PDD Holdings, the parent company of discount e-commerce platforms Temu and Pinduoduo, announced its fourth-quarter financial report on Monday, with revenue increasing 46% year-over-year.
Revenue for the quarter ended December 31 came in at 39.82 billion yuan ($5.79 billion), below expectations of 41.01 billion yuan.
The increase was primarily due to an increase in revenues from online marketing services and transaction services, partially offset by the decrease in revenues from merchandise sales.
Revenues from online marketing services and other were approximately $31 billion ($4.5 billion), up 38% from $22.4 billion in the same quarter of 2021. Revenues from transaction services were $8.8 billion ($1.27 billion), up 86% from $4.72 billion in the same quarter of 2021. Revenue from merchandising was $58.2 million ($8.4 million), a 29% decrease from $81.7 million in the same quarter of 2021.
While PDD's revenue growth was lower than expected, it outperformed its Chinese competitors. By comparison, JD.com's revenue grew 7.1% in the fourth quarter, while Alibaba's revenue grew 2%.
China's total retail sales contracted 1.8% in December, while the country's economic growth in 2022 slumped to one of its worst levels in half a century.
To support consumption and recovery, the company offered various forms of promotions and subsidies and increased advertising spending in fourth quarter. Consequently, sales and marketing expenses surged to $17.3 billion, an increase of 59% compared to the same quarter in 2021.
While PDD did not detail its sales and marketing allocations, one of its priorities in the fourth quarter was to expand the presence of its cross-border e-commerce business, Temu.
First launched in the US in September, Temu focuses on selling low-priced, made-in-China products. Driven by bargain-hunting consumers, the app has been No. 1 in the shopping category of the App Store for months, surpassing Amazon and Shein.
According to data analysis by YipitData, Temu's gross merchandise value (GMV) grew from $3 million in September to $192 million in January. In 2023, the platform plans to expand its operations to Canada, Australia, New Zealand, and the UK.
“Given its early stage nature, financial impact from this business in fourth quarter is relatively small...We are entering new markets, we need to understand customer demand better, and experiment how to meet their demand effectively," Liu Jun, VP of Finance, said during the earnings call.
On Tuesday, Google suspended the Chinese e-commerce app Pinduoduo from downloading on its Play store due to security concerns after finding malware issues on off-Play versions.
"Off-Play versions of this app that have been found to contain malware have been enforced on via Google Play Protect," the spokesperson said in a statement, adding that the Play version of the app has been suspended for security concerns.
A spokesperson for Pinduoduo confirmed the suspension, saying the company has not received any further details from Google.
There are several other apps that have been suspended by Google Play, Pinduoduo said, adding that there are multiple reasons an app is temporarily suspended.
As of now, Temu has not been affected by any such suspension.