PDD's adjusted net profit in the second quarter exceeded market expectations, with the stock price rising by 2% at one point

The U.S.-listed discount e-commerce platform Pinduoduo (PDD) announced its second-quarter 2024 results, achieving revenue of 103.985 billion yuan, a year-on-year increase of 7%, which is basically in line with market expectations. The adjusted net profit was 32.708 billion yuan, down 5% year-on-year, but far exceeded the market expectation of 22.390 billion yuan. After the earnings report was released, Pinduoduo's pre-market stock price briefly rose to $142, an increase of up to 12%. However, the company's management expressed concerns about potential fluctuations in profits over the next few quarters during a conference call, leading to a pre-market pullback in the stock price. After the market opened, buying continued to pour in, and the stock price still rose 2% in the early session, reaching $129.94. In terms of business structure, Pinduoduo's second-quarter revenue from online marketing services and other businesses was 55.703 billion yuan, an increase of 13% compared to the same period last year; transaction service revenue recorded 48.282 billion yuan, remaining flat. The company continued to strictly control operating costs, resulting in total operating expenses increasing by only 5% to 32.333 billion yuan, a growth rate significantly lower than revenue growth, driving the operating profit margin up by 8.7 percentage points year-on-year to 24.8%. Management reiterated the importance of long-term investment for the company's development. Chairman and Co-CEO Chen Lei pointed out that Pinduoduo further increased its investment in merchant support programs in the past quarter and expressed optimism about the healthy and sustainable development of the ecosystem. He emphasized that the company always prioritizes long-term performance. Executive Director and Co-CEO Zhao Jiazhen added that Pinduoduo invested a significant amount of resources this quarter to launch multiple merchant support initiatives, focusing on improving the efficiency of platform merchants. CFO Liu Jun believes that due to intensified market competition, the quarterly revenue growth rate has slowed down, but the company will continue to focus on creating long-term value, and ongoing investments may suppress profitability in the short term