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(Reuters) - Chinese e-commerce platform Pinduoduo Inc's quarterly revenue beat Wall Street estimates on Wednesday, driven by a sustained surge in online shopping following the COVID-19 pandemic.
Total revenue more than tripled to 22.17 billion yuan ($3.47 billion) in the first quarter, boosted by Pinduoduo's online marketing services revenue. Analysts on average had expected revenue of 20.2 billion yuan, according to IBES data from Refinitiv.
Active buyers on Pinduoduo in the 12-month period ended March rose 31% to about 824 million, outpacing Alibaba's 811 million. Pinduoduo's shares rose more than 5% in pre-market trading on Wednesday, having dropped nearly 40% from their highs this year.
The Shanghai-based company has led China's adoption of social e-commerce, which melds online shopping with social media and allows buyers to reap greater discounts when shopping in bigger groups, helping it challenge bigger rivals Alibaba and JD.com.
"Our growing scale gives us both greater capacity as well as responsibility to live up to our mission to 'benefit all'," Chen Lei, chairman and chief executive of the company said in a statement, adding that it was the company's goal to become the world's largest agriculture and grocery platform.
Pinduoduo has invested heavily in its Duo Duo Grocery fresh produce business that it launched in August 2020. Shanghai-based Everbright Securities said in a recent research note it expects Pinduoduo to increase capital expenditure significantly in 2021.
Managing director of Haitong International Natalie Wu estimated Duo Duo Grocery lost 3.5 billion yuan, meaning the main site e-commerce business turned profitable in the quarter at Non-GAAP operating level.
"Pinduoduo appears to be playing the long game, investing in structural changes that could bring benefits in the long term," she told Reuters. In March, Chinese regulators fined Pinduoduo along with several other e-commerce companies for misleading price tactics, in a move to increase regulation of community group buying as Beijing looks to rein in its internet giants.
A relatively new platform, Pinduoduo is still to gain a stronghold in the Chinese e-commerce sector dominated by its larger rivals where per person spending is a lot higher.
The interactive buying platform's net loss attributable to shareholders narrowed to 2.91 billion yuan in the quarter ended March 31, from 4.12 billion yuan a year earlier.
($1 = 6.3948 Chinese yuan renminbi)
(Reporting by Eva Mathews in Bengaluru and Sophie Yu in Beijing; Editing by Maju Samuel, Elaine Hardcastle, Kirsten Donovan)