On November 21, Thursday, PDD announced that its Q3 earnings report showed a 44% year-on-year increase in revenue to 99.4 billion yuan, and a 61% year-on-year increase in net profit attributable to the parent company to 25 billion yuan, but a 22% decline compared to the previous quarter.
At the earnings conference that evening, PDD Co-CEO Zhao Jiazhen introduced that since this quarter, the platform has launched a series of measures to support merchants. On one hand, it has reduced transaction fees for high-quality merchants, and on the other hand, invested a resource package worth tens of billions, significantly lowering merchants' operating costs and improving operational efficiency, helping merchants to have the motivation and ability to further improve their product services.
Zhao Jiazhen stated that in the next few quarters, the company will continue to firmly implement a high-quality development strategy, continuously improving the platform and industrial ecosystem.
However, considering the increasingly complex external environment and intensifying industry competition, as well as the limitations of the platform's operating model and the team's experience and capabilities, Zhao Jiazhen indicated that due to the natural constraints of business development, the growth rate of the business will not be linearly extrapolated in the long term, and in this case, a slowdown in revenue growth is inevitable.
Zhao Jiazhen mentioned that in the second half of this year, due to the limitations of third-party operating platforms, the team did not fully grasp the macro policy dividends, resulting in us having to offer costs that are much higher than those of other peers to maintain the competitiveness of the same products, which will inevitably affect our current and future profitability.
Zhao Jiazhen expects that the company's disadvantages compared to its peers will significantly exist for a period of time, and the financial impact may further expand.
The following is a transcript of the analyst Q&amp;A session:
Q1: What are the results of the series of measures to support merchants? What is the future direction? In the face of many uncertainties, what plans does the management have for the future development of global business?
Zhao Jiazhen responded that, as we have always emphasized, as an e-commerce platform, the platform and various ecosystem participants need to work together to create value for consumers, and merchants are important partners in serving consumers well. Therefore, a healthy and sustainable merchant ecosystem is an important foundation for the platform's high-quality development.
This quarter, we have made a lot of investments in the merchant ecosystem, vigorously supporting high-quality merchants and implementing multiple policies, such as launching a tens of billions reduction plan. Currently, we have successively implemented a package of new measures, including service fee refunds, deposit reductions, exemption from logistics transfer fees, and upgrading merchant after-sales services.
Through long-term and strong execution, we hope these policies can promote high-quality development for high-quality merchants and work together to provide better services for consumers. For example, in terms of fee reductions, we have introduced service fee refunds and deposit reductions, which not only lower merchants' operating costs but also improve operational efficiency, and in the long run, will help merchants have more motivation and ability to further improve their products and services
In addition, in the third quarter, we also made significant efforts in logistics. The logistics fee reduction policy exempted merchants from logistics transfer fees for orders sent to remote areas in the western regions, allowing merchants to cover a larger consumer base at a lower cost. The implementation of this policy further promoted the execution of our emerging e-commerce plans and encouraged more quality products to be supplied to the western regions.
The implementation of these policies has already received positive feedback from many merchants, and in the future, we will make more long-term meaningful investments in this direction. Through the improvement of the merchant ecosystem, we hope to build a foundation for higher quality supply and work together with merchants to provide better products and services for consumers.
Regarding globalization, the Group's Chairman and Co-CEO Chen Lei stated that our goal and original intention have always been to bring sufficient value to consumers in different countries. We will continue to strengthen our capabilities and make long-term investments and optimizations in various aspects such as supply chain capabilities and service levels.
As our business continues to grow, consumers and external stakeholders have raised higher demands on us. In response to this situation, we maintain a positive and open attitude. During this period, we proactively communicated with various stakeholders in the locations where we operate, carefully listening to their feedback and suggestions, and promptly reflecting valuable feedback into our daily operations, thereby continuously optimizing service standards and compliance levels.
Currently, the results of these communication efforts have begun to show initial outcomes. Our businesses in various locations are holding themselves to higher standards. With the development of our globalization efforts, we will continue to focus on strengthening our capabilities in these areas, providing high-quality services that align with local usage habits and standards to users worldwide.
At the same time, as mentioned in the last quarter, the competition faced by our globalization business is becoming increasingly fierce, compounded by a complex external environment. Our business will inevitably experience some fluctuations and impacts, but these short-term effects will not affect our determination to explore and move forward. The challenges and pressures from the outside will drive us to continuously improve ourselves, creating a safer and more reassuring shopping environment and a higher quality consumer experience for global consumers.
Q2: What specific measures has the company taken regarding compliance and the platform ecosystem, and what results do you hope to achieve in the future? This quarter, both profit and profit margin recorded a quarter-on-quarter decline. What is the management's view on this? Does it align with the &#34;long-term trend&#34; mentioned last quarter? What is the future direction of profitability?
Zhao Jiazhen stated that the regulatory trends in various markets have raised higher demands on our compliance capabilities. We also firmly believe that providing consumers with a safe and reassuring consumption environment is the fundamental responsibility of an e-commerce platform. Therefore, we consider compliance and a high-quality ecosystem as an important component of our high-quality development strategy.
In this quarter, we continued to intensify our efforts to implement a series of resolute governance measures, further improving the platform's compliance and governance system. From the perspective of compliance management, we continue to invest heavily in building a professional compliance team, keeping up with updates in market regulations and industry trends in real-time, and translating them into practical guidance; we also prepared rich and detailed compliance education materials for merchants to enhance their compliance capabilities and promote the high-quality development of supply chain merchants
From a technical perspective, we have further optimized the standards and processes for merchant onboarding and product listing, investing significant resources to actively manage product inspections through a combination of technology and manual screening, thereby improving potential product safety risks. While actively expanding the market, we also cooperate with the requirements put forward by external stakeholders, holding ourselves to high standards in our efforts to build a first-class compliance level in the industry.
Through these investments in compliance and governance, combined with our support policies for quality merchants on this platform, we hope to achieve supply-side optimization and upgrades, fostering a healthier and more sustainable merchant ecosystem by incentivizing good products and eliminating bad ones. Ultimately, these results will translate into more competitive products and services, creating greater value for consumers.
Liu Jun, Vice President of Finance at PDD Group, responded that last quarter, we indicated that our revenue growth might slow down due to competition and external factors. Additionally, as we firmly invest in promoting a healthy and sustainable platform ecosystem, our profitability may gradually decline in the long run.
Aside from financial data, our investments in the platform ecosystem have already shown initial results. The positive feedback from merchants regarding our &#34;Merchant Support Program&#34; has greatly encouraged us. We believe that investing in the merchant ecosystem lays the foundation for the platform's health and sustainable development.
In the long run, these efforts will benefit merchants, consumers, and the platform, creating more value for consumers through supply chain efforts. I believe this is a long journey. In the future, we will continue to explore more investments in this area to drive impactful results.
We believe that investing in the merchant ecosystem lays the foundation for the platform's healthy and sustainable development, and in the long term, consumers will benefit from it.
Q3: How did PDD perform during the Double Eleven shopping festival? What consumer trends were discovered? Did PDD have any new strategies during this promotion? What were the results? As the domestic e-commerce competition environment becomes increasingly fierce, how does management view this situation? Will the company's strategy change in the future?
Zhao Jiazhen stated that in the second half of this year, overall consumption is recovering, and online consumption is showing good growth. Recently, driven by the atmosphere of promotions, we have also seen the platform's consumption vitality further released. From the perspective of consumer trends, consumer choices are becoming more diversified, and cross-platform mobility has also increased. In response to this trend, enhancing consumer trust in the platform is fundamental, and we have consistently invested significant resources on both the consumption and supply sides to bring tangible benefits to consumers.
During the recently concluded Double Eleven shopping festival, we launched a consumption voucher campaign worth billions for the first time, giving back to consumers with real cash. The response from consumers was very enthusiastic, especially in categories such as agricultural products, small appliances, and daily necessities, where sales saw significant growth. The platform and merchants worked well together to meet consumers' demand for high-quality and cost-effective products.
At the same time, we launched a super doubling subsidy activity, focusing on supporting a group of quality merchants with product and technological innovation capabilities. Many domestic brands launched new products on our platform, quickly gaining traction during the promotion, and the growth of these quality supplies also provided consumers with better and more diverse product choices
It further consolidates consumers' trust in this platform, achieving a win-win situation for both the demand and supply sides.
In the past, under the guidance of the consumer-first philosophy, we have made long-term, patient, and continuous investments, accumulating this hard-earned positive user mindset for the platform. Currently, we believe that by insisting on high-quality long-term investments in consumer supply and ecology, we can further solidify consumers' trust in the platform, which is also the cornerstone of our long-term healthy development.
Regarding industry competition, we have mentioned multiple times that the current e-commerce competitive environment remains very intense, and our business faces many challenges. At the same time, constrained by the natural trajectory of business development, the growth rate of our business will not be linearly extrapolated in the long term, and under these circumstances, a slowdown in revenue growth is inevitable.
Since the third quarter, as macro policies have further intensified, while we see opportunities, we also face many challenges. We observe that the domestic market is very active, with many changes and intensified competition. Our team is gradually aging and lacks sufficient capabilities, which may lead to missing some macro opportunities while responding to certain changes.
Since the beginning of this year, due to macro policies that have greatly stimulated certain industries and consumption, our team, limited by the capabilities of third-party operating platforms, has not fully grasped these macro policy dividends. This has resulted in us offering costs that are much higher than those of our peers to maintain the competitiveness of the same products, which will inevitably affect our current and future profitability levels.
With the continuation and expansion of consumption promotion policies, we will actively embrace changes, seize new opportunities, and better serve consumers. However, constrained by our platform's operating model and the limitations of our team's historical experience and capabilities, our disadvantages compared to peers will significantly exist for a period of time, and the financial impact brought about by this may further expand, which indeed poses a challenge for us.
To cope with the current competitive environment, we will further raise our standards, strengthen our core business capabilities, continue to seek new investment opportunities in the supply chain and platform ecology, make long-term high-quality investments, and transform these capabilities into higher and more competitive products and better services for consumers.
We firmly believe that the high-quality development of this ecology and supply side is an important foundation for the platform's long-term development and for creating long-term value for consumers. This is a long and patient process. We are prepared for a protracted battle, and changes in the external competitive environment will not affect our pace

PDD Co-CEO Zhao Jiazhen stated that due to the limitations of the platform's operating model and the historical experience and capabilities of the team, the company's disadvantages compared to its peers are expected to significantly persist for a period of time, and the resulting financial impact may further expand. High-quality development on the ecological and supply sides is an important foundation for creating long-term value for consumers. This is a long and patient process, and we are prepared for a protracted battle. Changes in the external competitive environment will not affect our pace

- Pinduoduo reported a 44% year-on-year revenue increase to 99.4 billion yuan in Q3, with net profit rising 61% to 25 billion yuan, despite a 22% quarter-on-quarter decline.  
- The company has implemented measures to support merchants, including fee reductions and resource investments, aiming to enhance operational efficiency and product offerings.  
- However, CEO Zhao Jiazhen noted that external complexities and competitive pressures will likely lead to a slowdown in revenue growth, impacting profitability in the near term.

PDD conference call: Slowing growth is inevitable, and the disadvantages compared to peers will significantly exist for a period of time