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Pinduoduo Announces First Quarter 2020 Unaudited Financial Results

SHANGHAI, China, May 22, 2020 (GLOBE NEWSWIRE) -- Pinduoduo Inc. ("Pinduoduo" or the "Company") (PDD), an innovative and fast growing technology platform and one of the leading Chinese e-commerce players, today announced its unaudited financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Highlights

  • GMV1 in the twelve-month period ended March 31, 2020 was RMB1,157.2 billion (US$2163.4 billion), an increase of 108% from RMB557.4 billion in the twelve-month period ended March 31, 2019.
     
  • Total revenues in the quarter were RMB6,541.1 million (US$923.8 million), an increase of 44% from RMB4,545.2 million in the same quarter of 2019.
     
  • Average monthly active users3 in the quarter were 487.4 million, an increase of 68% from 289.7 million in the same quarter of 2019.
     
  • Active buyers4 in the twelve-month period ended March 31, 2020 were 628.1 million, an increase of 42% from 443.3 million in the twelve-month period ended March 31, 2019.
     
  • Annual spending per active buyer5 in the twelve-month period ended March 31, 2020 was RMB1,842.4 (US$260.2), an increase of 47% from RMB1,257.3 in the twelve-month period ended March 31, 2019.

"Despite the unprecedented challenges in the first quarter, Pinduoduo has grown and now serves more than 600 million active buyers. We’re encouraged to see our next generation of leaders stepping up and shouldering the responsibilities of serving our users,” said Mr. Zheng Huang, Chairman and Chief Executive Officer of Pinduoduo. “We remain committed to our users, merchants and ecosystem partners during this difficult period. In the first quarter, we adopted numerous measures to support them, including providing free traffic to farmers and small businesses, and stabilizing the prices of medical and other daily necessities that were in high demand.”

“Despite the outbreak and seasonality, we were able to ship on average 50 million daily orders in March to meet our users’ needs. We are pleased to see more users giving us the vote of trust and making purchases on our platform,” added Mr. David Liu, Vice President of Strategy. “As a result, the number of our active buyers in the last twelve-month period has a net increase of 43 million on a quarter-on-quarter basis. As the economy worldwide regains its foothold, we are seeing opportunities for investments and partnerships such as our recent investment in GOME Retail Holdings. Our strong balance sheet allows us to act quickly on such opportunities which we believe would help us better serve our users.”

First Quarter 2020 Unaudited Financial Results

Total revenues were RMB6,541.1 million (US$923.8 million), an increase of 44% from RMB4,545.2 million in the same quarter of 2019. The increase was primarily due to an increase in revenues from online marketing services.

  • Revenues from online marketing services were RMB5,492.3 million (US$775.7 million), an increase of 39% from RMB3,948.4 million in the same quarter of 2019.
     
  • Revenues from transaction services were RMB1,048.8 million (US$148.1 million), an increase of 76% from RMB596.8 million in the same quarter of 2019.

Total costs of revenues were RMB1,830.2 million (US$258.5 million), an increase of 110% from RMB873.3 million in the same quarter of 2019. The increase was mainly due to higher costs for cloud services, call center and merchant support services.

Total operating expenses were RMB9,108.0 million (US$1,286.3 million), compared with RMB5,792.4 million in the same quarter of 2019.

  • Sales and marketing expenses were RMB7,296.6 million (US$1,030.5 million), an increase of 49% from RMB4,889.3 million in the same quarter of 2019, mainly due to an increase in advertising expenses and promotion and coupon expenses.
     
  • General and administrative expenses were RMB338.3 million (US$47.8 million), an increase of 43% from RMB236.1 million in the same quarter of 2019, primarily due to an increase in headcount.
     
  • Research and development expenses were RMB1,473.2 million (US$208.0 million), an increase of 121% from RMB667.1 million in the same quarter of 2019. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel and an increase in R&D-related cloud services expenses.

Operating loss was RMB4,397.2 million (US$621.0 million), compared with operating loss of RMB2,120.5 million in the same quarter of 2019. Non-GAAP operating loss6 was RMB3,587.9 million (US$506.7 million), compared with operating loss of RMB1,621.9 million in the same quarter of 2019.

Net loss attributable to ordinary shareholders was RMB4,119.3 million (US$581.8 million), compared with RMB1,877.7 million in the same quarter of 2019. Non-GAAP net loss attributable to ordinary shareholders was RMB3,169.6 million (US$447.6 million), compared with RMB1,379.1 million in the same quarter of 2019.

Basic and diluted net loss per ADS were RMB3.54 (US$0.50), compared with RMB1.64 in the same quarter of 2019. Non-GAAP basic and diluted net loss per ADS were RMB2.73 (US$0.39), compared with RMB1.20 in the same quarter of 2019.

Net cash used in operating activities was RMB567.1 million (US$80.1 million), compared with RMB1,543.3 million in the same quarter of 2019, primarily due to an increase in online marketing services revenues.

Cash, cash equivalents, restricted cash and short-term investments were RMB69.5 billion (US$9.8 billion) as of March 31, 2020, compared with RMB68.6 billion as of December 31, 2019.

Conference Call

The Company will host a conference call to discuss the earnings at 7:30 AM U.S. Eastern Time on Friday, May 22, 2020 (7:30 PM Beijing/Hong Kong Time on Friday, May 22, 2020).

Due to the outbreak of COVID-19, operator assisted conference calls are not available at the moment. All participants must pre-register to join this conference call using the Participant Registration link below:

http://apac.directeventreg.com/registration/event/5338186

Once registered, an email will be sent with details for this conference call including dial-in numbers, direct event passcode, and Registrant ID. To join the conference call, simply dial the number in the calendar invite you receive after preregistering, enter the passcode followed by your PIN, and you will join the conference call instantly.

A telephone replay of the call will be available after the conclusion of the conference call until 9:59 AM ET on May 30, 2020.

Dial-in numbers for the replay are as follows:
 
International +61-2-8199-0299
U.S. +1-646-254-3697
Passcode: 5338186

A live and archived webcast of the conference call will be available on the Investor Relations section of Pinduoduo’s website at http://investor.pinduoduo.com/

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses non-GAAP measures, such as non-GAAP operating loss and non-GAAP net loss attributable to ordinary shareholders, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s non-GAAP financial measures exclude share-based compensation expenses and interest expenses related to the convertible bonds’ amortization to face value.

The Company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses and interest expenses related to the convertible bonds’ amortization to face value, which is a non-cash charge. The Company also believes that the non-GAAP financial measures could provide further information about the Company’s results of operations, and enhance the overall understanding of the Company’s past performance and future prospects.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. The Company’s non-GAAP financial measures do not reflect all items of income and expenses that affect the Company’s operations and do not represent the residual cash flow available for discretionary expenditures. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages you to review the Company’s financial information in its entirety and not rely on a single financial measure.

For more information on the non-GAAP financial measures, please see the table captioned “Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures” set forth at the end of this press release.

Safe Harbor Statements

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue” or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as Pinduoduo’s strategic and operational plans, contain forward-looking statements. Pinduoduo may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to fourth parties. Statements that are not historical facts, including but not limited to statements about Pinduoduo’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Pinduoduo’s growth strategies; its future business development, results of operations and financial condition; its ability to understand buyer needs and provide products and services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchants and fourth-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with merchants; trends and competition in China’s e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of China’s e-commerce market; PRC governmental policies and regulations relating to Pinduoduo’s industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Pinduoduo’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Pinduoduo undertakes no obligation to update any forward-looking statement, except as required under applicable law.

About Pinduoduo Inc.

Pinduoduo is an innovative and fast growing technology platform that provides buyers with value-for-money merchandise and a fun and interactive shopping experience. The Pinduoduo mobile platform offers a comprehensive selection of attractively priced merchandise, featuring a dynamic social shopping experience that leverages social networks effectively.

For more information, please visit http://investor.pinduoduo.com/

For investor and media inquiries, please contact:

investor@pinduoduo.com
internationalmedia@pinduoduo.com

 

 
PINDUODUO INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
 
   As of
   December
 31, 2019
  March 31, 2020
   RMB     RMB     US$
        (Unaudited)
       
 ASSETS          
 Current Assets          
 Cash and cash equivalents  5,768,186    5,526,736    780,524
 Restricted cash  27,577,671    26,972,389    3,809,229
 Receivables from online payment platforms  1,050,974    679,522    95,967
 Short-term investments  35,288,827    37,048,472    5,232,244
 Amounts due from related parties  2,365,528    1,948,392    275,166
 Prepayments and other current assets  950,277    914,603    129,167
 Total current assets   73,001,463    73,090,114    10,322,297
           
 Non-current assets          
 Property, equipment and software, net  41,273    41,353    5,840
 Intangible asset  1,994,292    1,866,532    263,605
 Right-of-use assets  517,188    486,894    68,763
 Other non-current assets  503,120    691,994    97,728
 Total non-current assets  3,055,873    3,086,773    435,936
           
 Total Assets  76,057,336    76,176,887    10,758,233


 
PINDUODUO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
 
  As of
  December
31, 2019
  March 31, 2020
   RMB    RMB    US$
       (Unaudited)
       
LIABILITIES AND
  SHAREHOLDERS’ EQUITY
     
Current Liabilities          
Amounts due to related parties  1,502,892      2,635,849      372,253  
Customer advances and deferred revenue  605,970     619,769      87,528  
Payable to merchants  29,926,488      28,713,943      4,055,183  
Accrued expenses and other liabilities  4,877,062      5,791,227      817,880  
Merchant deposits  7,840,912      8,639,172      1,220,084  
Short-term borrowings  898,748      2,114,541      298,630  
Lease liabilities  115,734      118,281      16,704  
Total current liabilities  45,767,806      48,632,782      6,868,262  
           
           
Convertible bonds  5,206,682      5,430,487      766,931  
Lease liabilities  428,593      397,127      56,085  
Other non-current liabilities  7,389      7,050      996  
Total non-current liabilities  5,642,664      5,834,664      824,012  
           
Total Liabilities  51,410,470      54,467,446      7,692,274  
           
           
Shareholders’ equity          
Ordinary shares  148      148      21  
Additional paid-in capital  41,493,949      42,303,322      5,974,370  
Accumulated other comprehensive income  1,448,230      1,820,761      257,141  
Accumulated deficits  (18,295,461 )    (22,414,790 )    (3,165,573 )
Total shareholders’ equity 24,646,866     21,709,441     3,065,959  
Total liabilities and shareholders’ equity   76,057,336       76,176,887       10,758,233  

 

 
PINDUODUO INC.
 CONDENSED CONSOLIDATED STATEMENTS OF LOSS 
 (Amounts in thousands of RMB and US$)
 
  For the three months ended March 31,
  2019     2020  
  RMB   RMB   US$
  (Unaudited)   (Unaudited)   (Unaudited)
Revenues          
Online marketing services 3,948,414     5,492,270     775,657  
Transaction services 596,790     1,048,789     148,117  
Total Revenues 4,545,204     6,541,059     923,774  
           
Costs of revenues          
Costs of online marketplace services (873,314 )   (1,830,247 )   (258,480 )
Total costs of revenues  (873,314 )   (1,830,247 )   (258,480 )
           
Gross profit  3,671,890      4,710,812     665,294  
           
Sales and marketing expenses (4,889,255 )   (7,296,621 )   (1,030,480 )
General and administrative expenses (236,075 )   (338,274 )   (47,773 )
Research and development expenses (667,081 )   (1,473,150 )   (208,049 )
Total operating expenses  (5,792,411 )   (9,108,045 )   (1,286,302 )
           
Operating loss  (2,120,521 )   (4,397,233 )   (621,008 )
           
Interest and investment income, net 252,102     460,282     65,004  
Interest expenses -     (150,634 )   (21,274 )
Foreign exchange loss (1,886 )   (19,273 )   (2,722 )
Other loss, net (7,403 )   (12,391 )   (1,750 )
Loss before income tax and share of results of equity investees (1,877,708 )   (4,119,249 )   (581,750 )
Share of results of equity investees -     (80 )   (11 )
Income tax expenses -     -     -  
Net loss  (1,877,708 )    (4,119,329 )   (581,761 )
                 


 
PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(Amounts in thousands of RMB and US$, except for per share data)
 
  For the three months ended March 31,
  2019     2020  
   RMB    RMB    US$
  (Unaudited)   (Unaudited)   (Unaudited)
           
Net loss (1,877,708 )   (4,119,329 )   (581,761 )
Net loss attributable to ordinary shareholders  (1,877,708 )   (4,119,329 )     (581,761 )
           
   
Loss per ordinary share:
         
  -Basic (0.41 )   (0.89 )   (0.13 )
  -Diluted (0.41 )   (0.89 )   (0.13 )
           
Loss per ADS (4 ordinary shares equals 1 ADS ):          
  -Basic (1.64 )   (3.54 )   (0.50 )
  -Diluted (1.64 )   (3.54 )   (0.50 )
           
Weighted average number of outstanding ordinary shares (in thousands):          
  -Basic 4,559,017     4,650,112     4,650,112  
  -Diluted 4,559,017     4,650,112     4,650,112  

 

 
PINDUODUO INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)
 
  For the three months ended March 31,
  2019   2020
  RMB   RMB   US$
  (Unaudited)   (Unaudited)   (Unaudited)
Share-based compensation costs included in:          
Costs of revenues 4,281   8,447   1,193
Sales and marketing expenses 196,121   231,799   32,736
General and administrative expenses 169,003   220,188   31,096
Research and development expenses 129,227   348,939   49,280
Total 498,632   809,373   114,305
           


 
PINDUODUO INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Amounts in thousands of RMB and US$)
 
  For the three months ended March 31,
  2019     2020  
  RMB   RMB   US$
  (Unaudited)   (Unaudited)   (Unaudited)
Net cash flow used in operating activities  (1,543,251 )   (567,070 )    (80,086 )
Net cash flow generated from/(used in) investing activities  457,473      (1,584,192 )    (223,731 )
Net cash flow generated from financing activities  7,993,828      1,205,472      170,245  
Effect of exchange rate changes on cash, cash equivalents and restricted cash  (228,497 )    99,058     13,990  
           
Increase/(decrease) in cash, cash equivalents and restricted cash  6,679,553      (846,732 )    (119,582 )
Cash, cash equivalents and restricted cash at beginning of period  30,539,686      33,345,857      4,709,335  
           
Cash, cash equivalents and restricted cash at end of period  37,219,239      32,499,125      4,589,753  
                 


 
PINDUODUO INC.
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES
(Amounts in thousands of RMB and US$, except for per share data)
 
  For the three months ended March 31,
  2019     2020  
  RMB   RMB   US$
  (Unaudited)   (Unaudited)   (Unaudited)
Operating Loss  (2,120,521 )    (4,397,233 )    (621,008 )
Add: Share-based compensation  498,632      809,373      114,305  
Non-GAAP operating loss  (1,621,889 )    (3,587,860 )    (506,703 )
           
Net loss attributable to ordinary shareholders  (1,877,708 )    (4,119,329 )    (581,761 )
Add: Share-based compensation  498,632      809,373      114,305  
Add: Interest expense related to convertible bonds’ amortization to face value  -       140,312      19,816  
Non-GAAP net loss attributable to ordinary shareholders   (1,379,076 )    (3,169,644 )    (447,640 )
           
Weighted-average number of ordinary shares outstanding – basic and diluted (in thousands)  

 4,559,017
     

4,650,112
     

4,650,112
 
Non-GAAP basic and diluted loss per share  (0.30 )    (0.68 )    (0.10 )
Non-GAAP basic and diluted loss per ADS  (1.20 )   (2.73 )   (0.39 )
                 

_________________________________
1  “GMV” refers to the total value of all orders for products and services placed on the Pinduoduo mobile platform, regardless of whether the products and services are actually sold, delivered or returned. Buyers on the platform are not charged for shipping fees in addition to the listed price of merchandise. Hence, merchants may embed the shipping fees in the listed price. If embedded, then the shipping fees are included in GMV. As a prudential matter aimed at eliminating any influence on Pinduoduo’s GMV of irregular transactions, the Company excludes from its calculation of GMV transactions in certain product categories over certain amounts and transactions by buyers in certain product categories over a certain amount per day.
2  This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.0808 to US$1.00, the noon buying rate in effect on March 31, 2020 as set forth in the H.10 Statistical Release of the Federal Reserve Board.
3  “Monthly active users” refers to the number of user accounts that visited the Pinduoduo mobile app during a given month, which does not include those that accessed the platform through social networks and access points.
4  “Active buyers” in a given period refers to the number of user accounts that placed one or more orders (i) on the Pinduoduo mobile app, and (ii) through social networks and access points in that period, regardless of whether the products and services are actually sold, delivered or returned.
5  “Annual spending per active buyer” in a given period refers to the quotient of total GMV in that period divided by the number of active buyers in the same period.
6  The Company’s non-GAAP financial measures exclude share-based compensation expenses and interest expenses related to the convertible bonds’ amortization to face value. See “Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures” set forth at the end of this press release.