PDD Holdings Announces Third Quarter 2024 Unaudited Financial Results

Rhea-AI Summary

PDD Holdings reported strong Q3 2024 financial results with total revenues reaching RMB99,354.4 million (US$14,157.9 million), up 44% year-over-year. The company's operating profit increased 46% to RMB24,292.5 million, while net income grew 61% to RMB24,980.7 million. Revenue growth was primarily driven by increases in online marketing services and transaction services. Despite intensified competition and external challenges, PDD continued to invest in its platform ecosystem through merchant support policies and trust and safety updates.

Positive

• Total revenues increased 44% YoY to RMB99,354.4 million
• Operating profit grew 46% YoY to RMB24,292.5 million
• Net income rose 61% YoY to RMB24,980.7 million
• Transaction services revenue increased 72% YoY
• Cash and short-term investments reached RMB308.5 billion

Negative

• Total costs of revenues increased 48% YoY, outpacing revenue growth
• General and administrative expenses surged 138% YoY
• Operating cash flow decreased from RMB32,537.9 million to RMB27,522.3 million YoY
• Topline growth moderated quarter-on-quarter amid intensified competition

Insights

Financial Analyst

PDD Holdings delivered exceptional Q3 2024 results with RMB99.35 billion in revenue, up 44% YoY and net income of RMB24.98 billion, surging 61% YoY. The company's dual growth engines - online marketing and transaction services - showed robust performance, with transaction services growing an impressive 72%. Operating margins remained healthy despite increased investments in merchant support and platform security. With RMB308.5 billion in cash and short-term investments, PDD maintains a strong financial position for future growth initiatives. However, management's note about moderating topline growth and intensifying competition warrants attention. The significant increase in operating expenses, particularly in sales and marketing (40% YoY), suggests aggressive market expansion efforts.

Market Research Analyst

The results demonstrate PDD's successful execution in both domestic and international markets. The platform's focus on high-quality development and merchant support is paying off through increased transaction volumes. Notable is the 138% jump in G&A expenses, indicating substantial investments in organizational scaling. The company's strategic emphasis on ecosystem development and merchant support policies suggests a long-term focus on sustainable growth rather than short-term profitability. While competition intensifies, particularly in international markets, PDD's robust financial performance and substantial cash reserves position it well for continued market expansion and competitive responses.

DUBLIN and SHANGHAI, Nov. 21, 2024 (GLOBE NEWSWIRE) -- PDD Holdings Inc. (“PDD Holdings” or the “Company”) (NASDAQ: PDD), today announced its unaudited financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Highlights

• Total revenues in the quarter were RMB99,354.4 million (US$¹ 14,157.9 million), an increase of 44% from RMB68,840.4 million in the same quarter of 2023.

• Operating profit in the quarter was RMB24,292.5 million (US$3,461.6 million), an increase of 46% from RMB16,656.0 million in the same quarter of 2023. Non-GAAP² operating profit in the quarter was RMB26,770.5 million (US$3,814.8 million), an increase of 48% from RMB18,125.8 million in the same quarter of 2023.

• Net income attributable to ordinary shareholders in the quarter was RMB24,980.7 million (US$3,559.7 million), an increase of 61% from RMB15,537.1 million in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB27,458.7 million (US$3,912.8 million), an increase of 61% from RMB17,027.1 million in the same quarter of 2023.
  

“Over the past quarter, our focus remained on driving the high-quality development of the platforms,” said Mr. Lei Chen, Chairman and Co-Chief Executive Officer of PDD Holdings. “We are committed to investing consistently and patiently in our platform ecosystem to deliver impactful results over the long run.”

“In the third quarter, we stepped up the investments in our platform ecosystem through merchant support policies and trust and safety updates,” said Mr. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer of PDD Holdings. “High-quality merchants are encouraged to further strengthen their product and service offerings, thereby fostering a virtuous cycle.”

“Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges,” said Ms. Jun Liu, VP of Finance of PDD Holdings. “In our pursuit of high-quality development, we will continue to invest resolutely in building a healthy and sustainable ecosystem, which will be reflected in our results.”

___________________
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 RMB7.0176 to US$1.00, the noon buying rate in effect on September 30, 2024 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.

Third Quarter 2024 Unaudited Financial Results

Total revenues were RMB99,354.4 million (US$14,157.9 million), an increase of 44% from RMB68,840.4 million in the same quarter of 2023. The increase was primarily due to the increase in revenues from online marketing services and transaction services.

• Revenues from online marketing services and others were RMB49,351.0 million (US$7,032.5 million), an increase of 24% from RMB39,687.7 million in the same quarter of 2023.

• Revenues from transaction services were RMB50,003.4 million (US$7,125.4 million), an increase of 72% from RMB29,152.7 million in the same quarter of 2023.
  

Total costs of revenues were RMB39,709.2 million (US$5,658.5 million), an increase of 48% from RMB26,830.2 million in the same quarter of 2023. The increase mainly came from the increased fulfilment fees and payment processing fees.

Total operating expenses were RMB35,352.7 million (US$5,037.7 million), an increase of 39% from RMB25,354.1 million in the same quarter of 2023. The increase was primarily due to the increase in sales and marketing expenses.

• Sales and marketing expenses were RMB30,483.8 million (US$4,343.9 million), an increase of 40% from RMB21,748.5 million in the same quarter of 2023, mainly due to the increased spending in promotion and advertising activities.

• General and administrative expenses were RMB1,805.6 million (US$257.3 million), an increase of 138% from RMB758.3 million in the same quarter of 2023, primarily due to the increase in staff related costs.

• Research and development expenses were RMB3,063.4 million (US$436.5 million), compared with RMB2,847.3 million in the same quarter of 2023.
  

Operating profit in the quarter was RMB24,292.5 million (US$3,461.6 million), an increase of 46% from RMB16,656.0 million in the same quarter of 2023. Non-GAAP operating profit in the quarter was RMB26,770.5 million (US$3,814.8 million), an increase of 48% from RMB18,125.8 million in the same quarter of 2023.

Net income attributable to ordinary shareholders in the quarter was RMB24,980.7 million (US$3,559.7 million), an increase of 61% from RMB15,537.1 million in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB27,458.7 million (US$3,912.8 million), an increase of 61% from RMB17,027.1 million in the same quarter of 2023.

Basic earnings per ADS was RMB18.02 (US$2.57) and diluted earnings per ADS was RMB16.91 (US$2.41), compared with basic earnings per ADS of RMB11.38 and diluted earnings per ADS of RMB10.60 in the same quarter of 2023. Non-GAAP diluted earnings per ADS was RMB18.59 (US$2.65), compared with RMB11.61 in the same quarter of 2023.

Net cash generated from operating activities was RMB27,522.3 million (US$3,921.9 million), compared with RMB32,537.9 million in the same quarter of 2023.

Cash, cash equivalents and short-term investments were RMB308.5 billion (US$44.0 billion) as of September 30, 2024, compared with RMB217.2 billion as of December 31, 2023.

Other non-current assets were RMB74.0 billion (US$10.5 billion) as of September 30, 2024, compared with RMB48.0 billion as of December 31, 2023, which mainly included time deposits, held-to-maturity debt securities, and available-for-sale debt securities.

Conference Call

The Company’s management will hold an earnings conference call at 7:30 AM ET on November 21, 2024 (12:30 PM IST and 8:30 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$”))
		As of
		December 31, 2023		September 30, 2024
		RMB		RMB		US$
				(Unaudited)		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		59,794,469		65,295,431		9,304,524
Restricted cash		61,985,436		60,393,064		8,605,943
Receivables from online payment platforms		3,914,117		4,633,683		660,295
Short-term investments		157,415,365		243,166,321		34,650,924
Amounts due from related parties		7,428,070		9,288,981		1,323,669
Prepayments and other current assets		4,213,015		4,053,807		577,662
Total current assets		294,750,472		386,831,287		55,123,017
Non-current assets
Property, equipment and software, net		979,597		875,513		124,760
Intangible assets		21,148		20,088		2,863
Right-of-use assets		4,104,889		4,820,181		686,870
Deferred tax assets		270,738		272,699		38,859
Other non-current assets		47,951,276		73,974,101		10,541,225
Total non-current assets		53,327,648		79,962,582		11,394,577
Total Assets		348,078,120		466,793,869		66,517,594

PDD HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December 31, 2023		September 30, 2024
		RMB		RMB		US$
				(Unaudited)		(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Amounts due to related parties		1,238,776		1,075,858		153,309
Customer advances and deferred revenues		2,144,610		2,951,591		420,598
Payable to merchants		74,997,252		82,780,215		11,796,086
Accrued expenses and other liabilities		55,351,399		74,404,296		10,602,527
Merchant deposits		16,878,746		16,769,864		2,389,687
Convertible bonds, current portion		648,570		-		-
Lease liabilities		1,641,548		2,015,098		287,149
Total current liabilities		152,900,901		179,996,922		25,649,356
Non-current liabilities
Convertible bonds		5,231,523		5,175,904		737,560
Lease liabilities		2,644,260		3,045,829		434,027
Deferred tax liabilities		59,829		70,294		10,017
Total non-current liabilities		7,935,612		8,292,027		1,181,604
Total Liabilities		160,836,513		188,288,949		26,830,960
Shareholders’ equity
Ordinary shares		177		179		26
Additional paid-in capital		107,293,091		115,424,865		16,447,912
Statutory reserves		105,982		105,982		15,102
Accumulated other comprehensive income		4,723,760		2,867,422		408,604
Retained earnings		75,118,597		160,106,472		22,814,990
Total Shareholders’ Equity		187,241,607		278,504,920		39,686,634
Total Liabilities and Shareholders’ Equity		348,078,120		466,793,869		66,517,594

PDD HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands of RMB and US$)
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues		68,840,371			99,354,401			14,157,889			158,758,169			283,225,991			40,359,381
Costs of revenues		(26,830,233	)		(39,709,214	)		(5,658,518	)		(56,645,305	)		(106,101,998	)		(15,119,414	)
Sales and marketing expenses		(21,748,449	)		(30,483,800	)		(4,343,907	)		(55,550,346	)		(79,943,592	)		(11,391,871	)
General and administrative expenses		(758,345	)		(1,805,576	)		(257,293	)		(2,170,780	)		(5,467,571	)		(779,123	)
Research and development expenses		(2,847,323	)		(3,063,353	)		(436,524	)		(8,087,944	)		(8,882,183	)		(1,265,701	)
Total operating expenses		(25,354,117	)		(35,352,729	)		(5,037,724	)		(65,809,070	)		(94,293,346	)		(13,436,695	)
Operating profit		16,656,021			24,292,458			3,461,647			36,303,794			82,830,647			11,803,272
Interest and investment income, net		2,127,356			5,416,080			771,785			5,878,696			15,320,261			2,183,120
Interest expenses		(12,208	)		-			-			(35,832	)		-			-
Foreign exchange gain/(loss)		94,860			(547,343	)		(77,996	)		234,540			(272,660	)		(38,854	)
Other income, net		290,384			18,606			2,651			2,624,375			2,393,112			341,016
Profit before income tax and share of results of equity investees		19,156,413			29,179,801			4,158,087			45,005,573			100,271,360			14,288,554
Share of results of equity investees		(105,811	)		2,513			358			10,359			(99,500	)		(14,179	)
Income tax expenses		(3,513,480	)		(4,201,620	)		(598,726	)		(8,269,697	)		(15,183,985	)		(2,163,701	)
Net income		15,537,122			24,980,694			3,559,719			36,746,235			84,987,875			12,110,674

PDD HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended September 30,						For the nine months ended September 30,
		2023		2024				2023		2024
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net income		15,537,122		24,980,694		3,559,719		36,746,235		84,987,875		12,110,674
Net income attributable to ordinary shareholders		15,537,122		24,980,694		3,559,719		36,746,235		84,987,875		12,110,674
Earnings per ordinary share:
-Basic		2.84		4.51		0.64		6.81		15.37		2.19
-Diluted		2.65		4.23		0.60		6.28		14.37		2.05
Earnings per ADS (4 ordinary shares equals 1 ADS):
-Basic		11.38		18.02		2.57		27.24		61.48		8.76
-Diluted		10.60		16.91		2.41		25.13		57.49		8.19
Weighted-average number of outstanding ordinary shares (in thousands):
-Basic		5,462,542		5,543,633		5,543,633		5,395,211		5,529,090		5,529,090
-Diluted		5,865,102		5,909,793		5,909,793		5,853,748		5,913,666		5,913,666

PDD HOLDINGS INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)
		For the three months ended September 30,						For the nine months ended September 30,
		2023		2024				2023		2024
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenues
- Online marketing services and others		39,687,678		49,351,022		7,032,465		104,864,935		140,923,131		20,081,386
- Transaction services		29,152,693		50,003,379		7,125,424		53,893,234		142,302,860		20,277,995
Total		68,840,371		99,354,401		14,157,889		158,758,169		283,225,991		40,359,381

PDD HOLDINGS INC.
NOTES TO FINANCIAL INFORMATION
(Amounts in thousands of RMB and US$)
		For the three months ended September 30,						For the nine months ended September 30,
		2023		2024				2023		2024
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Share-based compensation expenses included in:
Costs of revenues		20,422		44,725		6,373		86,066		99,945		14,242
Sales and marketing expenses		464,950		650,106		92,639		1,943,049		1,960,478		279,366
General and administrative expenses		355,053		1,158,615		165,102		1,058,914		3,655,344		520,882
Research and development expenses		629,394		624,559		88,999		1,805,821		1,763,542		251,303
Total		1,469,819		2,478,005		353,113		4,893,850		7,479,309		1,065,793

PDD HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$)
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net cash generated from operating activities		32,537,857			27,522,313			3,921,898			57,271,860			92,382,132			13,164,348
Net cash used in investing activities		(4,820,500	)		(16,898,558	)		(2,408,025	)		(38,960,607	)		(87,810,779	)		(12,512,936	)
Net cash generated from financing activities		385			132			19			7,671			890			127
Effect of exchange rate changes on cash, cash equivalents and restricted cash		201,058			(1,052,321	)		(149,955	)		733,918			(663,653	)		(94,570	)
Increase in cash, cash equivalents and restricted cash		27,918,800			9,571,566			1,363,937			19,052,842			3,908,590			556,969
Cash, cash equivalents and restricted cash at beginning of period		83,434,459			116,116,929			16,546,530			92,300,417			121,779,905			17,353,498
Cash, cash equivalents and restricted cash at end of period		111,353,259			125,688,495			17,910,467			111,353,259			125,688,495			17,910,467

PDD HOLDINGS INC.
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES
(Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended September 30,						For the nine months ended September 30,
		2023		2024				2023		2024
		RMB		RMB		US$		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Operating profit		16,656,021		24,292,458		3,461,647		36,303,794		82,830,647		11,803,272
Add: Share-based compensation expenses		1,469,819		2,478,005		353,113		4,893,850		7,479,309		1,065,793
Non-GAAP operating profit		18,125,840		26,770,463		3,814,760		41,197,644		90,309,956		12,869,065
Net income attributable to ordinary shareholders		15,537,122		24,980,694		3,559,719		36,746,235		84,987,875		12,110,674
Add: Share-based compensation expenses		1,469,819		2,478,005		353,113		4,893,850		7,479,309		1,065,793
Add: Interest expenses related to convertible bonds’ amortization to face value		12,208		-		-		35,832		-		-
Add: Loss from fair value change of certain investments		7,935		2		-		746,915		25,456		3,627
Non-GAAP net income attributable to ordinary shareholders		17,027,084		27,458,701		3,912,832		42,422,832		92,492,640		13,180,094
Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands)		5,865,102		5,909,793		5,909,793		5,853,748		5,913,666		5,913,666
Diluted earnings per ordinary share		2.65		4.23		0.60		6.28		14.37		2.05
Add: Non-GAAP adjustments to earnings per ordinary share		0.25		0.42		0.06		0.97		1.27		0.18
Non-GAAP diluted earnings per ordinary share		2.90		4.65		0.66		7.25		15.64		2.23
Non-GAAP diluted earnings per ADS		11.61		18.59		2.65		28.99		62.56		8.92

FAQ

What was PDD's revenue growth in Q3 2024?

PDD's total revenues grew 44% year-over-year to RMB99,354.4 million (US$14,157.9 million) in Q3 2024.

How much did PDD's net income increase in Q3 2024?

PDD's net income increased 61% year-over-year to RMB24,980.7 million (US$3,559.7 million) in Q3 2024.

What was PDD's cash position as of September 30, 2024?

PDD held RMB308.5 billion (US$44.0 billion) in cash, cash equivalents and short-term investments as of September 30, 2024.

How much did PDD's transaction services revenue grow in Q3 2024?

PDD's transaction services revenue grew 72% year-over-year to RMB50,003.4 million in Q3 2024.