Record of pinduoduo financial report teleconference: we will continue to adhere to the zero commission policy for agricultural products business

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On August 24, pinduoduo released its second quarter financial report as of June 30. Pinduoduo’s second quarter revenue was 23.046 billion yuan, a year-on-year increase of 89%, and the market is expected to be 26.438 billion yuan; The average number of monthly active users was 738.5 million, a year-on-year increase of 30%; The net profit attributable to ordinary shareholders was 2.416 billion yuan, with a net loss of 899.3 million yuan in the same period last year.
Pinduoduo’s revenue in the second quarter was 23.05 billion yuan
After the release of the financial report, CEO Chen Lei, vice president of Finance Ma Jing and other executives attended the subsequent analyst teleconference to interpret the financial report and answer analyst questions.
The following are the specific contents of the analyst meeting:
Morgan Stanley analyst: my first question is about consumption. What is the management’s view on the domestic consumption trend since the third quarter? Previously, a leading domestic e-commerce platform thought that domestic consumption was slightly weak. Yesterday, another e-commerce platform thought that the consumption trend was relatively strong. What is the view of the management? The second question is about the profit margin. The net profit margin of pinduoduo platform non GAAP has achieved 18%, which is very good. While pinduoduo’s business model is becoming more and more mature, will the gross profit of this quarter remain stable in the future and what trend will it show?
Ma Jing: before we talk about the performance in the third quarter, let’s review the overall situation in the second quarter. In the second quarter, the domestic epidemic was fully controlled. We also saw a strong rebound in offline retail. In the second quarter of 2020, online retail also showed a good growth due to the home isolation policy. This growth has been stable and sustained during the quarter. In the second quarter, we continued to see the increasing user stickiness and the expansion of user scale. Our revenue increased by 89% year-on-year. If 1p business is excluded, the figure is 73%, so the growth is very strong.
Compared with other companies in the industry, pinduoduo may be relatively small, so our performance does not represent the state of the whole industry. We only talk about our own performance. The driving forces of pinduoduo come from two, one is the growth of users, and the other is user stickiness. We also mentioned in the presentation that now our number of users has reached 850 million, and this growth rate will inevitably decline. Therefore, our focus needs to shift to how to provide better services to customers and strengthen users’ stickiness to the platform. I think in this regard, Pinduoduo still has a lot of room to continue to strengthen users’ trust in the platform. This process takes time.
In terms of profit, the profit of this quarter mainly comes from the operating leverage of marketing expenses and the seasonal fluctuation I mentioned earlier. Generally speaking, the second quarter is an off-season for us, and we will reduce marketing expenses. Therefore, the outstanding performance of this quarter can not be used as a reference for the future, As a reference for investment and infrastructure, we will continue to invest in the future, such as very important agricultural fields. Therefore, we do not think this profit rate will continue in the future.
We will continue to implement the zero commission policy for agricultural products business to help more farmers and agricultural products sellers, so the investment in this area will continue.