Tencent technology news on November 26, Beijing time, pinduoduo released its third quarter financial report. The financial report showed that pinduoduo’s total revenue in the third quarter was RMB 21.505.8 billion (about US $3337.6 million), an increase of 51% year-on-year: the net profit attributable to common shareholders was RMB 1.640 billion (about us $254.5 million), compared with a net loss of RMB 784.7 million in the same period last year.
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 is the record of the earnings conference call:
Haitong International Securities analyst: has the ROI of marketing expenses changed? What is the future marketing expense strategy? Pinduoduo has seen GAAP and non GAAP profit growth for two consecutive quarters. Does it mean that the management will pay more attention to profit rather than growth in the future? Is there any new progress in 10 billion agricultural research?
Chen Lei: we always adhere to the investment of marketing expenses and high standard ROI. At the same time, the number of users is increasing and the needs of users are becoming more and more diversified. We are also constantly fine-tuning the ROI model. The ultimate purpose is to meet the diversified needs of users. From the first day of its establishment, we have been using technology to provide services to benefit the most users and realize inclusive benefits. Previously, we had few users. Our goal is to attract more users to the platform, participate in activities and enjoy services. Now we have a large user group and continue to use pinduoduo. How to provide more categories, let users have a better experience, meet their expectations and improve their trust in the platform has become a challenge we are facing.
With the continuous development of technology, how to better meet the needs of users, things for management is very challenging. Then the task of our management is to constantly adjust in the exploration, and at the same time, we will continue to maintain the ROI requirements in the process of marketing, strictly and disciplined to arrange our marketing investment.
At the same time, we have been making some new investment for the long-term development of the company. We have also noticed that we have been increasing investment in R & D, which is a key area of our future investment. I can ask Ma Jing to explain the relationship between marketing expenses and profits.
Ma Jing: first of all, let me explain that the percentage of marketing expenditure in our overall revenue is declining, but the profit margin is not the assessment KPI of any department within us. Our long-term investment is still committed to solving the needs of users. We have always paid close attention to the development of the market. For us, the investment in marketing expenses is actually consistent with capital expenditure. The most important thing is user loyalty to the platform, which is our core asset and the strategy we have adhered to in the past five years. We have shifted the focus of our work to R & D and are committed to achieving long-term and steady growth in the future. Therefore, we will also see an increasing trend in R & D expenditure in the future.
As for your question about the impact of 10 billion agricultural research on finance, because the project of 10 billion agricultural research has just been approved by the general meeting of shareholders at the end of September, it has not had any substantive impact on the financial results of the third quarter.
Chen Lei: in the first quarter, we announced the special activity of 10 billion energy. We received recommendations and suggestions from all aspects of the industry. Now we are constantly exploring some possibilities of this scheme.
Jeffrey analyst: with regard to the competitive situation of online shopping, how does the management view the competitive pressure caused by the rise of live shopping on pinduoduo business? With regard to some support policies for platform businesses, what impact will this have on the growth of Gmv and advertising business?
Chen Lei: in China, e-commerce is not only a very large industry, but also a market full of vitality and potential. We note that with the continuous development of mobile technology, the infrastructure related to the industry is constantly improving, and the consumer demand is constantly evolving. In such a dynamic environment, More and more platform or platform enterprises are participating in the e-commerce industry. My understanding is in line with the logic of the industry.
Recently, regulatory measures are also promoting the orderly development of the whole e-commerce industry towards benign competition. We believe that more competition will have a long-term positive and positive impact on users, the whole industry and enterprises in the industry.
For example, the short video platforms you see are in the e-commerce field. These platforms have a huge user base, user frequency and market. They enter the e-commerce field. I think we will see that more and more other platforms with user base and user activity are trying to enter the e-commerce field.
What we are discussing now may be more external things. The core of enterprise development is to go back to itself and understand some values and purposes of its own platform. Pinduoduo started from agricultural products. We pay more attention to the daily basic needs of users and hope to provide users with services such as firewood, rice, oil, salt, soy sauce, vinegar and tea, I think this is different from other e-commerce enterprises.
For us, what we need to do now is to serve 870 million consumers. Being consumer oriented is the duty of our enterprise. We are also constantly asking ourselves how we can continuously serve consumers by using our own services. At the same time, in this process, do we create more value for the whole society, Whether to make our environment greener and development more sustainable, for us, winning the trust of users and creating value for the society is the core strategy that pinduoduo, as an enterprise, has always adhered to, and will also become a long-term asset for pinduoduo to gain a foothold in the competitive environment.
Ma Jing: I think your question is about the prospect of liquidity. Our strategy has always been to better serve consumers, so the growth of revenue and liquidity is the natural result of such a strategy. We can see from the performance of revenue that businesses can actually obtain very good ROI on the platform. We don’t focus on the quarterly performance of liquidity. I think this is a natural result of consumer satisfaction and business ROI growth. In the past, the realization rate has always been in a state of fluctuating development, and the same is true in the future. We insist on continuously improving the quality of merchants and the quality of products provided by merchants to meet the needs of users. We are also developing the business of agricultural products on the platform, making ourselves the most trusted platform for consumers to buy products. Therefore, we still adhere to the zero commission policy for agricultural products and fresh food.