Pinduoduo Announces Second Quarter 2022 Unaudited Financial Results

Aug 29th, 2022 6:30 EST

SHANGHAI, China, Aug. 29, 2022 (GLOBE NEWSWIRE) -- Pinduoduo Inc. (“Pinduoduo” or the “Company”) (NASDAQ: PDD), China’s largest agriculture platform, today announced its unaudited financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights

  • Total revenues in the quarter were RMB31,439.6 million (US$14,693.8 million), an increase of 36% from RMB23,046.2 million in the same quarter of 2021.
  • Operating profit in the quarter was RMB8,697.2 million (US$1,298.5 million), an increase of 335% from RMB1,997.5 million in the same quarter of 2021. Non-GAAP2 operating profit in the quarter was RMB10,541.5 million (US$1,573.8 million), an increase of 231% from RMB3,185.2 million in the same quarter of 2021.
  • Net income attributable to ordinary shareholders in the quarter was RMB8,896.3 million (US$1,328.2 million), an increase of 268% from RMB2,414.6 million in the same quarter of 2021. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB10,776.3 million (US$1,608.9 million), an increase of 161% from RMB4,125.3 million in the same quarter of 2021.

“We saw a recovery in consumer sentiment in the second quarter especially during the 618 shopping festival, a reflection of the resilience of overall consumption,” said Mr. Lei Chen, Chairman and Chief Executive Officer of Pinduoduo. “We remain committed to building a platform that serves as a force for good.”

“The postponement of certain projects and lower business-related expenses during the first half of the quarter affected overall expenses in short term,” said Ms. Jun Liu, VP of Finance of Pinduoduo. “Looking ahead, we stay dedicated to investing in areas such as agriculture and R&D to better serve our consumers.”

_______________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 RMB6.6981 to US$1.00, the noon buying rate in effect on June 30, 2022 as set forth in the H.10 Statistical Release of the Federal Reserve Board.2 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.

Second Quarter 2022 Unaudited Financial Results

Total revenues were RMB31,439.6 million (US$4,693.8 million), an increase of 36% from RMB23,046.2 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 RMB25,172.7 million (US$3,758.2 million), an increase of 39% from RMB18,080.4 million in the same quarter of 2021.
  • Revenues from transaction services were RMB6,216.2 million (US$928.1 million), an increase of 107% from RMB3,007.6 million in the same quarter of 2021.
  • Revenues from merchandise sales were RMB50.7 million (US$7.6 million), a decrease of 97% from RMB1,958.2 million in the same quarter of 2021.

Total costs of revenues were RMB7,961.9 million (US$1,188.7 million), a slight increase of 1% from RMB7,897.9 million in the same quarter of 2021.

Total operating expenses were RMB14,780.5 million (US$2,206.7 million), compared with RMB13,150.9 million in the same quarter of 2021.

  • Sales and marketing expenses were RMB11,343.4 million (US$1,693.5 million), an increase of 9% from RMB10,387.9 million in the same quarter of 2021, mainly due to increased spending in promotion and advertising activities.
  • General and administrative expenses were RMB825.7 million (US$123.3 million), an increase of 90% from RMB434.2 million in the same quarter of 2021, primarily due to an increase in staff related costs.
  • Research and development expenses were RMB2,611.4 million (US$389.9 million), an increase of 12% from RMB2,328.8 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 in the quarter was RMB8,697.2 million (US$1,298.5 million), an increase of 335% from RMB1,997.5 million in the same quarter of 2021. Non-GAAP operating profit in the quarter was RMB10,541.5 million (US$1,573.8 million), an increase of 231% from RMB3,185.2 million in the same quarter of 2021.

Net income attributable to ordinary shareholders in the quarter was RMB8,896.3 million (US$1,328.2 million), an increase of 268% from RMB2,414.6 million in the same quarter of 2021. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB10,776.3 million (US$1,608.9 million), an increase of 161% from RMB4,125.3 million in the same quarter of 2021.

Basic earnings per ADS was RMB7.06 (US$1.05) and diluted earnings per ADS was RMB6.22 (US$0.93), compared with basic earnings per ADS of RMB1.93 and diluted earnings per ADS of RMB1.69 in the same quarter of 2021. Non-GAAP diluted earnings per ADS was RMB7.54 (US$1.13), compared with RMB2.85 in the same quarter of 2021.

Net cash flow generated from operating activities was RMB19,373.9 million (US$2,892.4 million), compared with RMB7,371.2 million in the same quarter of 2021, mainly due to the increase in net income and the changes in working capitals.

Cash, cash equivalents and short-term investments were RMB119.4 billion (US$17.8 billion) as of June 30, 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 Monday, August 29, 2022 (7:30 PM Beijing/Hong Kong Time on Monday, August 29, 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 and non-GAAP net income 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 are non-cash charges. 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 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 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 June 30, 2022
   RMB  RMB  US$
     (Unaudited)
     
ASSETS      
Current assets      
Cash and cash equivalents 6,426,715 13,057,463 1,949,428
Restricted cash 59,617,256 49,806,558 7,435,923
Receivables from online payment platforms 673,737 617,724 92,224
Short-term investments 86,516,618 106,322,578 15,873,543
Amounts due from related parties 4,250,155 4,110,162 613,631
Prepayments and other current assets 3,424,687 1,531,816 228,695
Total current assets  160,909,168  175,446,301 26,193,444
       
Non-current assets      
Property, equipment and software, net 2,203,323 1,450,866 216,609
Intangible assets 701,220 435,841 65,069
Right-of-use assets 938,537 882,300 131,724
Deferred tax assets 31,504 24,148 3,605
Other non-current assets 16,425,966 13,759,949 2,054,306
Total non-current assets  20,300,550  16,553,104 2,471,313
       
Total Assets  181,209,718  191,999,405 28,664,757
       

PINDUODUO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
 
  As of
  December 31, 2021 June 30, 2022
   RMB  RMB  US$
     (Unaudited)
     
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities      
Amounts due to related parties 1,963,007  2,494,855  372,472 
Customer advances and deferred revenues 1,166,764  1,242,716  185,533 
Payable to merchants 62,509,714  52,897,387  7,897,372 
Accrued expenses and other liabilities 14,085,513  13,828,902  2,064,600 
Merchant deposits 13,577,552  14,772,915  2,205,538 
Lease liabilities 427,164  477,639  71,310 
Total current liabilities  93,729,714   85,714,414  12,796,825 
       
Non-current liabilities      
Convertible bonds3 11,788,907  14,874,632  2,220,724 
Lease liabilities 544,263  462,401  69,035 
Deferred tax liabilities 31,291  38,669  5,773 
Other non-current liabilities 996  80  12 
Total non-current liabilities  12,365,457   15,375,782  2,295,544 
       
Total Liabilities  106,095,171   101,090,196  15,092,369 
       
       
Shareholders’ equity      
Ordinary shares 161  162  24 
Additional paid-in capital3 95,340,819  94,889,255  14,166,593 
Accumulated other comprehensive (loss)/ income3 (2,519,900) 864,028  128,996 
Accumulated deficits3 (17,706,533) (4,844,236) (723,225)
Total Shareholders’ Equity 75,114,547  90,909,209  13,572,388 
       
Total Liabilities and Shareholders’ Equity 181,209,718  191,999,405  28,664,757 
       

_______________3 The Group adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) on January 1, 2022, using the modified retrospective method with a cumulative-effect adjustment to the opening balance of convertible bonds, additional paid-in capital, accumulated other comprehensive income/ (loss) and accumulated deficits.

PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME/ (LOSS)
(Amounts in thousands of RMB and US$)
 
  For the three months ended June 30, For the six months ended June 30,
  2021 2022 2021 2022
  RMB RMB US$ RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues 23,046,220  31,439,568  4,693,804  45,213,319  55,233,257  8,246,108  
Costs of revenues (7,897,886) (7,961,866) (1,188,675) (18,643,936) (15,121,461) (2,257,575) 
Gross profit 15,148,334   23,477,702  3,505,129  26,569,383  40,111,796  5,988,533  
              
Sales and marketing expenses (10,387,873) (11,343,447) (1,693,532) (23,385,280) (22,562,515) (3,368,495) 
General and administrative expenses (434,151) (825,722) (123,277) (786,006) (1,417,835) (211,677) 
Research and development expenses (2,328,831) (2,611,366) (389,867) (4,547,574) (5,279,873) (788,264) 
Total operating expenses (13,150,855) (14,780,535) (2,206,676) (28,718,860) (29,260,223) (4,368,436) 
              
Operating profit/ (loss) 1,997,479  8,697,167  1,298,453  (2,149,477) 10,851,573  1,620,097  
              
Interest and investment income, net 544,629  756,991  113,016  1,515,106  1,553,252  231,894  
Interest expenses (293,999) (13,148) (1,963) (629,455) (25,788) (3,850) 
Foreign exchange gain/ (loss) 44,452  (199,349) (29,762) 34,078  (179,265) (26,764) 
Other income, net 123,391  1,266,235  189,044  593,775  1,506,005  224,841  
              
Profit/ (loss) before income tax and share of results of equity investees  2,415,952  10,507,896  1,568,788  (635,973) 13,705,777  2,046,218  
Share of results of equity investees (1,372) (53,493) (7,986) 145,137  (87,109) (13,005) 
Income tax expenses -  (1,558,063) (232,613) -  (2,122,877) (316,937) 
Net income/ (loss) 2,414,580  8,896,340  1,328,189  (490,836) 11,495,791  1,716,276  
                    

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 June 30, For the six months ended June 30,
  2021 2022 2021 2022
   RMB   RMB   US$  RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
             
Net income/ (loss) 2,414,580 8,896,340 1,328,189 (490,836) 11,495,791 1,716,276
Net income/ (loss) attributable to ordinary shareholders 2,414,580 8,896,340 1,328,189 (490,836) 11,495,791 1,716,276
             
Earnings/ (loss) per ordinary share:            
-Basic 0.48 1.76 0.26 (0.10) 2.28 0.34
-Diluted 0.42 1.56 0.23 (0.10) 2.02 0.30
             
Earnings/ (loss) per ADS (4 ordinary shares equals 1 ADS):            
-Basic 1.93 7.06 1.05 (0.39) 9.12 1.36
-Diluted 1.69 6.22 0.93 (0.39) 8.07 1.21
             
Weighted average number of outstanding ordinary shares (in thousands):            
-Basic 5,013,747 5,042,417 5,042,417 4,998,722  5,039,591 5,039,591
-Diluted 5,719,402 5,716,947 5,716,947 4,998,722  5,708,590 5,708,590

PINDUODUO INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)
 
  For the three months ended June 30, For the six months ended June 30,
  2021 2022 2021 2022
   RMB   RMB   US$  RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues            
- Online marketing services and others 18,080,419 25,172,651 3,758,178 32,191,905 43,331,076 6,469,160
- Transaction services 3,007,638 6,216,207 928,055 5,939,113 11,807,614 1,762,830
- Merchandise sales 1,958,163 50,710 7,571 7,082,301 94,567 14,118
Total 23,046,220 31,439,568 4,693,804 45,213,319 55,233,257 8,246,108
             

PINDUODUO INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)
 
  For the three months ended June 30, For the six months ended June 30,
  2021 2022 2021 2022
  RMB RMB US$ RMB RMB US$
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Share-based compensation costs included in:            
Costs of revenues 7,442 6,989 1,043 11,806 16,170 2,414
Sales and marketing expenses 383,540 513,559 76,672 683,023 1,014,664 151,485
General and administrative expenses 220,365 661,019 98,688 411,535 1,044,315 155,912
Research and development expenses 576,416 662,781 98,951 1,054,208 1,291,949 192,883
Total 1,187,763 1,844,348 275,354 2,160,572 3,367,098 502,694
             

PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$)
 
  For the three months ended June 30, For the six months ended June 30,
  2021  2022 2021 2022
  RMB RMB US$ RMB RMB US$
  (Unaudited)  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net cash generated from operating activities 7,371,215  19,373,871  2,892,443  3,646,668  10,305,775  1,538,612 
Net cash used in investing activities (3,484,056) (8,593,271) (1,282,942) (9,105,103) (13,445,360) (2,007,339)
Net cash (used in)/ generated from financing activities (636,619) 268  40  (1,875,493) 311  46 
Effect of exchange rate changes on cash, cash equivalents and restricted cash (192,413) (50,839) (7,590) (140,863) (40,676) (6,073)
             
Increase/ (decrease) in cash, cash equivalents and restricted cash 3,058,127  10,730,029  1,601,951  (7,474,791) (3,179,950) (474,754)
Cash, cash equivalents and restricted cash at beginning of period 64,310,718  52,133,992  7,783,400  74,843,636  66,043,971  9,860,105 
Cash, cash equivalents and restricted cash at end of period 67,368,845  62,864,021  9,385,351  67,368,845  62,864,021  9,385,351 
                   

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 June 30, For the six months ended June 30,
  2021 2022 2021 2022
  RMB RMB US$ RMB RMB US$
  (Unaudited)  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating profit/ (loss) 1,997,479 8,697,167 1,298,453 (2,149,477) 10,851,573 1,620,097
Add: Share-based compensation 1,187,763 1,844,348 275,354 2,160,572  3,367,098 502,694
Non-GAAP operating profit 3,185,242 10,541,515 1,573,807 11,095  14,218,671 2,122,791
             
Net income/ (loss) attributable to ordinary shareholders 2,414,580 8,896,340 1,328,189 (490,836) 11,495,791 1,716,276
Add: Share-based compensation 1,187,763 1,844,348 275,354 2,160,572  3,367,098 502,694
Add: Interest expense related to convertible bonds’ amortization to face value and gain or loss on extinguishment, net 298,863 13,148 1,963 617,474  25,788 3,850
Add: Loss/ (gain) from fair value change of long-term investments 224,100 22,459 3,353 (52,236) 88,059 13,147
Non-GAAP net income attributable to ordinary shareholders  4,125,306 10,776,295 1,608,859 2,234,974  14,976,736 2,235,967
             
Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands) 5,784,208 5,716,947 5,716,947 5,795,517  5,708,590 5,708,590
             
Diluted earnings/ (loss) per ordinary share 0.42 1.56 0.23 (0.10) 2.02 0.30
Add: Non-GAAP adjustments to earnings/ (loss) per ordinary share 0.29 0.32 0.05 0.49  0.60 0.09
Non-GAAP diluted earnings per ordinary share 0.71 1.88 0.28 0.39  2.62 0.39
Non-GAAP diluted earnings per ADS 2.85 7.54 1.13 1.54  10.49 1.57
              

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