On the 20th, PDD announced its financial report showing that Q4 revenue grew by 24.4% year-on-year, which was below expectations, but net profit of 29.85 billion yuan exceeded expectations. PDD's U.S. stock fell over 5% in early trading, but then turned to rise over 2.8% amid a general decline in Chinese concept stocks.
In the subsequent earnings call, when asked about the slowdown in revenue growth, PDD explained:
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“External uncertainties and fierce competition have impacted short-term revenue, while increased investment in merchant support and the platform ecosystem has led to profit fluctuations, but short-term fluctuations will not shake our confidence in long-term goals.”
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PDD stated that the platform is entering a new stage of growth driven by quality:
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“With the evolution and modernization of the supply chain, more and more high-quality merchants and products are emerging, which will provide consumers with a more diverse and higher quality range of goods.”
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Regarding the competitive landscape, management stated that competition is the norm in the e-commerce industry:
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“Our strategic investments in the consumer end, supply side, and platform ecosystem have already yielded tangible results, proving the feasibility of high-quality development as a sustainable growth path. We recognize the necessity of profound transformation on the supply side of the e-commerce industry.”
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When asked about balancing social responsibility and shareholder responsibility, PDD responded:
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“Our logistics support measures tailored for remote areas have driven double-digit growth in orders in western China, and we have expanded nationwide free delivery services to nearly 100 million consumers in remote areas.
In the agricultural sector, we continue to support the agricultural industry through **sustainable investment in agricultural technology, supply chain innovation, and training the next generation of farmers. These efforts, along with our current support for high-quality merchants, promoting agricultural modernization, and improving supply chain efficiency, have simultaneously increased farmers' incomes and created local job opportunities.”
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The following is the full Q&amp;A:
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Q1: In the past two quarters, the company has taken several important measures in platform ecosystem construction and virtual support. As management just mentioned, the company plans to further increase investment in these areas. How should we understand the long-term goals of platform ecosystem construction, and how will this drive further growth of the platform?
A1: Since the second quarter of 2024, we have launched a series of initiatives centered on protecting merchant rights, in line with the overall direction of high-quality development of the platform ecosystem. For example, the “Billion Yuan Fee Reduction” plan and support programs for high-quality merchants have effectively reduced merchants' operating costs. By leveraging our platform's digital technology and resources, we also help manufacturers invest in product innovation and technology upgrades while broadening their market channels.
These initiatives deepen our long-term efforts to build a stronger ecosystem and enhance the platform ecosystem. We have also launched a series of initiatives focused on high-quality development. We have noticed that in certain industries, some merchants face homogenization competition, which not only squeezes corporate profits but also weakens the motivation for innovation and investment. As a platform connecting manufacturers, merchants, and consumers, we have introduced a series of policies to support high-quality suppliers
By reducing costs and simplifying operations, we encourage merchants to invest more in products and services. This is driving our platform into a new stage of quality-driven growth. With the evolution and modernization of the supply chain, an increasing number of high-quality merchants and products are emerging. This provides consumers with a more diverse and higher quality selection of goods, as well as a smoother shopping experience, bringing tangible benefits to consumers and building a healthy ecosystem that benefits all stakeholders in the long term.
These are our thoughts on investing in the platform ecosystem.
Q2: In addition to investments in the supply side and merchant ecosystem, can management share what has been done recently on the consumer side? For example, what new initiatives were launched during the peak e-commerce season in the past fourth quarter? What will be the strategic focus on the consumer side in the future?
A2: Our initiatives on the supply side and merchant ecosystem complement our consumer-centric strategy. We are always committed to serving consumers by providing more value and better services, which has been our core philosophy all along.
During the promotional period in the fourth quarter, we upgraded the &#34;Super Double Savings&#34; program, adding more discounts on top of the discounted prices from the &#34;Billion Subsidy&#34; program. This not only saved consumers a significant amount of money but also became a new growth engine for brands. The number of brands and products participating in the promotional activities reached an all-time high, and total order volume achieved an important milestone.
During the &#34;Double 12&#34; promotion, we further optimized the event by launching 10 billion yuan in consumption vouchers, reinforcing our focus on consumer interests. At the same time, we prioritized support for high-quality merchants in our 10 billion yuan investment in research and supply chain, driving brand growth. Additionally, we strengthened logistics support measures for remote areas, stimulating new consumption trends. For example, during this year's Spring Festival, the platform accelerated the circulation of New Year goods to the western regions through traffic support and promotional plans.
Through investments on both the supply and demand sides, we have seen a surge in quality supply, enriching consumer choices and promoting a virtuous cycle. In the future, we will continue to focus on long-term high-quality investments on the consumer side to build a mutually beneficial platform ecosystem.
Q3: The competition in the domestic e-commerce market has been intensifying for some time. Can management share some insights on the latest developments in the competitive landscape and whether the company will adjust its development strategy in the future?
We have emphasized multiple times in the past that competition is the norm in the e-commerce industry and a key driving force for its continuous progress. Major platforms are actively optimizing their strategies and services to better respond to changes in consumer preferences, reflecting the strength and healthy development of the industry. As the industry and technology continue to evolve, e-commerce platforms are exploring new business models and technological applications to enhance user experience and operational efficiency.
We are closely monitoring this development and will continue to optimize the platform ecosystem and services to better meet consumer needs. Our strategic investments on the consumer side, supply side, and platform ecosystem have already yielded tangible results, proving the feasibility of high-quality development as a sustainable growth path
For many years, we have built a trusted brand reputation and deep consumer loyalty, which remain our core advantages. At the same time, we recognize the necessity of a profound transformation on the supply side of the e-commerce industry.
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Our current investments in merchant benefits and industrial sustainability will improve the consumer experience over time by safeguarding merchant rights, enhancing service quality and satisfaction, and enriching quality supply. This will further promote the healthy development of the platform ecosystem. We will continue to strengthen our advantages through meaningful, long-term, high-quality investments. By doing so, our goal is to provide consumers with more quality products and a seamless, trustworthy shopping experience.
Q4: Regarding our global business, we have noticed that recent global operations may face some macro conditions and policy changes. Can management share more about how these external changes might impact the company's business and what measures the company plans to take in response?
As we have discussed in recent quarters, the external environment for global business is changing rapidly, and the competitive landscape remains intense. Additionally, there may be some changes related to macro conditions that could be unrelated to our operations.
To respond to external changes, we will first strictly comply with laws and regulations to ensure comprehensive operational compliance. On this basis, we are also actively communicating with various market participants to continuously optimize service and compliance standards. However, these external changes combined will inevitably pose some challenges to our global business. Nevertheless, we remain committed to providing high-quality products to global consumers, and this will not change.
We will continue to focus on our business, invest in supply chain improvements, service quality, and the platform ecosystem, while ensuring high-quality growth and adhering to compliance standards. By doing so, we strive to further deepen the core advantages of supply chain efficiency and operational capabilities accumulated over the years. In addition, we will continue to explore new business models, attempt innovative localized supply chain solutions, deepen market penetration, introduce new product categories and services, and build a stronger, sustainable platform infrastructure for long-term development.
Our commitment to high-quality sustainable development also applies to our global business. In addition to providing high-quality products at affordable prices, our goal is to meet the growing expectations of global consumers. As emphasized in previous quarters, we have implemented merchant support policies and strengthened trust and safety measures in the supply chain and platform ecosystem to empower innovative and high-quality merchants.
At the same time, we firmly regulate merchants who violate platform rules and harm consumer interests. These efforts have already begun to yield positive results, and we are committed to long-term enforcement of these measures.
Meanwhile, as a sizable e-commerce platform, we have noticed that global consumers are increasingly concerned about corporate social responsibility. We are also actively seeking opportunities to create more value for communities by leveraging our technological capabilities and platform resources based on e-commerce services. As an evolving e-commerce platform, we recognize that global consumers' attention to corporate social responsibility is on the rise. We are actively exploring how to utilize our technological capabilities and platform resources to create greater value for the communities we serve
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We have launched several initiatives in global corporate social responsibility and have some new ideas for the future. Our team is committed to exploring this area and taking concrete actions to strive to be responsible corporate citizens on a global scale. There is still much we can do, and the team is very excited about future opportunities.
Through long-term investments and consistently doing the right thing, we hope to strengthen our core competitive advantages and build lasting, trustworthy relationships with merchants and global consumers. This is my reflection on global business.
Q5: We have noticed that the company's revenue growth has slowed in recent quarters, and profits have also fluctuated. How should we view the recent trends in revenue and profits?
Regarding this quarter's financial performance, external uncertainties and intense competition have impacted our short-term revenue growth. At the same time, our increased investments in merchant support and platform ecosystem participation may lead to profit fluctuations.
When we began these investments, we anticipated fluctuations in revenue growth and profits, as this is part of building a high-quality platform ecosystem and achieving sustainable growth. Short-term fluctuations will not shake our confidence in long-term goals. We believe that only through continuous investment and optimization can we create a healthy e-commerce ecosystem.
Currently, our efforts have received positive feedback from merchants, and supply-side optimization is driving new consumer trends on the demand side, which has begun to form a virtuous cycle. In the future, we will continue to focus on high-quality development strategies, investing patiently and at scale to ensure long-term sustainable development.
Q6: In the past two quarters, management has mentioned taking on more social and platform responsibilities. Today, management also brought up this topic. Could management share more about the long-term goals the company hopes to achieve through platform responsibility, and how to balance these goals with responsibilities to shareholders?
In recent quarters, we have noticed that evaluating company performance solely based on short-term financial results or capital returns does not align with our current stage of development. As a global company in the new era, we are embracing innovation, adapting to change, and taking on more social responsibilities in the regions where we operate. This aligns with our long-term responsibilities to shareholders and reflects thoughtful leadership decisions.
For example, our recent support for high-quality merchants has included comprehensive support for product development, marketing, operations, and supply chains. We have cultivated a group of high-quality merchants with product and technical capabilities, empowering independent entrepreneurs to simplify operations while driving supply chain transformation.
Additionally, our logistics support measures tailored for remote areas have driven double-digit growth in orders in western China and expanded nationwide free delivery services to nearly 100 million consumers in remote areas. This strategy has created new opportunities for merchants to grow orders in western China, benefiting not only the merchants' business opportunities but also consumers in different regions
In the agricultural sector, we continue to support the agricultural industry through sustainable investment in agricultural technology, supply chain innovation, and training the next generation of farmers. These efforts, combined with our current support for quality merchants, promoting agricultural modernization, and improving supply chain efficiency, have simultaneously increased farmers' incomes and created local job opportunities.
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Overall, the e-commerce industry is transforming towards quality, service, experience, and innovation, raising higher standards for platforms. Our focus on merchant rights, supporting quality merchants, and promoting supply chain reform is both cost-driven and aimed at meeting the growing demands of e-commerce platforms. In the long run, building an inclusive ecosystem that creates value for all participants will lay the foundation for us to achieve sustainable growth and long-term returns

PDD executives stated that external uncertainties and competition have impacted short-term revenue, while increased support for merchants and ecosystem investments have led to profit fluctuations. However, they are confident in their long-term goals, as the platform is entering a phase of quality-driven growth. Management emphasized the normalization of competition in the e-commerce industry and pointed out the necessity of supply-side transformation. In addition, PDD actively fulfills its social responsibilities by enhancing order growth in remote areas through customized logistics support and continues to invest in agricultural modernization

- Pinduoduo's Q4 report shows a 24.4% year-on-year revenue growth, below expectations, but a net profit of 29.85 billion yuan exceeded forecasts.  
- The company attributes revenue slowdown to external uncertainties and competition, while emphasizing a shift towards quality-driven growth and increased investment in its ecosystem.  
- Pinduoduo aims to balance social and shareholder responsibilities, enhancing logistics for remote areas and supporting agricultural modernization to foster sustainable development.

PDD conference call: Short-term fluctuations do not change long-term plans, entering the stage of quality-driven growth