EX-99.1 2 tm2231418d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

PDD Announces Third Quarter 2022 Unaudited Financial Results

 

SHANGHAI, November 28, 2022 (GLOBE NEWSWIRE) – PDD (the “Company”) (NASDAQ: PDD), today announced its unaudited financial results for the third quarter ended September 30, 2022.

 

Third Quarter 2022 Highlights

 

●Total revenues in the quarter were RMB35,504.3 million (US$14,991.1 million), an increase of 65% from RMB21,505.8 million in the same quarter of 2021.

 

●Operating profit in the quarter was RMB10,436.6 million (US$1,467.2 million), an increase of 388% from RMB2,139.3 million in the same quarter of 2021. Non-GAAP2 operating profit in the quarter was RMB12,301.5 million (US$1,729.3 million), an increase of 277% from RMB3,260.7 million in the same quarter of 2021.

 

●Net income attributable to ordinary shareholders in the quarter was RMB10,588.6 million (US$1,488.5 million), an increase of 546% from RMB1,640.0 million in the same quarter of 2021. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB12,447.2 million (US$1,749.8 million), an increase of 295% from RMB3,150.2 million in the same quarter of 2021.

 

“We continued to deepen our value creation in the third quarter,” said Mr. Lei Chen, Chairman and Chief Executive Officer of PDD. “We will increase our R&D investment to further enhance the supply chain efficiency and agricultural digital inclusion.”

 

“Investment in certain projects was affected in the third quarter,” said Ms. Jun Liu, VP of Finance of PDD. “We will continue to step up our investment in R&D and create long-term value through innovations.”

 

 

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 RMB7.1135 to US$1.00, the noon buying rate in effect on September 30, 2022 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 long-term investments, and interest expenses related to the convertible bonds’ amortization to face value and gain or loss on extinguishment. See “Reconciliation of Non- GAAP Measures to The Most Directly Comparable GAAP Measures” set forth at the end of this press release.

 

1 

 

 

Third Quarter 2022 Unaudited Financial Results

 

Total revenues were RMB35,504.3 million (US$4,991.1 million), an increase of 65% from RMB21,505.8 million in the same quarter of 2021. The increase was primarily due to an increase in revenues from online marketing services and transaction services, offset by the decrease of revenues from merchandise sales.

 

●Revenues from online marketing services and others were RMB28,425.6 million (US$3,996.0 million), an increase of 58% from RMB17,946.5 million in the same quarter of 2021.

 

●Revenues from transaction services were RMB7,022.3 million (US$987.2 million), an increase of 102% from RMB3,477.1 million in the same quarter of 2021.

 

●Revenues from merchandise sales were RMB56.4 million (US$7.9 million), a decrease of 31% from RMB82.1 million in the same quarter of 2021.

 

Total costs of revenues were RMB7,414.1 million (US$1,042.3 million), an increase of 13% from RMB6,558.6 million in the same quarter of 2021. The increase mainly came from increased fulfillment fees and payment processing fees.

 

Total operating expenses were RMB17,653.6 million (US$2,481.7 million), an increase of 38% from RMB12,807.8 million in the same quarter of 2021.

 

●Sales and marketing expenses were RMB14,048.8 million (US$1,975.0 million), an increase of 40% from RMB10,050.6 million in the same quarter of 2021, mainly due to increased spending in promotion and advertising activities.

 

●General and administrative expenses were RMB906.6 million (US$127.4 million), an increase of 171% from RMB334.8 million in the same quarter of 2021, primarily due to an increase in staff related costs.

 

●Research and development expenses were RMB2,698.2 million (US$379.3 million), an increase of 11% from RMB2,422.4 million in the same quarter of 2021. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel.

 

Operating profit in the quarter was RMB10,436.6 million (US$1,467.2 million), an increase of 388% from RMB2,139.3 million in the same quarter of 2021. Non-GAAP operating profit in the quarter was RMB12,301.5 million (US$1,729.3 million), an increase of 277% from RMB3,260.7 million in the same quarter of 2021.

 

Net income attributable to ordinary shareholders in the quarter was RMB10,588.6 million (US$1,488.5 million), an increase of 546% from RMB1,640.0 million in the same quarter of 2021. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB12,447.2 million (US$1,749.8 million), an increase of 295% from RMB3,150.2 million in the same quarter of 2021.

 

2

 

 

Basic earnings per ADS was RMB8.38 (US$1.18) and diluted earnings per ADS was RMB7.34 (US$1.03), compared with basic earnings per ADS of RMB1.31 and diluted earnings per ADS of RMB1.15 in the same quarter of 2021. Non-GAAP diluted earnings per ADS was RMB8.62 (US$1.21), compared with RMB2.18 in the same quarter of 2021.

 

Net cash flow provided by operating activities was RMB11,651.8 million (US$1,638.0 million), compared with RMB8,736.6 million in the same quarter of 2021, mainly due to the increase in net income and the changes in working capitals.

 

Cash, cash equivalents and short-term investments were RMB137.8 billion (US$19.4 billion) as of September 30, 2022, compared with RMB92.9 billion as of December 31, 2021.

 

3

 

 

Conference Call

 

The Company will host a conference call to discuss the earnings at 7:30 AM U.S. Eastern Time on Monday, November 28, 2022 (8:30 PM Beijing/Hong Kong Time on Monday, November 28, 2022).

 

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 long-term investments, and interest expenses related to the convertible bonds’ amortization to face value and gain or loss on extinguishment.

 

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 long-term investments, and interest expenses related to the convertible bonds’ amortization to face value and gain or loss on extinguishment, 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.

 

4

 

 

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.

 

5

 

 

About PDD

 

PDD is a multinational commerce group that owns and operates a portfolio of businesses. PDD 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 convenience through new opportunities.

 

For more information, please visit www.pddholdings.com.

 

For investor and media inquiries, please contact:

 

investor@pddholdings.com

media@pddholdings.com

 

6

 

 

PDD

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))

 

   As of 
  

December

31, 2021

   September 30, 2022 
   RMB   RMB   US$ 
       (Unaudited) 
ASSETS            
Current assets               
Cash and cash equivalents   6,426,715    25,601,547    3,599,009 
Restricted cash   59,617,256    48,808,388    6,861,375 
Receivables from online payment platforms   673,737    476,329    66,961 
Short-term investments   86,516,618    112,207,949    15,773,944 
Amounts due from related parties   4,250,155    4,680,281    657,943 
Prepayments and other current assets   3,424,687    1,795,802    252,448 
Total current assets   160,909,168    193,570,296    27,211,680 
                
Non-current assets               
Property, equipment and software, net   2,203,323    1,148,010    161,385 
Intangible assets   701,220    297,856    41,872 
Right-of-use assets   938,537    1,235,435    173,675 
Deferred tax assets   31,504    27,707    3,895 
Other non-current assets   16,425,966    12,828,680    1,803,427 
Total non-current assets   20,300,550    15,537,688    2,184,254 
                
Total Assets   181,209,718    209,107,984    29,395,934 

 

7

 

 

PDD

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))

 

   As of 
  

December

31, 2021

   September 30, 2022 
   RMB   RMB   US$ 
       (Unaudited) 
LIABILITIES AND SHAREHOLDERS’ EQUITY               
Current liabilities               
Amounts due to related parties   1,963,007    2,600,563    365,581 
Customer advances and deferred revenues   1,166,764    1,391,560    195,622 
Payable to merchants   62,509,714    51,562,514    7,248,543 
Accrued expenses and other liabilities   14,085,513    14,242,036    2,002,114 
Merchant deposits   13,577,552    15,122,695    2,125,915 
Lease liabilities   427,164    512,838    72,094 
Total current liabilities   93,729,714    85,432,206    12,009,869 
                
Non-current liabilities               
Convertible bonds3   11,788,907    15,749,603    2,214,044 
Lease liabilities   544,263    750,257    105,469 
Deferred tax liabilities   31,291    46,047    6,473 
Other non-current liabilities   996    -    - 
Total non-current liabilities   12,365,457    16,545,907    2,325,986 
                
Total Liabilities   106,095,171    101,978,113    14,335,855 
                
                
Shareholders’ equity               
Ordinary shares   161    162    23 
Additional paid-in capital3   95,340,819    96,754,398    13,601,518 
Accumulated other comprehensive (loss)/ income3    (2,519,900)   4,630,973    651,012 
Accumulated (deficits)/ surplus3    (17,706,533)   5,744,338    807,526 
Total Shareholders’ Equity   75,114,547    107,129,871    15,060,079 
                
Total Liabilities and Shareholders’ Equity   181,209,718    209,107,984    29,395,934 

  

 

3 The Company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) on January 1, 2022, using the modified retrospective method with a cumulative-effect adjustment to the opening balance of convertible bonds, additional paid-in capital, accumulated other comprehensive income/ (loss) and accumulated surplus/ (deficits).

 

8

 

 

  

PDD 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands of RMB and US$)

 

   For the three months ended September 30,   For the nine months ended September 30, 
   2021   2022   2021   2022 
   RMB   RMB   US$   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Revenues   21,505,758    35,504,304    4,991,116    66,719,077    90,737,561    12,755,684 
Costs of revenues   (6,558,648)   (7,414,132)   (1,042,262)   (25,202,584)   (22,535,593)   (3,168,004)
Gross profit   14,947,110    28,090,172    3,948,854    41,516,493    68,201,968    9,587,680 
                               
Sales and marketing expenses   (10,050,611)   (14,048,820)   (1,974,952)   (33,435,891)   (36,611,335)   (5,146,740)
General and administrative expenses   (334,806)   (906,573)   (127,444)   (1,120,812)   (2,324,408)   (326,760)
Research and development expenses   (2,422,421)   (2,698,166)   (379,302)   (6,969,995)   (7,978,039)   (1,121,534)
Total operating expenses   (12,807,838)   (17,653,559)   (2,481,698)   (41,526,698)   (46,913,782)   (6,595,034)
                               
Operating profit/ (loss)   2,139,272    10,436,613    1,467,156    (10,205)   21,288,186    2,992,646 
                               
Interest and investment income, net   631,913    1,092,150    153,532    2,147,019    2,645,402    371,885 
Interest expenses   (298,431)   (13,646)   (1,918)   (927,886)   (39,434)   (5,544)
Foreign exchange (loss)/ gain   (10,433)   53,374    7,503    23,645    (125,891)   (17,697)
Other (loss)/ income, net   (52,606)   546,528    76,829    541,169    2,052,533    288,540 
                               
Profit before income tax and share of results of equity investees   2,409,715    12,115,019    1,703,102    1,773,742    25,820,796    3,629,830 
Share of results of equity investees   85,011    10,732    1,509    230,148    (76,377)   (10,737)
Income tax expenses   (854,766)   (1,537,177)   (216,093)   (854,766)   (3,660,054)   (514,522)
Net income   1,639,960    10,588,574    1,488,518    1,149,124    22,084,365    3,104,571 

 

9

 

 

PDD 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(Amounts in thousands of RMB and US$, except for per share data)

  

   For the three months ended September 30,   For the nine months ended September 30, 
   2021   2022   2021   2022 
   RMB   RMB   US$   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Net income   1,639,960    10,588,574    1,488,518    1,149,124    22,084,365    3,104,571 
Net income attributable to ordinary shareholders   1,639,960    10,588,574    1,488,518    1,149,124    22,084,365    3,104,571 
                               

Earnings per ordinary share:

                              
  -Basic   0.33    2.10    0.29    0.23    4.38    0.62 
  -Diluted   0.29    1.84    0.26    0.20    3.86    0.54 
                               
Earnings per ADS (4 ordinary shares equals 1 ADS ):                              
  -Basic   1.31    8.38    1.18    0.92    17.52    2.46 
  -Diluted   1.15    7.34    1.03    0.80    15.43    2.17 
                               
Weighted average number of outstanding ordinary shares (in thousands):                              
  -Basic   5,021,164    5,051,256    5,051,256    5,006,285    5,043,522    5,043,522 
  -Diluted   5,703,986    5,776,165    5,776,165    5,715,932    5,733,453    5,733,453 

 

10

 

 

PDD 

NOTES TO FINANCIAL INFORMATION

(Amounts in thousands of RMB and US$)

 

   For the three months ended September 30,   For the nine months ended September 30, 
   2021   2022   2021   2022 
   RMB   RMB   US$   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Revenues                        
 - Online marketing services and others   17,946,496    28,425,645    3,996,014    50,138,401    71,756,721    10,087,399 
 - Transaction services   3,477,147    7,022,252    987,173    9,416,260    18,829,866    2,647,061 
 - Merchandise sales   82,115    56,407    7,929    7,164,416    150,974    21,224 
Total   21,505,758    35,504,304    4,991,116    66,719,077    90,737,561    12,755,684 

 

11

 

 

PDD 

NOTES TO FINANCIAL INFORMATION 

(Amounts in thousands of RMB and US$)

  

   For the three months ended September 30,   For the nine months ended September 30, 
   2021   2022   2021   2022 
   RMB   RMB   US$   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Share-based compensation costs included in:                              
Costs of revenues   9,089    5,841    821    20,895    22,011    3,094 
Sales and marketing expenses   384,704    608,462    85,536    1,067,727    1,623,126    228,175 
General and administrative expenses   156,731    680,252    95,628    568,266    1,724,567    242,436 
Research and development expenses   570,929    570,327    80,176    1,625,137    1,862,276    261,795 
Total   1,121,453    1,864,882    262,161    3,282,025    5,231,980    735,500 

 

12

 

  

PDD 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Amounts in thousands of RMB and US$)

 

   For the three months ended September 30,   For the nine months ended September 30, 
   2021   2022   2021   2022 
   RMB   RMB   US$   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Net cash generated from operating activities   8,736,568    11,651,823    1,637,990    12,383,236    21,957,598    3,086,752 
Net cash used in investing activities   (13,764,757)   (356,394)   (50,102)   (22,869,860)   (13,801,754)   (1,940,220)
Net cash generated from/ (used in) financing activities   146    258    36    (1,875,347)   569    80 
Effect of exchange rate changes on cash, cash equivalents and restricted cash   22,160    250,227    35,176    (118,703)   209,551    29,458 
                               
(Decrease)/ increase in cash, cash equivalents and restricted cash   (5,005,883)   11,545,914    1,623,100    (12,480,674)   8,365,964    1,176,070 
Cash, cash equivalents and restricted cash at beginning of period   67,368,845    62,864,021    8,837,284    74,843,636    66,043,971    9,284,314 
Cash, cash equivalents and restricted cash at end of period   62,362,962    74,409,935    10,460,384    62,362,962    74,409,935    10,460,384 

  

13

 

 

PDD 

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 September 30,   For the nine months ended September 30, 
   2021   2022   2021   2022 
   RMB   RMB   US$   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Operating profit/ (loss)   2,139,272    10,436,613    1,467,156    (10,205)   21,288,186    2,992,646 
Add: Share-based compensation   1,121,453    1,864,882    262,161    3,282,025    5,231,980    735,500 
Non-GAAP operating profit   3,260,725    12,301,495    1,729,317    3,271,820    26,520,166    3,728,146 
                               
Net income attributable to ordinary shareholders   1,639,960    10,588,574    1,488,518    1,149,124    22,084,365    3,104,571 
Add: Share-based compensation   1,121,453    1,864,882    262,161    3,282,025    5,231,980    735,500 
Add: Interest expense related to convertible bonds’ amortization to face value and gain or loss on extinguishment, net   298,443    13,646    1,918    915,917    39,434    5,544 
Add: Loss/ (gain) from fair value changes of long-term investments   90,300    (19,886)   (2,796)   38,064    68,173    9,584 
Non-GAAP net income attributable to ordinary shareholders    3,150,156    12,447,216    1,749,801    5,385,130    27,423,952    3,855,199 
                               
Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands)   5,767,207    5,776,165    5,776,165    5,789,157    5,733,453    5,733,453 
                               
Diluted earnings per ordinary share   0.29    1.84    0.26    0.20    3.86    0.54 
Add: Non-GAAP adjustments to earnings per ordinary share   0.26    0.31    0.04    0.73    0.92    0.13 
Non-GAAP diluted earnings per ordinary share   0.55    2.15    0.30    0.93    4.78    0.67 
Non-GAAP diluted earnings per ADS   2.18    8.62    1.21    3.72    19.13    2.69 

 

14