lot of work to do to serve our consumers well.

[Foreign Language] And as a part of our development, to constantly satisfy our consumer demand would take a lot of patients. Not only do we need to constantly explore, but we also need to seize the key opportunities and also make the relevant investments.

And in the past quarter and especially during the first half of the second quarter, our team's investment activity was impacted. And during the short term, this might bring about decent financial results. But if we look at it with a long-term perspective, this actually weakens our competitiveness.

And therefore, looking ahead, we would always think about the long-term and we would remain very committed to investing for the future. We need to further strengthen our core capabilities and to continue to focus on investing into the field of agriculture and R&D over the long term in order to create value for consumers as well as for the society. And this would support our long-term and high-quality development. And this is my thinking on our overall strategies and hope to address your first question.

A:Okay. This is Jun. Thanks, Thomas. I will take your second question. For your second question about profits, well, as mentioned before, we have not changed our strategy on -- to the focus on profitability. So for the past quarter alone, our profitability was mainly attributable to a number of external factors, which are mostly short term or one-off nature.

On the revenue side, we saw a good level of user engagements and consumption, which are mostly boosted by consumption recovery. At the same time, we still face very intense competition.

For the expense side, factors such as project delays and a decrease in business-related activities led to the short-term impact in our Q2 expenses. And to sum up, this quarter’s profitability is due to short-term factors combined. So it is not a good benchmark for future preference, and this is our view on profitability. Thank you.

The above Q&A are highlights that are edited for brevity.Click here for the full Pinduoduo Q2 2022 Earnings Call Transcript.​​​​​​​​

If you want to know more details,you can click here to re-watch the  Pinduoduo Q2 2022 Earnings Conference Call​