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Pinduoduo Announces First Quarter 2022 Unaudited Financial Results

·17 min read
Pinduoduo Inc.
Pinduoduo Inc.

SHANGHAI, China, May 27, 2022 (GLOBE NEWSWIRE) -- Pinduoduo Inc. (“Pinduoduo” or the “Company”) (NASDAQ: PDD), China’s largest agriculture platform, today announced its unaudited financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights

  • Total revenues in the quarter were RMB23,793.7 million (US$13,753.4 million), an increase of 7% from RMB22,167.1 million in the same quarter of 2021.

  • Average monthly active users2 in the quarter was 751.3 million, an increase of 4% from 724.6 million in the same quarter of 2021.

  • Active buyers3 in the twelve-month period ended March 31, 2022 was 881.9 million, an increase of 7% from 823.8 million in the twelve-month period ended March 31, 2021.

  • Operating profit in the quarter was RMB2,154.4 million (US$339.8 million), compared with operating loss of RMB4,147.0 million in the same quarter of 2021. Non-GAAP4 operating profit in the quarter was RMB3,677.2 million (US$580.1 million), compared with non-GAAP operating loss of RMB3,174.1 million in the same quarter of 2021.

  • Net income attributable to ordinary shareholders in the quarter was RMB2,599.5 million (US$410.1 million), compared with net loss of RMB2,905.4 million in the same quarter of 2021. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB4,200.4 million (US$662.6 million), compared with non-GAAP net loss of RMB1,890.3 million in the same quarter of 2021.

“We remain focused on making long-term investments in agriculture and abide by our philosophy of ‘Benefit All’, ‘People First’, and ‘More Open’,” said Mr. Lei Chen, Chairman and Chief Executive Officer of Pinduoduo.

“At this current scale, it is inevitable for us to see slower growth,” said Ms. Jun Liu, VP of Finance of Pinduoduo. “We need to continue to invest in R&D to serve our users better.”

________________________
1 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 RMB6.3393 to US$1.00, the noon buying rate in effect on March 31, 2022 as set forth in the H.10 Statistical Release of the Federal Reserve Board.
2 “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.
3 “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.
4 The Company’s non-GAAP financial measures exclude share-based compensation expenses, fair value change of long-term investments, and interest expenses related to the convertible bonds’ amortization to face value and gain or loss on extinguishment. See “Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures” set forth at the end of this press release.

First Quarter 2022 Unaudited Financial Results

Total revenues were RMB23,793.7 million (US$3,753.4 million), an increase of 7% from RMB22,167.1 million in the same quarter of 2021. The increase was primarily due to an increase in revenues from online marketing services and transaction services, offset by the decrease of revenues from merchandise sales.

  • Revenues from online marketing services and others were RMB18,158.4 million (US$2,864.4 million), an increase of 29% from RMB14,111.5 million in the same quarter of 2021.

  • Revenues from transaction services were RMB5,591.4 million (US$882.0 million), an increase of 91% from RMB2,931.5 million in the same quarter of 2021.

  • Revenues from merchandise sales were RMB43.9 million (US$6.9 million), a decrease of 99% from RMB5,124.1 million in the same quarter of 2021.

Total costs of revenues were RMB7,159.6 million (US$1,129.4 million), a decrease of 33% from RMB10,746.1 million in the same quarter of 2021. The decrease mainly came from the reduction of merchandise sales partially offset by increased fulfillment fees.

Total operating expenses were RMB14,479.7 million (US$2,284.1 million), compared with RMB15,568.0 million in the same quarter of 2021.

  • Sales and marketing expenses were RMB11,219.1 million (US$1,769.8 million), decreased by 14% from RMB12,997.4 million in the same quarter of 2021, mainly due to controlled spending in promotion and advertising activities.

  • General and administrative expenses were RMB592.1 million (US$93.4 million), an increase of 68% from RMB351.9 million in the same quarter of 2021, primarily due to an increase in staff related costs.

  • Research and development expenses were RMB2,668.5 million (US$420.9 million), an increase of 20% from RMB2,218.7 million in the same quarter of 2021. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel.

Operating profit was RMB2,154.4 million (US$339.8 million), compared with operating loss of RMB4,147.0 million in the same quarter of 2021. Non-GAAP operating profit was RMB3,677.2 million (US$580.1 million), compared with non-GAAP operating loss of RMB3,174.1 million in the same quarter of 2021.

Net income attributable to ordinary shareholders was RMB2,599.5 million (US$410.1 million), compared with net loss of RMB2,905.4 million in the same quarter of 2021. Non-GAAP net income attributable to ordinary shareholders was RMB4,200.4 million (US$662.6 million), compared with non-GAAP net loss attributable to ordinary shareholders of RMB1,890.3 million in the same quarter of 2021.

Basic earnings per ADS was RMB2.06 (US$0.33) and diluted earnings per ADS was RMB1.84 (US$0.29), compared with basic and diluted net loss per ADS of RMB2.33 in the same quarter of 2021. Non-GAAP diluted earnings per ADS was RMB2.95 (US$0.47), compared with non-GAAP diluted net loss per ADS of RMB1.52 in the same quarter of 2021.

Net cash used in operating activities was RMB9,068.1 million (US$1,430.5 million), compared with RMB3,724.5 million in the same quarter of 2021, mainly due to seasonality changes in working capitals offset by controlled cost and operating expenses spending.

Cash, cash equivalents and short-term investments were RMB95.2 billion (US$15.0 billion) as of March 31, 2022, compared with RMB92.9 billion as of December 31, 2021.

Conference Call

The Company will host a conference call to discuss the earnings at 7:30 AM U.S. Eastern Time on Friday, May 27, 2022 (7:30 PM Beijing/Hong Kong Time on Friday, May 27, 2022).

The conference call will be webcast live at https://investor.pinduoduo.com/investor-events. The webcast will be available for replay at the same website following the conclusion of the call.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses non-GAAP measures, such as non-GAAP operating profit or loss and non-GAAP net income or 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, fair value change of long-term investments, and interest expenses related to the convertible bonds’ amortization to face value and gain or loss on extinguishment.

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, fair value change of long-term investments, and interest expenses related to the convertible bonds’ amortization to face value and gain or loss on extinguishment, 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 connects millions of agricultural producers with consumers across China. Pinduoduo aims to bring more businesses and people into the digital economy so that local communities can benefit from the increased productivity and convenience through new market opportunities.

For more information on Pinduoduo news and industry trends, please visit the content hub at https://stories.pinduoduo-global.com/.


PINDUODUO INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))

 

 

 

As of

 

 

 

December
31, 2021

 

March 31, 2022

 

 

 

RMB

 

RMB

 

US$

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

6,426,715

 

7,404,992

 

1,168,109

 

Restricted cash

 

59,617,256

 

44,729,000

 

7,055,826

 

Receivables from online payment platforms

 

673,737

 

600,527

 

94,731

 

Short-term investments

 

86,516,618

 

87,815,868

 

13,852,613

 

Amounts due from related parties

 

4,250,155

 

3,587,349

 

565,890

 

Prepayments and other current assets

 

3,424,687

 

2,027,225

 

319,788

 

Total current assets

 

160,909,168

 

146,164,961

 

23,056,957

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, equipment and software, net

 

2,203,323

 

1,746,746

 

275,542

 

Intangible assets

 

701,220

 

556,760

 

87,827

 

Right-of-use assets

 

938,537

 

831,826

 

131,217

 

Deferred tax assets

 

31,504

 

23,143

 

3,651

 

Other non-current assets

 

16,425,966

 

19,395,185

 

3,059,515

 

Total non-current assets

 

20,300,550

 

22,553,660

 

3,557,752

 

 

 

 

 

 

 

 

 

Total Assets

 

181,209,718

 

168,718,621

 

26,614,709

 


PINDUODUO INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))

 

 

 

As of

 

 

December
31, 2021

 

March 31, 2022

 

 

RMB

 

RMB

 

US$

 

 

 

 

(Unaudited)

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities

 

 

 

 

 

 

Amounts due to related parties

 

1,963,007

 

 

2,039,727

 

 

321,759

 

Customer advances and deferred revenues

 

1,166,764

 

 

1,060,656

 

 

167,314

 

Payable to merchants

 

62,509,714

 

 

47,166,443

 

 

7,440,324

 

Accrued expenses and other liabilities

 

14,085,513

 

 

12,882,178

 

 

2,032,113

 

Merchant deposits

 

13,577,552

 

 

13,955,037

 

 

2,201,353

 

Lease liabilities

 

427,164

 

 

418,356

 

 

65,994

 

Total current liabilities

 

93,729,714

 

 

77,522,397

 

 

12,228,857

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Convertible bonds5

 

11,788,907

 

 

14,057,021

 

 

2,217,441

 

Lease liabilities

 

544,263

 

 

453,621

 

 

71,557

 

Deferred tax liabilities

 

31,291

 

 

32,069

 

 

5,059

 

Other non-current liabilities

 

996

 

 

536

 

 

85

 

Total non-current liabilities

 

12,365,457

 

 

14,543,247

 

 

2,294,142

 

 

 

 

 

 

 

 

Total Liabilities

 

106,095,171

 

 

92,065,644

 

 

14,522,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

Ordinary shares

 

161

 

 

162

 

 

26

 

Additional paid-in capital5

 

95,340,819

 

 

93,044,708

 

 

14,677,442

 

Accumulated other comprehensive loss5

 

(2,519,900

)

 

(2,651,317

)

 

(418,235

)

Accumulated deficits5

 

(17,706,533

)

 

(13,740,576

)

 

(2,167,523

)

Total Shareholders’ Equity

 

75,114,547

 

 

76,652,977

 

 

12,091,710

 

Total Liabilities and Shareholders’ Equity

 

181,209,718

 

 

168,718,621

 

 

26,614,709

 

 

 

 

 

 

 

 

________________________
5 The Group adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity on January 1, 2022, using the modified retrospective method with a cumulative-effect adjustment to the opening balances of convertible bonds, additional paid-in capital, accumulated other comprehensive loss and accumulated deficits.


PINDUODUO INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME/ (LOSS)
 (Amounts in thousands of RMB and US$)

 

 

 

For the three months ended March 31,

 

 

2021

 

2022

 

 

RMB

 

RMB

 

US$

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Revenues

 

22,167,099

 

 

23,793,689

 

 

3,753,362

 

Costs of revenues

 

(10,746,050

)

 

(7,159,595

)

 

(1,129,398

)

Gross profit

 

11,421,049

 

 

16,634,094

 

 

2,623,964

 

 

 

 

 

 

 

 

Sales and marketing expenses

 

(12,997,407

)

 

(11,219,068

)

 

(1,769,764

)

General and administrative expenses

 

(351,855

)

 

(592,113

)

 

(93,404

)

Research and development expenses

 

(2,218,743

)

 

(2,668,507

)

 

(420,947

)

Total operating expenses

 

(15,568,005

)

 

(14,479,688

)

 

(2,284,115

)

 

 

 

 

 

 

 

Operating (loss)/ profit

 

(4,146,956

)

 

2,154,406

 

 

339,849

 

 

 

 

 

 

 

 

Interest and investment income, net

 

970,477

 

 

796,261

 

 

125,607

 

Interest expenses

 

(335,456

)

 

(12,640

)

 

(1,994

)

Foreign exchange (loss)/ gain

 

(10,374

)

 

20,084

 

 

3,168

 

Other income, net

 

470,384

 

 

239,770

 

 

37,823

 

(Loss)/ profit before income tax and share of results of equity investees

 

(3,051,925

)

 

3,197,881

 

 

504,453

 

Share of results of equity investees

 

146,509

 

 

(33,616

)

 

(5,303

)

Income tax expenses

 

-

 

 

(564,814

)

 

(89,097

)

Net (loss)/ income

 

(2,905,416

)

 

2,599,451

 

 

410,053

 


PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME/ (LOSS)
(Amounts in thousands of RMB and US$, except for per share data)

 

 

 

For the three months ended March 31,

 

 

2021

 

2022

 

 

RMB

 

RMB

 

US$

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

Net (loss)/ income

 

(2,905,416

)

 

2,599,451

 

410,053

Net (loss)/ income attributable to ordinary shareholders

 

(2,905,416

)

 

2,599,451

 

410,053

 

 

 

 

 

 

 


(Loss)/ earnings per ordinary share:

 

 

 

 

 

 

-Basic

 

(0.58

)

 

0.52

 

0.08

-Diluted

 

(0.58

)

 

0.46

 

0.07

 

 

 

 

 

 

 

(Loss)/ earnings per ADS (4 ordinary shares equals 1 ADS):

 

 

 

 

 

 

-Basic

 

(2.33

)

 

2.06

 

0.33

-Diluted

 

(2.33

)

 

1.84

 

0.29

 

 

 

 

 

 

 

Weighted average number of outstanding ordinary shares (in thousands):

 

 

 

 

 

 

-Basic

 

4,983,530

 

 

5,036,733

 

5,036,733

-Diluted

 

4,983,530

 

 

5,688,094

 

5,688,094


PINDUODUO INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)

 

 

 

 

 

For the three months ended March 31,

 

 

2021

 

2022

 

 

RMB

 

RMB

 

US$

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Revenues

 

 

 

 

 

 

- Online marketing services and others

 

14,111,486

 

18,158,425

 

2,864,421

- Transaction services

 

2,931,475

 

5,591,407

 

882,023

- Merchandise sales

 

5,124,138

 

43,857

 

6,918

Total

 

22,167,099

 

23,793,689

 

3,753,362


PINDUODUO INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)

 

 

 

 

 

For the three months ended March 31,

 

 

2021

 

2022

 

 

RMB

 

RMB

 

US$

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Share-based compensation costs included in:

 

 

 

 

 

 

Costs of revenues

 

4,364

 

9,181

 

1,448

Sales and marketing expenses

 

299,483

 

501,105

 

79,047

General and administrative expenses

 

191,170

 

383,296

 

60,463

Research and development expenses

 

477,792

 

629,168

 

99,250

Total

 

972,809

 

1,522,750

 

240,208


PINDUODUO INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$)

 

 

 

 

 

For the three months ended March 31,

 

 

2021

 

2022

 

 

RMB

 

RMB

 

US$

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Net cash used in operating activities

 

(3,724,547

)

 

(9,068,096

)

 

(1,430,457

)

Net cash used in investing activities

 

(5,621,047

)

 

(4,852,089

)

 

(765,398

)

Net cash (used in)/ generated from financing activities

 

(1,238,874

)

 

43

 

 

7

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

51,550

 

 

10,163

 

 

1,603

 

 

 

 

 

 

 

 

Decrease in cash, cash equivalents and restricted cash

 

(10,532,918

)

 

(13,909,979

)

 

(2,194,245

)

Cash, cash equivalents and restricted cash at beginning of period

 

74,843,636

 

 

66,043,971

 

 

10,418,180

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at end of period

 

64,310,718

 

 

52,133,992

 

 

8,223,935

 


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,

 

 

2021

 

 

2022

 

 

RMB

 

 

RMB

 

US$

 

 

(Unaudited)

 

 

(Unaudited)

 

(Unaudited)

Operating (loss)/ profit

 

(4,146,956

)

 

2,154,406

 

339,849

Add: Share-based compensation

 

972,809

 

 

1,522,750

 

240,208

Non-GAAP operating (loss)/ profit

 

(3,174,147

)

 

3,677,156

 

580,057

 

 

 

 

 

 

 

 

Net (loss)/ income attributable to ordinary shareholders

 

(2,905,416

)

 

2,599,451

 

410,053

Add: Share-based compensation

 

972,809

 

 

1,522,750

 

240,208

Add: Interest expense related to convertible bonds’ amortization to face value and gain or loss on extinguishment, net

 

318,611

 

 


12,640

 


1,994

Add: (Gain)/ loss from fair value change of long-term investments

 



(276,336



)

 



65,600

 



10,348

Non-GAAP net (loss)/ income attributable to ordinary shareholders

 

(1,890,332

)

 

4,200,441

 

662,603

 

 

 

 

 

 

 

 

Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands)

 

4,983,530

 

 

5,688,094

 

5,688,094

 

 

 

 

 

 

 

 

Diluted (loss)/ earnings per ordinary share

 

(0.58

)

 

0.46

 

0.07

Add: Non-GAAP adjustments to (loss)/ earnings per ordinary share

 

0.20

 

 

0.28

 

0.04

Non-GAAP diluted (loss)/ earnings per ordinary share

 

(0.38

)

 

0.74

 

0.12

Non-GAAP diluted (loss)/ earnings per ADS

 

(1.52

)

 

2.95

 

0.47

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