Profits are way up for discount ecommerce giant PDD as Temu app expands globally
PDD’s earnings show a recovery in consumer sentiment in China, and will help the company expand its cross-border operations taken on by global platform Temu.
PDD Holdings, the parent company of Chinese ecommerce giant Pinduoduo and the newer cross-border platform Temu, showed large year-on-year increases in revenue and profit in its earnings report for the first quarter of 2023: Total revenues for the quarter were $15.5 billion, up around 58% from last year, while operating profit hit $1 billion, an increase of 222%.
PDD Holdings’ shares jumped 16.9% on the news, and the earnings report led to a rally in other U.S.-listed Chinese stocks.
Various analysts posited that PDD’s success in the first quarter was attributable to a recovering Chinese economy and a growing willingness to spend among Chinese online shoppers. The first quarter results showed trends that “lay a solid foundation for the steady growth of consumption for the whole year” co-CEO Zhào Jiāzhēn 赵佳臻 said at an earnings call.
In addition to growing demand among consumers, Pinduoduo has also been able to increase its monetization for each transaction, and has grown its advertising revenue on its platform. In the first quarter, Pinduoduo’s online marketing service revenue was 27.2 billion yuan ($3.8 billion), up 50% over last year, showing that it isn’t just improvements to consumer sentiment that are fueling PDD’s recently announced growth.
While PDD’s global ecommerce platform Temu still makes up a small portion of the company’s revenue, it continues to expand into new markets as it competes with other Chinese cross-border ecommerce platforms like Shein and Alibaba Group’s AliExpress. In addition to starting operations in the U.S., Australia, New Zealand, and the UK, Temu has launched in France, Germany, Italy, The Netherlands, Spain, Poland, Mexico and other countries in Europe, Africa and the Middle East.
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Temu is gaining traction in the markets where it has launched, and one report out last week showed that it is the top downloaded app in the U.S., Germany, France, the UK, Canada, Italy, and other countries.
PDD’s grocery delivery arm, Duoduo Maicai 多多买菜, is also contributing to the company’s growth, and is expected to reach profitability in 2023. Both Duoduo Maicai and its ecommerce competitor Meituan’s grocery delivery unit aimed for a transaction volume of 250 billion yuan ($35.3 billion) in 2022 — Duoduo Maicai hit 180 billion yuan ($25.4 billion), while Meituan only reached about half the target, according to 36Kr.
Companies
PDD Holdings
Temu
Duoduo Maicai 多多买菜
Sources and additional data:
收入大涨58 %，拼多多为什么这么「猛」? / 36Kr
拼多多2023年第一季度营收376.4亿元 Non-GAAP净利润101.3亿元 / Sina
Pinduoduo earnings indicate a recovering Chinese e-commerce landscape / Modern Retail
Formerly Pinduoduo, PDD’s stock surge fuels broad bounce in U.S.-listed shares of China-based companies / MarketWatch
Chinese Shopping Apps Take Over the World / Market Pulse
