PDD Holdings Announces First Quarter 2023 Unaudited Financial Results
05/26/2023 - 06:30 AM
DUBLIN and SHANGHAI, May 26, 2023 (GLOBE NEWSWIRE) -- PDD Holdings Inc. (“PDD Holdings” or the “Company”) (NASDAQ: PDD), today announced its unaudited financial results for the first quarter ended March 31, 2023.
First Quarter 2023 Highlights
Total revenues in the quarter were RMB37,637.1 million (US$1 5,480.4 million), an increase of 58% from RMB23,793.7 million in the same quarter of 2022. Operating profit in the quarter was RMB6,929.0 million (US$1,008.9 million ), an increase of 222% from RMB2,154.4 million in the same quarter of 2022. Non-GAAP 2 operating profit in the quarter was RMB8,462.4 million (US$1,232.2 million ), an increase of 130% from RMB3,677.2 million in the same quarter of 2022. Net income attributable to ordinary shareholders in the quarter was RMB8,101.0 million (US$1,179.6 million ), an increase of 212% from RMB2,599.5 million in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB10,126.4 million (US$1,474.5 million ), an increase of 141% from RMB4,200.4 million in the same quarter of 2022. “Technology is the cornerstone of sustainable and inclusive growth that creates positive value for society,” said Mr. Lei Chen, Chairman and Co-Chief Executive Officer of PDD Holdings. “We will channel more resources to R&D as it is the key catalyst in driving efficiency and uncovering opportunities.”
“We are entering a new phase of development where we are fully committed to fostering high-quality growth and further strengthening our ecosystem,” said Mr. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer of PDD Holdings. “We are launching a dedicated ‘10 Billion Ecosystem Initiative’ to facilitate an environment where quality merchants can flourish.”
“Patient investment is essential for us to promote ecosystem vibrancy and sustainability,” said Ms. Jun Liu, VP of Finance at PDD Holdings. “We are still in the investment stage, and we plan to step up our investment to further support quality growth.”
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1 This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB6.8676 to US$1.00 , the noon buying rate in effect on March 31, 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.
First Quarter 2023 Unaudited Financial Results
Total revenues were RMB37,637.1 million (US$5,480.4 million ), an increase of 58% from RMB23,793.7 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 RMB27,244.4 million (US$3,967.1 million ), an increase of 50% from RMB18,202.3 million in the same quarter of 2022. Revenues from transaction services were RMB10,392.6 million (US$1,513.3 million ), an increase of 86% from RMB5,591.4 million in the same quarter of 2022. Total costs of revenues were RMB11,125.3 million (US$1,620.0 million ), an increase of 55% from RMB7,159.6 million in the same quarter of 2022. The increase mainly came from the increased fulfilment fees and payment processing fees.
Total operating expenses were RMB19,582.7 million (US$2,851.5 million ), an increase of 35% from RMB14,479.7 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 RMB16,259.7 million (US$2,367.6 million ), an increase of 45% from RMB11,219.1 million in the same quarter of 2022, mainly due to the increased spending in promotion and advertising activities. General and administrative expenses were RMB816.4 million (US$118.9 million ), an increase of 38% from RMB592.1 million in the same quarter of 2022, primarily due to an increase in staff related costs. Research and development expenses were RMB2,506.7 million (US$365.0 million ), a slight decrease of 6% from RMB2,668.5 million in the same quarter of 2022. Operating profit in the quarter was RMB6,929.0 million (US$1,008.9 million ), an increase of 222% from RMB2,154.4 million in the same quarter of 2022. Non-GAAP operating profit in the quarter was RMB8,462.4 million (US$1,232.2 million ), an increase of 130% from RMB3,677.2 million in the same quarter of 2022.
Net income attributable to ordinary shareholders in the quarter was RMB8,101.0 million (US$1,179.6 million ), an increase of 212% from RMB2,599.5 million in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB10,126.4 million (US$1,474.5 million ), an increase of 141% from RMB4,200.4 million in the same quarter of 2022.
Basic earnings per ADS was RMB6.13 (US$0.89) and the diluted earnings per ADS was RMB5.55 (US$0.81) , compared with basic earnings per ADS of RMB2.06 and diluted earnings per ADS of RMB1.84 in the same quarter of 2022. Non-GAAP diluted earnings per ADS was RMB6.92 (US$1.01) , compared with RMB2.95 in the same quarter of 2022.
Net cash generated from operating activities was RMB1,338.0 million (US$194.8 million ), compared with net cash used in operating activities of RMB9,068.1 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 RMB157.0 billion (US$22.9 billion ) as of March 31, 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 May 26, 2023 (12:30 PM IST and 7:30 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 and non-GAAP net income attributable to ordinary shareholders, 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 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 could 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 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. The Company’s 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 China’s and global e-commerce markets; changes in its revenues and certain cost or expense items; the expected growth of China’s and global e-commerce markets; PRC governmental policies and regulations relating to the Company’s industry, and general economic and business conditions globally and in China 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 March 31, 2023 RMB RMB US$ (Unaudited) ASSETS Current assets Cash and cash equivalents 34,326,192 19,771,265 2,878,919 Restricted cash 57,974,225 50,898,735 7,411,430 Receivables from online payment platforms 587,696 693,111 100,925 Short-term investments 115,112,554 137,263,553 19,987,121 Amounts due from related parties 6,318,830 4,896,517 712,988 Prepayments and other current assets 2,298,379 2,287,742 333,121 Total current assets 216,617,876 215,810,923 31,424,504 Non-current assets Property, equipment and software, net 1,044,847 948,095 138,053 Intangible assets 134,002 23,403 3,408 Right-of-use assets 1,416,081 1,640,361 238,855 Deferred tax assets 1,045,030 1,298,602 189,091 Other non-current assets 16,862,117 20,344,866 2,962,442 Total non-current assets 20,502,077 24,255,327 3,531,849 Total Assets 237,119,953 240,066,250 34,956,353
PDD HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)) As of December 31, 2022 March 31, 2023 RMB RMB US$ (Unaudited) LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Amounts due to related parties 1,676,391 1,960,013 285,400 Customer advances and deferred revenues 1,389,655 1,543,135 224,698 Payable to merchants 63,316,695 55,878,527 8,136,544 Accrued expenses and other liabilities 20,960,723 21,515,816 3,132,944 Merchant deposits 15,058,229 15,683,470 2,283,690 Convertible bonds, current portion 13,885,751 13,712,209 1,996,652 Lease liabilities 602,036 729,446 106,216 Total current liabilities 116,889,480 111,022,616 16,166,144 Non-current liabilities Convertible bonds 1,575,755 1,554,736 226,387 Lease liabilities 870,782 978,399 142,466 Deferred tax liabilities 13,025 382 56 Total non-current liabilities 2,459,562 2,533,517 368,909 Total Liabilities 119,349,042 113,556,133 16,535,053 Shareholders’ equity Ordinary shares 170 171 25 Additional paid-in capital 99,250,468 100,784,131 14,675,306 Statutory reserves 5,000 5,000 728 Accumulated other comprehensive income 3,322,238 2,426,753 353,363 Retained earnings 15,193,035 23,294,062 3,391,878 Total Shareholders’ Equity 117,770,911 126,510,117 18,421,300 Total Liabilities and Shareholders’ Equity 237,119,953 240,066,250 34,956,353
PDD HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands of RMB and US$) For the three months ended March 31, 2022 2023 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Revenues 23,793,689 37,637,050 5,480,379 Costs of revenues (7,159,595 ) (11,125,285 ) (1,619,967 ) Gross profit 16,634,094 26,511,765 3,860,412 Sales and marketing expenses (11,219,068 ) (16,259,688 ) (2,367,594 ) General and administrative expenses (592,113 ) (816,402 ) (118,877 ) Research and development expenses (2,668,507 ) (2,506,657 ) (364,998 ) Total operating expenses (14,479,688 ) (19,582,747 ) (2,851,469 ) Operating profit 2,154,406 6,929,018 1,008,943 Interest and investment income, net 796,261 1,463,599 213,117 Interest expenses (12,640 ) (11,687 ) (1,702 ) Foreign exchange gain/ (loss) 20,084 (16,037 ) (2,335 ) Other income, net 239,770 1,227,520 178,741 Profit before income tax and share of results of equity investees 3,197,881 9,592,413 1,396,764 Share of results of equity investees (33,616 ) 106,389 15,491 Income tax expenses (564,814 ) (1,597,775 ) (232,654 ) Net income 2,599,451 8,101,027 1,179,601
PDD HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands of RMB and US$, except for per share data) For the three months ended March 31, 2022 2023 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Net income 2,599,451 8,101,027 1,179,601 Net income attributable to ordinary shareholders 2,599,451 8,101,027 1,179,601 Earnings per ordinary share: -Basic 0.52 1.53 0.22 -Diluted 0.46 1.39 0.20 Earnings per ADS (4 ordinary shares equals 1 ADS ): -Basic 2.06 6.13 0.89 -Diluted 1.84 5.55 0.81 Weighted average number of outstanding ordinary shares (in thousands): -Basic 5,036,733 5,282,720 5,282,720 -Diluted 5,688,094 5,850,378 5,850,378
PDD HOLDINGS INC. NOTES TO FINANCIAL INFORMATION (Amounts in thousands of RMB and US$) For the three months ended March 31, 2022 2023 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Revenues - Online marketing services and others 18,202,282 27,244,426 3,967,096 - Transaction services 5,591,407 10,392,624 1,513,283 Total 23,793,689 37,637,050 5,480,379
PDD HOLDINGS INC. NOTES TO FINANCIAL INFORMATION (Amounts in thousands of RMB and US$) For the three months ended March 31, 2022 2023 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Share-based compensation costs included in: Costs of revenues 9,181 37,368 5,441 Sales and marketing expenses 501,105 488,773 71,171 General and administrative expenses 383,296 478,062 69,612 Research and development expenses 629,168 529,199 77,057 Total 1,522,750 1,533,402 223,281
PDD HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of RMB and US$) For the three months ended March 31, 2022 2023 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Net cash (used in)/ generated from operating activities (9,068,096 ) 1,338,022 194,831 Net cash used in investing activities (4,852,089 ) (22,620,247 ) (3,293,763 ) Net cash generated from financing activities 43 53 8 Effect of exchange rate changes on cash, cash equivalents and restricted cash 10,163 (348,245 ) (50,709 ) Decrease in cash, cash equivalents and restricted cash (13,909,979 ) (21,630,417 ) (3,149,633 ) Cash, cash equivalents and restricted cash at beginning of period 66,043,971 92,300,417 13,439,982 Cash, cash equivalents and restricted cash at end of period 52,133,992 70,670,000 10,290,349
PDD HOLDINGS INC. RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES (Amounts in thousands of RMB and US$, except for per share data) For the three months ended March 31, 2022 2023 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Operating profit 2,154,406 6,929,018 1,008,943 Add: Share-based compensation 1,522,750 1,533,402 223,281 Non-GAAP operating profit 3,677,156 8,462,420 1,232,224 Net income attributable to ordinary shareholders 2,599,451 8,101,027 1,179,601 Add: Share-based compensation 1,522,750 1,533,402 223,281 Add: Interest expenses related to convertible bonds’ amortization to face value 12,640 11,687 1,702 Add: Loss from fair value change of certain investments 65,600 480,276 69,934 Non-GAAP net income attributable to ordinary shareholders 4,200,441 10,126,392 1,474,518 Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands) 5,688,094 5,850,378 5,850,378 Diluted earnings per ordinary share 0.46 1.39 0.20 Add: Non-GAAP adjustments to earnings per ordinary share 0.28 0.34 0.05 Non-GAAP diluted earnings per ordinary share 0.74 1.73 0.25 Non-GAAP diluted earnings per ADS 2.95 6.92 1.01