PDD PDD Holdings Inc

PDD Holdings Inc. (“PDD Holdings” or the “Company”) (NASDAQ: PDD), today announced its unaudited financial results for the fourth quarter ended and the fiscal year ended December 31, 2023.

Fourth Quarter 2023 Highlights

• Total revenues in the quarter were RMB88,881.0 million (US$1 12,518.6 million), an increase of 123% from RMB39,820.0 million in the same quarter of 2022.
• Operating profit in the quarter was RMB22,395.0 million (US$3,154.3 million), an increase of 146% from RMB9,113.7 million in the same quarter of 2022. Non-GAAP2 operating profit in the quarter was RMB24,579.9 million (US$3,462.0 million), an increase of 112% from RMB11,600.1 million in the same quarter of 2022.
• Net income attributable to ordinary shareholders in the quarter was RMB23,280.3 million (US$3,279.0 million), an increase of 146% from RMB9,453.7 million in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB25,476.5 million (US$3,588.3 million), an increase of 110% from RMB12,105.8 million in the same quarter of 2022.

“2023 represents a pivotal chapter in our corporate history as we transition towards high-quality development,” said Mr. Lei Chen, Chairman and Co-Chief Executive Officer of PDD Holdings. “In 2024, we remain dedicated to further improving consumer experiences, enhancing technology innovations, and generating positive impacts in our communities.”

“In the fourth quarter, we saw growing demand driven by encouraging consumer sentiment,” said Mr. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer of PDD Holdings. “We will continue our high-quality development strategy, stay dedicated to offer great value and exceptional service, and keep building thriving communities that can benefit all.”

“In 2023, our R&D investment exceeded RMB10 billion for the second consecutive year, underscoring our dedication to technology and agricultural advancements,” said Ms. Jun Liu, VP of Finance of PDD Holdings. “Our focus remains on creating lasting value through strategic initiatives with sustainable and positive impacts.”

Fourth Quarter 2023 Unaudited Financial Results

Total revenues were RMB88,881.0 million (US$12,518.6 million), an increase of 123% from RMB39,820.0 million in the same quarter of 2022. The increase was primarily due to an increase in revenues from online marketing services and transaction services.

• Revenues from online marketing services and others were RMB48,675.6 million (US$6,855.8 million), an increase of 57% from RMB31,023.4 million in the same quarter of 2022.
• Revenues from transaction services were RMB40,205.4 million (US$5,662.8 million), an increase of 357% from RMB8,796.6 million in the same quarter of 2022.

Total costs of revenues were RMB35,078.3 million (US$4,940.7 million), an increase of 293% from RMB8,926.7 million in the same quarter of 2022. The increase mainly came from the increased fulfilment fees, payment processing fees, maintenance costs and call center expenses.

Total operating expenses were RMB31,407.8 million (US$4,423.7 million), an increase of 44% from RMB21,779.6 million in the same quarter of 2022. The increase was primarily due to an increase in sales and marketing expenses.

• Sales and marketing expenses were RMB26,638.5 million (US$3,752.0 million), an increase of 50% from RMB17,732.4 million in the same quarter of 2022, mainly due to the increased spending in promotion and advertising activities.
• General and administrative expenses were RMB1,904.8 million (US$268.3 million), compared with RMB1,640.5 million in the same quarter of 2022.
• Research and development expenses were RMB2,864.4 million (US$403.4 million), compared with RMB2,406.7 million in the same quarter of 2022.

Operating profit in the quarter was RMB22,395.0 million (US$3,154.3 million), an increase of 146% from RMB9,113.7 million in the same quarter of 2022. Non-GAAP operating profit in the quarter was RMB24,579.9 million (US$3,462.0 million), an increase of 112% from RMB11,600.1 million in the same quarter of 2022.

Net income attributable to ordinary shareholders in the quarter was RMB23,280.3 million (US$3,279.0 million), an increase of 146% from RMB9,453.7 million in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB25,476.5 million (US$3,588.3 million), an increase of 110% from RMB12,105.8 million in the same quarter of 2022.

Basic earnings per ADS was RMB17.00 (US$2.39) and diluted earnings per ADS was RMB15.83 (US$2.23), compared with basic earnings per ADS of RMB7.42 and diluted earnings per ADS of RMB6.52 in the same quarter of 2022. Non-GAAP diluted earnings per ADS was RMB17.32 (US$2.40), compared with RMB8.34 in the same quarter of 2022.

Net cash generated from operating activities was RMB36,890.7 million (US$5,195.9 million), compared with RMB26,550.3 million in the same quarter of 2022, mainly due to the increase in net income.

Cash, cash equivalents and short-term investments were RMB217.2 billion (US$30.6 billion) as of December 31, 2023, compared with RMB149.4 billion as of December 31, 2022.

Fiscal Year 2023 Unaudited Financial Results

Total revenues were RMB247,639.2 million (US$34,879.3 million), representing an increase of 90% from RMB130,557.6 million in 2022. The increase was primarily due to an increase in revenues from online marketing services and transaction services.

• Revenues from online marketing services and others were RMB153,540.6 million (US$21,625.7 million), representing an increase of 49% from RMB102,931.1 million in 2022.
• Revenues from transaction services were RMB94,098.7 million (US$13,253.5 million), representing an increase of 241% from RMB27,626.5 million in 2022.

Total costs of revenues were RMB91,723.6 million (US$12,919.0 million), an increase of 192% from RMB31,462.3 million in 2022. The increase mainly came from the increased fulfilment fees, payment processing fees, maintenance costs and call center expenses.

Total operating expenses were RMB97,216.9 million (US$13,692.7 million), an increase of 42% from RMB68,693.4 million in 2022.

• Sales and marketing expenses were RMB82,188.9 million (US$11,576.1 million), an increase of 51% from RMB54,343.7 million in 2022, mainly due to the increased spending in promotion and advertising activities.
• General and administrative expenses were RMB4,075.6 million (US$574.0 million), compared with RMB3,964.9 million in 2022.
• Research and development expenses were RMB10,952.4 million (US$1,542.6 million), compared with RMB10,384.7 million in 2022.

Operating profit was RMB58,698.8 million (US$8,267.5 million), an increase of 93% from RMB30,401.9 million in 2022. Non-GAAP operating profit was RMB65,777.6 million (US$9,264.6 million), an increase of 73% from RMB38,120.3 million in 2022.

Net income attributable to ordinary shareholders was RMB60,026.5 million (US$8,454.6 million), an increase of 90% from RMB31,538.1 million in 2022. Non-GAAP net income attributable to ordinary shareholders was RMB67,899.3 million (US$9,563.4 million), an increase of 72% from RMB39,529.7 million in 2022.

Basic earnings per ADS was RMB44.33 (US$6.24) and diluted earnings per ADS was RMB41.15 (US$5.80), compared with basic earnings per ADS of RMB24.94 and diluted earnings per ADS of RMB21.93 in 2022. Non-GAAP diluted earnings per ADS was RMB46.51 (US$6.56), compared with RMB27.45 in 2022.

Net cash generated from operating activities was RMB94,162.5 million (US$13,262.5 million), compared with RMB48,507.9 million in 2022, mainly due to the increase in net income and the changes in working capitals.

Conference Call

The Company’s management will hold an earnings conference call at 7:30 AM ET on March 20, 2024 (11:30 AM GMT and 7:30 PM HKT on the same day).

The conference call will be webcast live at https://investor.pddholdings.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, non-GAAP net income attributable to ordinary shareholders, non-GAAP diluted earnings per ordinary share and non-GAAP diluted earnings per ADS, 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 the impact of share-based compensation expenses, fair value change of certain investments, 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, fair value change of certain investments, and interest expenses related to the convertible bonds’ amortization to face value, which are non-cash charges. The Company also believes that the non-GAAP financial measures may 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 Company’s 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. These 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 the Company’s strategic and operational plans, contain forward-looking statements. The Company 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 the Company’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: the Company’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 the e-commerce markets globally and in the countries or regions where the Company has operations; changes in its revenues and certain cost or expense items; the expected growth of e-commerce markets globally and in the countries or regions where the Company has operations; developments in the relevant governmental policies and regulations relating to the Company’s industry; and general economic and business conditions globally and in the countries or regions where the Company has operations; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’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 the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

About PDD Holdings

PDD Holdings is a multinational commerce group that owns and operates a portfolio of businesses. PDD Holdings aims to bring more businesses and people into the digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities.

PDD HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December31, 2022		December 31, 2023
		RMB		RMB		US$
				(Unaudited)		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		34,326,192		59,794,469		8,421,875
Restricted cash		57,974,225		61,985,436		8,730,466
Receivables from online payment platforms		587,696		3,914,117		551,292
Short-term investments		115,112,554		157,415,365		22,171,490
Amounts due from related parties		6,318,830		7,428,070		1,046,222
Prepayments and other current assets		2,298,379		4,213,015		593,390
Total current assets		216,617,876		294,750,472		41,514,735
Non-current assets
Property, equipment and software, net		1,044,847		979,597		137,973
Intangible assets		134,002		21,148		2,979
Right-of-use assets		1,416,081		4,104,889		578,162
Deferred tax assets		1,045,030		270,738		38,133
Other non-current assets		16,862,117		47,951,276		6,753,796
Total non-current assets		20,502,077		53,327,648		7,511,043
Total Assets		237,119,953		348,078,120		49,025,778

PDD HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December31, 2022		December 31, 2023
		RMB		RMB			US$
				(Unaudited)			(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Amounts due to related parties		1,676,391		1,238,776			174,478
Customer advances and deferred revenues		1,389,655		2,144,610			302,062
Payable to merchants		63,316,695		74,997,252			10,563,142
Accrued expenses and other liabilities		20,960,723		55,351,399			7,796,081
Merchant deposits		15,058,229		16,878,746			2,377,322
Convertible bonds, current portion		13,885,751		648,570			91,349
Lease liabilities		602,036		1,641,548			231,207
Total current liabilities		116,889,480		152,900,901			21,535,641
Non-current liabilities
Convertible bonds		1,575,755		5,231,523			736,845
Lease liabilities		870,782		2,644,260			372,436
Deferred tax liabilities		13,025		59,829			8,427
Total non-current liabilities		2,459,562		7,935,612			1,117,708
Total Liabilities		119,349,042		160,836,513			22,653,349
Shareholders’ equity
Ordinary shares		170		177			25
Additional paid-in capital		99,250,468		107,293,091			15,111,916
Statutory reserves		5,000		105,982			14,927
Accumulated other comprehensive income		3,322,238		4,723,760			665,328
Retained earnings		15,193,035		75,118,597			10,580,233
Total Shareholders’ Equity		117,770,911		187,241,607			26,372,429
Total Liabilities and Shareholders’ Equity		237,119,953		348,078,120			49,025,778

PDD HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME   (Amounts in thousands of RMB and US$)
		For the three months ended December 31,									For the year ended December 31,
		2022			2023						2022			2023
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)						(Unaudited)			(Unaudited)
Revenues		39,820,028			88,881,036			12,518,632			130,557,589			247,639,205			34,879,253
Costs of revenues		(8,926,705	)		(35,078,272	)		(4,940,671	)		(31,462,298	)		(91,723,577	)		(12,918,996	)
Sales and marketing expenses		(17,732,384	)		(26,638,524	)		(3,751,958	)		(54,343,719	)		(82,188,870	)		(11,576,060	)
General and administrative expenses		(1,640,527	)		(1,904,842	)		(268,291	)		(3,964,935	)		(4,075,622	)		(574,039	)
Research and development expenses		(2,406,677	)		(2,864,430	)		(403,447	)		(10,384,716	)		(10,952,374	)		(1,542,610	)
Total operating expenses		(21,779,588	)		(31,407,796	)		(4,423,696	)		(68,693,370	)		(97,216,866	)		(13,692,709	)
Operating profit		9,113,735			22,394,968			3,154,265			30,401,921			58,698,762			8,267,548
Interest and investment income, net		1,351,698			4,359,384			614,006			3,997,100			10,238,080			1,442,003
Interest expenses		(12,221	)		(8,155	)		(1,149	)		(51,655	)		(43,987	)		(6,195	)
Foreign exchange (loss)/ gain		(23,819	)		(198,819	)		(28,003	)		(149,710	)		35,721			5,031
Other income, net		168,825			328,204			46,227			2,221,358			2,952,579			415,862
Profit before income tax and share of results of equity investees		10,598,218			26,875,582			3,785,346			36,419,014			71,881,155			10,124,249
Share of results of equity investees		(78,908	)		(15,066	)		(2,122	)		(155,285	)		(4,707	)		(663	)
Income tax expenses		(1,065,613	)		(3,580,207	)		(504,262	)		(4,725,667	)		(11,849,904	)		(1,669,024	)
Net income		9,453,697			23,280,309			3,278,962			31,538,062			60,026,544			8,454,562

PDD HOLDINGS INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended December 31,						For the year ended December 31,
		2022		2023				2022		2023
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)				(Unaudited)		(Unaudited)
Net income		9,453,697		23,280,309		3,278,962		31,538,062		60,026,544		8,454,562
Net income attributable to ordinary shareholders		9,453,697		23,280,309		3,278,962		31,538,062		60,026,544		8,454,562
Earnings per ordinary share:
-Basic		1.85		4.25		0.60		6.24		11.08		1.56
-Diluted		1.63		3.96		0.56		5.48		10.29		1.45
Earnings per ADS (4 ordinary shares equals 1 ADS ):
-Basic		7.42		17.00		2.39		24.94		44.33		6.24
-Diluted		6.52		15.83		2.23		21.93		41.15		5.80
Weighted average number of outstanding ordinary shares (in thousands):
-Basic		5,099,138		5,478,111		5,478,111		5,057,540		5,416,106		5,416,106
-Diluted		5,809,212		5,882,980		5,882,980		5,761,291		5,839,630		5,839,630

PDD HOLDINGS INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$)
		For the three months ended December 31,						For the year ended December 31,
		2022		2023				2022		2023
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)				(Unaudited)		(Unaudited)
Revenues
- Online marketing services and others		31,023,400		48,675,618		6,855,817		102,931,095		153,540,553		21,625,735
- Transaction services		8,796,628		40,205,418		5,662,815		27,626,494		94,098,652		13,253,518
Total		39,820,028		88,881,036		12,518,632		130,557,589		247,639,205		34,879,253

PDD HOLDINGS INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$)
		For the three months ended December 31,						For the year ended December 31,
		2022		2023				2022		2023
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)				(Unaudited)		(Unaudited)
Share-based compensation expenses included in:
Costs of revenues		11,777		46,404		6,536		33,788		132,470		18,658
Sales and marketing expenses		535,550		411,048		57,895		2,158,676		2,354,097		331,568
General and administrative expenses		1,279,760		1,230,358		173,292		3,004,327		2,289,272		322,437
Research and development expenses		659,298		497,134		70,020		2,521,574		2,302,955		324,364
Total		2,486,385		2,184,944		307,743		7,718,365		7,078,794		997,027

        

PDD HOLDINGS INC.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of RMB and US$)
		For the three months ended December 31,									For the year ended December 31,
		2022			2023						2022			2023
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)						(Unaudited)			(Unaudited)
Net cash generated from operating activities		26,550,262			36,890,671			5,195,942			48,507,860			94,162,531			13,262,515
Net cash used in investing activities		(8,559,916	)		(16,470,671	)		(2,319,845	)		(22,361,670	)		(55,431,278	)		(7,807,332	)
Net cash generated from/ (used in) financing activities		9,510			(8,968,297	)		(1,263,158	)		10,079			(8,960,626	)		(1,262,078	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(109,374	)		(1,025,057	)		(144,377	)		100,177			(291,139	)		(41,006	)
Increase in cash, cash equivalents and restricted cash		17,890,482			10,426,646			1,468,562			26,256,446			29,479,488			4,152,099
Cash, cash equivalents and restricted cash at beginning of period/ year		74,409,935			111,353,259			15,683,779			66,043,971			92,300,417			13,000,242
Cash, cash equivalents and restricted cash at end of period/ year		92,300,417			121,779,905			17,152,341			92,300,417			121,779,905			17,152,341

PDD HOLDINGS INC.RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES(Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended December 31,						For the year ended December 31,
		2022		2023				2022		2023
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)				(Unaudited)		(Unaudited)
Operating profit		9,113,735		22,394,968		3,154,265		30,401,921		58,698,762		8,267,548
Add: Share-based compensation expenses		2,486,385		2,184,944		307,743		7,718,365		7,078,794		997,027
Non-GAAP operating profit		11,600,120		24,579,912		3,462,008		38,120,286		65,777,556		9,264,575
Net income attributable to ordinary shareholders		9,453,697		23,280,309		3,278,962		31,538,062		60,026,544		8,454,562
Add: Share-based compensation expenses		2,486,385		2,184,944		307,743		7,718,365		7,078,794		997,027
Add: Interest expenses related to convertible bonds’ amortization to face value		12,221		8,155		1,149		51,655		43,987		6,195
Add: Loss from fair value change of certain investments		153,467		3,052		430		221,640		749,967		105,631
Non-GAAP net income attributable to ordinary shareholders		12,105,770		25,476,460		3,588,284		39,529,722		67,899,292		9,563,415
Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands)		5,809,212		5,882,980		5,882,980		5,761,291		5,839,630		5,839,630
Diluted earnings per ordinary share		1.63		3.96		0.56		5.48		10.29		1.45
Add: Non-GAAP adjustments to earnings per ordinary share		0.45		0.37		0.04		1.38		1.34		0.19
Non-GAAP diluted earnings per ordinary share		2.08		4.33		0.60		6.86		11.63		1.64
Non-GAAP diluted earnings per ADS		8.34		17.32		2.40		27.45		46.51		6.56

______________________

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 RMB7.0999 to US$1.00, the noon buying rate in effect on December 29, 2023 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 certain investments, 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.

For investor and media inquiries, please contact:

investor@pddholdings.com
media@pddholdings.com