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Pinduoduo Announces Fourth Quarter and Fiscal Year 2018 Results

SHANGHAI, China, March 13, 2019 (GLOBE NEWSWIRE) -- Pinduoduo Inc. ("Pinduoduo" or the "Company") (PDD), an innovative and fast growing “new e-commerce” platform and one of the leading Chinese e-commerce players, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2018. 

Fourth Quarter 2018 Highlights

  • GMV1 in the twelve-month period ended December 31, 2018 was RMB471.6 billion (US$268.6 billion), an increase of 234% from RMB141.2 billion in the twelve-month period ended December 31, 2017.
     
  • Total revenues3 in the quarter were RMB5,653.9 million (US$822.3 million), an increase of 379% from RMB1,179.4 million in the same quarter of 2017.
     
  • Average monthly active users4 in the quarter were 272.6 million, an increase of 93% from 141.0 million in the same quarter of 2017.
     
  • Active buyers5 in the twelve-month period ended December 31, 2018 were 418.5 million, an increase of 71% from 244.8 million in the twelve-month period ended December 31, 2017.
     
  • Annual spending per active buyer6 in the twelve-month period ended December 31, 2018 was RMB1,126.9 (US$163.9), an increase of 95% from RMB576.9 in the twelve-month period ended December 31, 2017.

“We had a strong finish to 2018 in the fourth quarter,” said Mr. Zheng Huang, Chairman and Chief Executive Officer of Pinduoduo. “GMV in the last twelve months increased 234% year-over-year to RMB471.6 billion. This was driven by the rapid growth in our annual active buyer base and a near doubling in the annual spending per active buyer. We view this as an indication of users’ growing trust in our platform, and will keep on innovating to satisfy our users’ evolving needs so they can have the best user experience possible.”

“In the fourth quarter, our revenue grew 379% year-over-year and 68% sequentially to RMB5.7 billion,” added Mr. Tian Xu, Vice President of Finance of Pinduoduo. “The growth in our revenue is the result of the continued expansion of our buyer base and increasing user engagement, which translates to greater traffic and attractive advertising return on investments on our platform. To build on this momentum and increase mindshare with users, we will continue to invest strategically.”

Fourth Quarter 2018 Financial Results

Total revenues were RMB5,653.9 million (US$822.3 million), an increase of 379% from RMB1,179.4 million in the same quarter of 2017 and an increase of 68% sequentially from RMB3,372.4 million in the previous quarter. The increases were primarily due to an increase in revenues from online marketing services.

  • Revenues from online marketing services were RMB5,062.4 million (US$736.3 million), an increase of 470% from RMB887.6 million in the same quarter of 2017, and an increase of 70% sequentially from RMB2,974.1 million in the previous quarter.
     
  • Revenues from transaction services were RMB591.5 million (US$86.0 million), an increase of 103% from RMB291.8 million in the same quarter of 2017, and an increase of 49% sequentially from RMB398.3 million in the previous quarter.

Total costs of revenues were RMB1,424.0 million (US$207.1 million), an increase of 281% from RMB374.0 million in the same quarter of 2017, and an increase of 84% sequentially from RMB774.7 million in the previous quarter. The increase from last quarter is mainly due to higher costs for cloud services, our call center and merchant support services.

Total operating expenses were RMB 6,870.8 million (US$999.3 million), compared with RMB828.1 million in the same quarter of 2017.

  • Sales and marketing expenses were RMB 6,024.0 million (US$876.2 million), an increase of 699% from RMB753.9 million in the same quarter of 2017, mainly due to an increase in online and offline advertisement and promotions and branding campaigns.
     
  • General and administrative expenses were RMB321.6 million (US$46.8 million), a significant increase from RMB11.6 million in the same quarter of 2017, primarily due to an increase in headcount and share-based compensation expenses.
     
  • Research and development expenses were RMB525.2 million (US$76.4 million), an increase of 901% from RMB52.5 million in the same quarter of 2017. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel, as well as an increase in R&D-related cloud services expenses.

Operating loss was RMB2,640.9 million (US$384.1 million), compared with operating loss of RMB22.7 million in the same quarter of 2017. Non-GAAP operating loss7 was RMB2,112.9 million (US$307.3 million), compared with RMB10.0 million in the same quarter of 2017.

Net loss attributable to ordinary shareholders was RMB2,423.9 million (US$352.5 million), compared with net income of RMB13.6 million in the same quarter of 2017. Non-GAAP net loss attributable to ordinary shareholders8 was RMB1,895.9 million (US$275.7million), compared with Non-GAAP net income attributable to ordinary shareholders of RMB26.3 million in the same quarter of 2017.

Basic and diluted net loss per ADS was RMB2.16 (US$0.32), compared with net earnings per ADS of RMB0.04 in the same quarter of 2017. Non-GAAP basic and diluted net loss per ADS were RMB1.72 (US$0.24), compared with Non-GAAP basic and diluted net earnings per ADS of RMB0.04 in the same quarter of 2017.

Net cash9 provided by operating activities was RMB5,732.4 million (US$833.7 million), compared with RMB5,362.6 million in the same quarter of 2017, primarily due to an increase in revenues from online marketing services.

Cash, cash equivalents and restricted cash were RMB30.5 billion (US$4.4 billion) as of December 31, 2018, compared with RMB12.4 billion as of December 31, 2017.

Fiscal Year 2018 Financial Results

Total revenues were RMB13,120.0 million (US$1,908.2 million), representing an increase of 652% from RMB1,744.1 million in 2017. The increase was primarily due to an increase in revenues from online marketing services.

  • Revenues from online marketing services were RMB11,515.6 million (US$1,674.9 million), representing an increase of 852% from RMB1,209.3 million in 2017.
     
  • Revenues from transaction services were RMB1,604.4 million (US$233.4 million), representing an increase of 202% from RMB531.4 million in 2017.
     
  • Revenues from merchandise sale were nil, representing a decrease of 100% from RMB3.4 million in 2017.

Total costs of revenues were RMB2,905.2 million (US$422.6 million), representing an increase of 302% from RMB722.8 million in 2017. The increase from last year is mainly due to higher costs for cloud services, our call center and merchant support services.
Total operating expenses were RMB21,014.5 million (US$3,056.4 million), compared with RMB1,617.0 million in 2017.

  • Sales and marketing expenses were RMB13,441.8 million (US$1,955.0 million), an increase of 900% from RMB1,344.6 million in 2017 as we invested in cultivating greater user recognition through online and offline advertising campaigns and promotions.
     
  • General and administrative expenses were RMB6,456.6 million (US$939.1 million), a significant increase from RMB133.2 million in 2017, primarily due to an increase in headcount and share-based compensation expenses as we expanded our operations.
     
  • Research and development expenses were RMB1,116.1 million (US$162.3 million), an increase of 764% from RMB129.2 million in 2017. The increase was primarily due to an increase in headcount as we invest to build out our technical capabilities. We have recruited more experienced R&D personnel, as well as incurred more costs in R&D related cloud services expenses.

Operating loss was RMB10,799.7 million (US$1,570.8 million), compared with operating loss of RMB595.7 million in 2017. Non-GAAP operating loss was RMB3,958.2 million (US$575.7 million), compared with RMB469.2 million in 2017.

Net loss attributable to ordinary shareholders was RMB10,297.6 million (US$1,497.7 million), compared with RMB498.7 million in 2017. Non-GAAP net loss attributable to ordinary shareholders was RMB3,456.0 million (US$502.7 million), compared with RMB372.2 million in 2017.

Basic and diluted net loss per ADS was RMB13.88 (US$2.00), compared with RMB1.12 in 2017. Non-GAAP basic and diluted net loss per ADS were RMB4.64 (US$0.68), compared with RMB0.84 in 2017.

Net cash provided by operating activities was RMB7,767.9 million (US$1,129.8 million), compared with RMB9,686.3 million in 2017, primarily due to an increase in sales and marketing expenses.

Recent Developments

Follow-on Equity Offering
On February 7, 2019, the Company successfully completed a public offering of 40,185,000 American Depositary Shares (“ADSs”), each representing four Class A ordinary shares of the Company, and of 14,815,000 ADSs by several shareholders (the “selling shareholders”), at a public offering price of US$25.00 per ADS. Including the 8,250,000 additional ADSs purchased upon the full exercise of the underwriters’ over-allotment option, the Company raised a total of US$1,180 million in proceeds after deducting underwriting discounts and commissions and estimated offering expenses payable.

Conference Call

The Company will host a conference call to discuss the earnings at 8:00 AM U.S. Eastern Time on Wednesday, March 13, 2019 (8:00 PM Beijing/Hong Kong Time on Wednesday, March 13, 2019).

Dial-in numbers for the live conference call are as follows:

International    +65-6713-5090
Mainland China   4006-208-038
U.S.   +1-845-675-0437
U.K.    +44-203-621-4779
Hong Kong    +852-3018-6771
Passcode:    Pinduoduo

A telephone replay of the call will be available after the conclusion of the conference call for one week.

Dial-in numbers for the replay are as follows:

International        +61-2-8199-0299
U.S.   +1-646-254-3697
Passcode:   7587753

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 income/(loss) and non-GAAP net income/(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 defines non-GAAP operating income/(loss) as operating income/(loss) excluding share-based compensation expenses and impairment of long term investment. The Company defines non-GAAP net income/(loss) attributable to ordinary shareholders as net income/(loss) attributable to ordinary shareholders excluding share-based compensation expenses and impairment of long term investment.

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 impairment of long term investment, 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, 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 expense 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 third 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 third-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 “new e-commerce” platform that provides buyers with value-for-money merchandise and fun and interactive shopping experiences. The Pinduoduo mobile platform offers a comprehensive selection of attractively priced merchandise, featuring a dynamic social shopping experience that leverages social networks as an effective and efficient tool for buyer acquisition and engagement.

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

For investor and media inquiries, please contact:

Pinduoduo Inc.
investor@pinduoduo.com
internationalmedia@pinduoduo.com

Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In U.S.
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@christensenir.com

   
PINDUODUO INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares and per share data)  
   
      As of  
      December 312017   December 31, 2018  
       RMB    RMB    US$  
       (Audited)    (Unaudited)  
             
ASSETS                
                 
Current Assets                
                 
Cash and cash equivalents     3,058,152   14,160,322   2,059,533  
Restricted cash     9,370,849   16,379,364   2,382,280  
Receivables from online payment platforms     88,173  
247,586
  36,010  
Short-term investments     50,000   7,630,689   1,109,838  
Amounts due from related parties     442,912   1,019,033   148,212  
Prepayments and other current assets     127,742   953,989   138,752  
Total current assets     13,137,828   40,390,983   5,874,625  
                 
Non-current assets                
Property and equipment, net     9,279   29,075   4,229  
Intangible asset     -   2,579,338   375,149  
Loan to a related party     162,363   -   -  
Other non-current assets     5,000   182,667   26,568  
Total non-current assets     176,642   2,791,080   405,946  
                 
Total Assets     13,314,470   43,182,063    6,280,571  
                 


   
PINDUODUO INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares and per share data)  
   
      As of  
      December 312017   December 31, 2018  
       RMB    RMB    US$  
       (Audited)    (Unaudited)  
             
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ (DEFICITS)/EQUITY                
Current Liabilities                
Amounts due to related parties     76,057     478,113     69,539    
Customer advances     56,453     191,482     27,850    
Payable to merchants     9,838,519     17,275,934     2,512,680    
Accrued expenses and other liabilities     360,393     2,225,667     323,712    
Merchant deposits     1,778,085     4,188,273     609,159    
Total current liabilities     12,109,507     24,359,469     3,542,940    
                 
Total Liabilities     12,109,507     24,359,469     3,542,940    
                 
                 
Mezzanine equity     2,196,921     -     -    
                 
                 
Shareholders’ (deficits)/equity                
Ordinary Shares     54     142     20    
Additional paid-in capital     61,326     29,114,527     4,234,532    
Accumulated other comprehensive income/(loss)     (23,101 )   1,035,783     150,648    
Accumulated deficits     (1,030,237 )   (11,327,858 )   (1,647,569 )  
Total shareholders’ (deficits)/equity     (991,958 )   18,822,594     2,737,631    
Total liabilities, mezzanine equity, and shareholders’ (deficits)/equity     13,314,470     43,182,063     6,280,571    
                 

                                                                                                                                        

 
PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS)
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
 
    For the three months ended December 31,   For the years ended December 31,
    2017   2018
  2017
  2018
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Audited)   (Unaudited)   (Unaudited)
Revenues                        
Online marketplace services   1,179,402     5,653,922     822,329     1,740,691     13,119,990     1,908,223  
Merchandise sales   -     -     -     3,385     -     -  
Total Revenues   1,179,402     5,653,922     822,329     1,744,076     13,119,990     1,908,223  
                         
Costs of revenues                        
Costs of online marketplace services   (374,024 )   (1,424,035 )   (207,117 )   (719,778 )   (2,905,249 )   (422,551 )
Costs of merchandise sales   -     -     -     (3,052 )   -     -  
Total costs of revenues   (374,024 )   (1,424,035 )   (207,117 )   (722,830 )   (2,905,249 )   (422,551 )
                         
Gross profit   805,378     4,229,887     615,212     1,021,246     10,214,741     1,485,672  
                         
Sales and marketing expenses   (753,945 )   (6,023,974 )   (876,151 )   (1,344,582 )   (13,441,813 )   (1,955,031 )
General and administrative expenses   (11,649 )   (321,609 )   (46,776 )   (133,207 )   (6,456,612 )   (939,075 )
Research and development expenses   (52,488 )   (525,213 )   (76,389 )   (129,181 )   (1,116,057 )   (162,324 )
Impairment of long term investment   (10,000 )   -     -     (10,000 )   -     -  
Total operating expenses   (828,082 )   (6,870,796 )   (999,316 )   (1,616,970 )   (21,014,482 )   (3,056,430 )
                         
Operating loss   (22,704 )   (2,640,909 )   (384,104 )   (595,724 )   (10,799,741 )   (1,570,758 )
                         
Interest income   38,892     233,357     33,940     80,783     584,940     85,076  
Foreign exchange (loss)/gain   (1,523 )   3,158     459     (11,547 )   10,037     1,460  
Other (loss)/income, net   (1,074 )   (19,499 )   (2,836 )   1,373     (12,361 )   (1,798 )
                         
Income/(loss) before income tax   13,591     (2,423,893 )   (352,541 )   (525,115 )   (10,217,125 )   (1,486,020 )
Income tax expenses   -     -     -     -     -     -  
Net income/(loss)   13,591     (2,423,893 )   (352,541 )   (525,115 )   (10,217,125 )   (1,486,020 )
                                     


 
PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS)
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
 
    For the three months ended December 31,   For the years ended December 31,
    2017   2018
  2017
  2018
     RMB    RMB    US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Audited)   (Unaudited)   (Unaudited)
                         
Net income/(loss)   13,591   (2,423,893 )   (352,541 )   (525,115 )   (10,217,125 )   (1,486,020 )
Deemed distribution to certain holders of convertible preferred shares   -   -     -     -     (80,496 )   (11,708 )
Contribution from a holder of convertible preferred shares   -   -     -     26,413     -     -  
Net income/(loss) attributable to ordinary shareholders   13,591   (2,423,893 )   (352,541 )   (498,702 )   (10,297,621 )   (1,497,728 )
                         
                         
Earnings/(deficits) per share for Class A and Class B ordinary shares:                        
-Basic   0.01   (0.54 )   (0.08 )   (0.28 )   (3.47 )   (0.50 )
-Diluted   0.01   (0.54 )   (0.08 )   (0.28 )   (3.47 )   (0.50 )
                         
Earnings/(deficits) per ADS (4 ordinary shares equals 1 ADS ):                        
-Basic   0.04   (2.16 )   (0.32 )   (1.12 )   (13.88 )   (2.00 )
-Diluted   0.04   (2.16 )   (0.32 )   (1.12 )   (13.88 )   (2.00 )
                         
Weighted average number of Class A and Class B ordinary shares outstanding:                        
-Basic   1,758,769,820   4,455,688,688     4,455,688,688     1,764,799,346     2,968,319,549     2,968,319,549  
-Diluted   1,758,769,820   4,455,688,688     4,455,688,688     1,764,799,346     2,968,319,549     2,968,319,549  
                                   


 
PINDUODUO INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
 
    For the three months ended December 31,   For the years ended December 31,
    2017   2018   2017   2018
     RMB    RMB    US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Audited)   (Unaudited)   (Unaudited)
Revenues                        
Online marketplace services                        
- Online marketing services   887,585   5,062,378   736,292   1,209,275   11,515,575   1,674,871
- Transaction services   291,817   591,544   86,037   531,416   1,604,415   233,352
Merchandise sales   -   -   -   3,385   -   -
Total   1,179,402   5,653,922   822,329   1,744,076   13,119,990   1,908,223
                         


 
PINDUODUO INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
 
    For the three months ended December 31,   For the years ended December 31,
    2017   2018   2017   2018
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Audited)   (Unaudited)   (Unaudited)
Share-based compensation costs included in:                        
Costs of revenues   210     2,118   308   796   3,488   507
Sales and marketing expenses   593     191,844   27,903   1,675   405,805   59,022
General and administrative expenses   (397 )   255,671   37,186   108,141   6,296,186   915,742
Research and development   2,262     78,379   11,400   5,893   136,094   19,794
Total   2,668     528,012   76,797   116,505   6,841,573   995,065
                           

                                                                                                                                                     

 
PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
 
    For the three months ended December 31,   For the years ended December 31,
    2017   2018
  2017
  2018
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Net cash provided by operating activities   5,362,621     5,732,397     833,743     9,686,328     7,767,927     1,129,798  
Net cash (used in)/provided by investing activities   (11,926 )   (238,635 )   (34,708 )   71,651     (7,548,509 )   (1,097,885 )
Net cash (used in)/provided by financing activities   (300 )   (13,936 )   (2,027 )   1,398,860     17,344,357     2,522,632  
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (13,293 )   (66,967 )   (9,740 )   (47,681 )   546,910     79,545  
                         
Increase in cash, cash equivalents and restricted cash   5,337,102     5,412,859     787,268     11,109,158     18,110,685     2,634,090  
Cash, cash equivalents and restricted cash at beginning of period10   7,091,899     25,126,827     3,654,545     1,319,843     12,429,001     1,807,723  
                         
Cash, cash equivalents and restricted cash at end of period10   12,429,001     30,539,686     4,441,813     12,429,001     30,539,686     4,441,813  
                                     


 
PINDUODUO INC.
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
 
    For the three months ended December 31,   For the years ended December 31,
    2017   2018
  2017
  2018
    RMB   RMB   US$   RMB   RMB   US$
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Operating Loss   (22,704 )   (2,640,909 )   (384,104 )   (595,724 )   (10,799,741 )   (1,570,758 )
Add: Share-based compensation   2,668     528,012     76,797     116,505     6,841,573     995,065  
Impairment of long term investment   10,000     -     -     10,000     -     -  
Non- GAAP operating loss   (10,036 )   (2,112,897 )   (307,307 )   (469,219 )   (3,958,168 )   (575,693 )
                         
Net income/(loss) attributable to ordinary shareholders   13,591     (2,423,893 )   (352,541 )   (498,702 )   (10,297,621 )   (1,497,728 )
Add: Share-based compensation   2,668     528,012     76,797     116,505     6,841,573     995,065  
Impairment of long term investment   10,000     -     -     10,000     -     -  
Non- GAAP net income/(loss) attributable to ordinary shareholders   26,259     (1,895,881 )   (275,744 )   (372,197 )   (3,456,048 )   (502,663 )
                         
                         
Non-GAAP basic earnings/(deficits) per share   0.01     (0.43 )   (0.06 )   (0.21 )   (1.16 )   (0.17 )
Non-GAAP basic earnings/(deficits) per ADS   0.04     (1.72 )   (0.24 )   (0.84 )   (4.64 )   (0.68 )
Non-GAAP diluted earnings/(deficits) per share   0.01     (0.43 )   (0.06 )   (0.21 )   (1.16 )   (0.17 )
Non-GAAP diluted earnings/(deficits) per ADS   0.04     (1.72 )   (0.24 )   (0.84 )   (4.64 )   (0.68 )
                                     

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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 over certain amounts (RMB100,000) and transactions by buyers over a certain amount (RMB1,000,000) 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 RMB6.8755 to US$1.00, the noon buying rate in effect on December 31, 2018 as set forth in the H.10 Statistical Release of the Federal Reserve Board.
3 As the Company lost its EGC status on December 31, 2018, the Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using the modified retrospective transition approach beginning January 1, 2018. The adoption did not have a significant impact on the Company’s operating results for the three months and the year ended December 31, 2018 and the comparable periods.
4 “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.
5 “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.
6 “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.
7 Non-GAAP operating income/(loss) is defined as operating income/(loss) excluding share-based compensation expenses and impairment of long term investment. See “Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures ” set forth at the end of this press release.
8 Non-GAAP net income/(loss) attributable to ordinary shareholders is defined as net income/(loss) attributable to ordinary shareholders excluding share-based compensation expenses and impairment of long term investment. See “Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures ” set forth at the end of this press release.
9 As the Company lost its EGC status on December 31, 2018, the Company adopted the guidance of ASU 2016-18 issued by FASB in November 2016, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Pursuant to the guidance, the Company retrospectively restated the statement of cash flows in the comparative periods.
10 As the Company lost its EGC status on December 31, 2018, the Company adopted the guidance of ASU 2016-18 issued by FASB in November 2016, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Pursuant to the guidance, the Company retrospectively restated the statement of cash flows in the comparative periods.