PDD Holdings Q4 Profit Rises 43%, while Shares Plunge

Consumer Staples Author: Yiru Qian Mar 21, 2023 12:08 PM (GMT+8)

PDD is speeding up making money and presence on the global stage; however, investors are still not buying it.


China's e-commerce heavyweight in the low-price segment PDD (NASDAQ: PDD) announced on March 20 its unaudited financial results for the fourth quarter and the fiscal year ended December 31, 2022.

This Nasdaq-listed company’s revenue ballooned over 46% to CNY 39.82 billion (USD 5.77 billion) in the fourth quarter of FY2022. Specifically, the revenues from online marketing services and others were CNY 30.97 billion, a 38% uplift from last year. Revenues from transaction services and merchandise sales were CNY 8.8 billion (up 86% YoY) and CNY 58.2 million (down 29% YoY).

The operating profit increased 32% year on year to CNY 9.11 billion (USD 1.32 billion) in the quarter, with Q4 net income attributable to ordinary shareholders reaching CNY 9.45 billion (USD 1.37 billion), up 38% from last year.

While the group’s total operating expenses also went up 57% to CNY 21.78 billion (USD 3.18 billion). Of that, CNY 17.73 billion went into sales and marketing expenses, which climbed 56%.

For the full year, PDD’s total revenue stood at CNY 130.56 billion (USD 18.93 million), representing a jump of 39% compared to 2021.

The operating profit totaled CNY 30.4 billion (USD 4.41 billion), a massive 341% leap.

“We continued our technology focus with our annual R&D spending exceeding CNY 10 billion,” said Ms. Jun Liu, VP of Finance of PDD Holdings. “We will further step up our investments in technology to drive sustainable growth of our company.”

However, in the posted financial results, the research and development expenses for the full year only took account of 15.12%, where 80% of operating spending was invested in promotion and advertising activities

PDD Holdings launches Temu in the United States on September 1, 2022, an online cross-border marketplace that has been in the spotlight globally. And up to now, Temu has landed in several key overseas markets, including but not limited to Australia, Africa and New Zealand. It was also reported to launch in the UK on March 25 to further glam up its global presence, sources said.

Interestingly, the quarterly results didn't seem to satisfy the investors and prompted the selling of shares, whose stock prices dropped 14% since the news release. As of press time, PDD closed at USD 78.91, with a market cap of USD 99.77 billion.