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Ecommerce Pinduoduo

China's Fastest-Growing Ecommerce Platform Pinduoduo Reports Strong Revenue but Heavy Losses

By: Ran Yu · M.E. Strickland March 14, 2019 9:28 am

BEIJING (PingWest) - China's fastest-growing ecommerce company, Pinduoduo Inc. (“Pinduoduo” or “PDD”) (NASDAQ: PDD), on Wednesday announced its unaudited financial results for the fourth quarter and fiscal year ended December 2018. 

For the Fourth Quarter 2018:

Total revenues were 5.65 billion RMB ($822.3 million), an increase of 379% from 1.18 billion RMB in the same quarter of 2017. The rise was primarily due to an increase in revenues from online marketing services.

Total costs of revenues were 1.42 billion RMB ($207.1 million), an increase of 281% from 374.0 RMB million in the same quarter of 2017. The financial report says the increase from last year is mainly due to higher costs for cloud services, PDD’s call center, and merchant support services.

GMV in the twelve-month period ended December 31, 2018 was 471.6 billion RMB ($68.6 billion), an increase of 234% from 141.2 RMB billion in the twelve-month period ended December 31, 2017. Huang Zheng, chairman and CEO of PDD, said it was driven by the rapid growth in PDD’s annual active buyer base and a near doubling in the annual spending per active buyer.

PDD’s operating loss, however, was 2.64 billion RMB ($384.1 million), up 11,500% on a year-on-year basis. Net loss attributable to ordinary shareholders was 2.42 billion RMB ($352.5 million), up 17,700% year-on-year compared with 13.6 million RMB in the same quarter of 2017. 

Total operating expenses were 6.87 billion RMB ($999.3 million), with an increase of 730% year-on-year compared with 828.1 million RMB in the same quarter of 2017.

For the FY 2018:

Total revenues were 5.65 billion RMB ($822.3 million), an increase of 379% from 1.18 billion RMB in the same quarter of 2017. The report says the increases were primarily due to an increase in revenues from online marketing services.

Total costs of revenues were 1.42 billion RMB ($207.1 million), up 281% year-on-year.

Net loss attributable to ordinary shareholders was 10.3 billion RMB ($1,497.7 million), up 570% year-on-year. Non-GAAP net loss attributable to ordinary shareholders was 3.46 billion RMB ($502.7 million), up 828% year-on-year compared with 372.2 million RMB in 2017.

Operating loss was 2.64 billion RMB ($384.1 million), up 11,500% year-on-year.

Shares in PDD plummeted by more than 17% after the company’s announcement.

In the earnings conference call on Wednesday, Huang Zheng announced that Pinduoduo is to set up a technology advisory panel to build AI networks and tailor recommendations for the company’s users through machine learning. The advisory panel will be led by Lu Qi, who was previously the Vice Chairman of the Board of Directors of Baidu and Microsoft’s Global EVP.

As to counterfeit accusations from manufacturers, Huang Zheng said Pinduoduo has been tackling counterfeiting in 2018 and will continue the important fight against counterfeits and IP infringement in 2019 and beyond.

(Cover image from Financial Times)

Ecommerce Pinduoduo