On November 28, Pinduoduo released its third-quarter financial report for 2023.
According to the financial report, Pinduoduo‘s revenue reached 68.84 billion yuan in Q3, 2023, a 93.9% increase from 35.5 billion yuan in the same period last year, nearly doubling, and a net increase of nearly 16.6 billion yuan from 52.281 billion yuan in the second quarter, far exceeding market expectations; it achieved a net profit of 15.54 billion yuan under the US GAAP, with a net profit margin of 22.6%.
Upon the report’s release, Pinduoduo‘s US stock opened with a surge of more than 18%, finally closing at 139 US dollars. At present, Pinduoduo‘s market value has reached $184.7 billion. Among the three Chinese e-commerce giants, Alibaba has a market value of $197.4 billion, and JD.com‘s market value is $44.6 billion. Without a doubt, Pinduoduo is one of the best-performing Chinese internet companies this year, with a total market value equivalent to four JD.coms, and only one small step away from Alibaba.
As for the reason for the impressive rise in revenue, Pinduoduo‘s co-CEO Zhao Jiazen mentioned in the financial report call that it was the combined result of the continuously improving consumer environment and the execution of the company’s high-quality development strategy, only that the “strategic return of high-quality development came faster than we expected.” The financial report further shows that the main reason for the surge in Pinduoduo‘s financial performance this quarter was the skyrocketing commissions it acquired, among which Temu performed the most fiercely.
In the third quarter, Pinduoduo‘s revenue from online marketing services and advertising reached 39.687 billion yuan, an increase of 39% compared to last year. The revenue from transaction services, or commissions, reached 29.152 billion yuan, a staggering growth of 315% compared to the same period in 2022. The growth rate of commission income has far exceeded that of advertising income.
During this quarter, Pinduoduo still did not disclose any data on Temu’s revenue, costs, or marketing investment. The official information available to the public is still limited to “Temu has been launched for over a year and has now reached more than 40 countries and regions worldwide.”
According to reports by Chinese tech media 36Kr, Temu’s sales in the third quarter have already exceeded $5 billion and may exceed the annual GMV (Gross Merchandise Volume) target of $15 billion. Liu Jun, Vice President of Finance at Pinduoduo explained during the conference call that cross-border business is still in its very early stages and many initiatives on the platform are to be adjusted as the team learns more about different markets and consumer needs. “This will be a challenging iterative process but also very interesting.”
Regarding e-commerce business, Pinduoduo‘s revenue scale is already close to 70% of Alibaba‘s Taobao and Tmall, and 60% of Taobao, Tmall, and Alibaba‘s overseas e-commerce combined.
While revenue and GMV surged, Pinduoduo‘s expansion into overseas market also led to an increase in input costs and operating expenses. The financial report shows that the total operating cost of the company in the third quarter was 26.83 billion yuan, a year-on-year increase of up to 262%. The company’s overall operating expenses in the third quarter saw a year-on-year increase of 44%. Among them, sales and marketing expenses were 21.749 billion yuan, a year-on-year increase of 55%, mainly due to increased promotion and advertising expenditures. The company’s R&D expenses reached a new high of 2.85 billion yuan, a year-on-year increase of 5.5%. In the future, Pinduoduo will continue to invest heavily in agricultural technology, supply chain technology, and overall core R&D, according to the financial report.
SEE ALSO: Pinduoduo Has Entered the Field of Large-scale Models
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