Q3 2022 Pinduoduo Inc Earnings Call
Speaker 2: Ladies and gentlemen.
Speaker 2: Thank you for standing by.
Speaker 2: Welcome to PDD's third quarter 2022 earnings conference call.
Speaker 2: At this time, all participants are in the listen-only mode. There will be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you will need to press star 1 on your telephone. I must advise you that this conference call is being recorded today. I would now like to hand the conference over to your host today, Mr. Cheng Pen. So please go ahead. Thank you, operator. Hello, everyone, and thank you for joining us today. My name is Cheng, and I will help host the earnings call. PDD earnings release was distributed earlier and is available on our website at investor.pdholdings.com, as well as through Globe News Lab services.
Speaker 2: Before we begin, I would like to refer you to our Safe Harbor statement in earnings press release which applies to this call as we will make certain forward-looking statements.
Speaker 2: Also, this call includes discussions of certain non-GAAP financial measures.
Speaker 2: So please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to GAAP measures.
Speaker 2: Joining us today on the call are Chen Lei, our Chairman and Chief Executive Officer. Dao Jing, our VP of Finance.
Speaker 2: Lei will make some general remarks on our performance for the past quarter and our strategic focus.
Speaker 2: Drink will then take us through our financial results for the 3rd quarter ended September 30th, 2022.
Speaker 2: During the Q&A session, they will answer questions in Chinese, and I will help translate.
Speaker 2: Please kindly note that all translations provided are for reference purposes only.
Speaker 2: In case of any discrepancy between the original remarks and the translated version, statements in the original language should prevail.
Speaker 2: Now, it is my pleasure to introduce our Chairman and Chief Executive Officer, Chen Lei. Lei, please go ahead.
Speaker 3: Thank you, Ted, and hello everyone.
Speaker 3: Thank you all for joining our 3 Q2 022 earnings call.
Speaker 3: Let me start by giving a brief overview of our third quarter results.
Speaker 3: Our total revenue for this quarter.
Speaker 3: with RMB 35.5L.
Speaker 3: This represents a year-on-year increase of 65%.
Speaker 3: Over to Task Order.
Speaker 3: We work closely with our immersion partners to serve our customers.
Speaker 3: We continue to provide our users with an enjoyable and affordable shopping experience.
Speaker 3: to meet their growing demand for high quality and valuable money products.
Speaker 3: During the past few months, many product categories such as agriculture, consumer electronics, beauty and cosmetics,
Speaker 3: They all enjoyed positive consumer feedback.
Speaker 3: Many brands joined Pin Zhaodong and extended our consumers their best deals.
Speaker 3: We are happy to keep creating value for our consumers.
Speaker 3: By the meanwhile, we still have many areas to improve and the color industry competition remains intact.
Speaker 3: We need to continue to deepen our value creation.
Speaker 3: increase our R&D investment to help further improve the supply chain efficiency.
Speaker 3: support upgrade of the PRI-side.
Speaker 3: and facilitate agricultural digital inclusion.
Speaker 3: We celebrated our seventh anniversary last month.
Speaker 3: And we are extremely grateful for the support and the support that we have from our consumers, merchants, farmers, and society.
Speaker 3: and we will continue to upload our core values of putting people first.
Speaker 3: by defeating all and being more open so that we can create lasting value.
Speaker 3: and be more open so that we can create lasting value for all the stakeholders.
Speaker 3: Technology is at the heart of our value creation.
Speaker 3: Through the very beginning, we committed to introducing technology to improve the efficiency of supply chain and create value for all the parties through digitalization.
Speaker 3: In the past year or so,
Speaker 3: We increase our investment in technology and focus on driving innovation through research and development.
Speaker 3: We have built a young, energetic, innovative team with strong technology backgrounds.
Speaker 3: And we are encouraged to see that our investment in technology is creating positive impacts to society.
Speaker 3: in agriculture.
Speaker 3: We keep promoting our holistic approach to digitalize the agricultural sector.
Speaker 3: so that more and more people can benefit from advances in science and technology.
Speaker 3: Our approach in agriculture is a holistic way of creating inclusive growth.
Speaker 3: I'll have a look at the resources of Q2O.
Speaker 3: We hope that more farmers will adopt agricultural technology to improve their productivity.
Speaker 3: and put their farming practices
Speaker 3: in a more sustainable future.
Speaker 3: The Harvest Festival last quarter is a good example of this approach.
Speaker 3: In September , Tinduoduo launched a dedicated orbit abelian on the platform.
Speaker 3: to support annual harvest festival.
Speaker 3: as its exclusive e-commerce platform partner.
Speaker 3: Last team, three months.
Speaker 3: The harvest pavilion features over half a million types of agricultural products across the country.
Speaker 3: We write a market for farmers by bringing them into digital economy.
Speaker 3: The millions of consumers also make it more feasible.
Speaker 3: to implement agricultural technology.
Speaker 3: Farmers are more willing to plant improved crops.
Speaker 3: If they have confidence that consumers will buy them.
Speaker 3: during the harvest festival.
Speaker 3: We worked with CCTV and a single professor.
Speaker 3: for the Chinese Academy of Agricultural Sciences.
Speaker 3: and the China Agricultural University to promote agricultural technology.
Speaker 3: For example, we introduced a new variety of sweet potatoes that are less prone to disease
Speaker 3: Divided by the research institute.
Speaker 3: The Tintozol platform helps this new sweet potato to reach more consumers nationally.
Speaker 3: And this crop is now grown in many parts of China and is available year-round.
Speaker 3: Its success has helped many farmers to prosper.
Speaker 3: This is a good example of how market demand can bring more science out of the lab and into the field. This is a good example of how market demand can bring more science out of the lab and
Speaker 3: We are committed to using the Pingdoodle platform for consumers to discover new agricultural targets.
Speaker 3: so that they can enjoy healthier and more nutritious food.
Speaker 3: Do you have it accessible?
Speaker 3: We also showcase a series of new and improved wheat varieties cultivated by China Agricultural University.
Speaker 3: with the support of our 10 billion agriculture initiative.
Speaker 3: These wheat varieties have higher yield, higher quality.
Speaker 3: and are more resistant to disease.
Speaker 3: In addition, we continue to support various events to promote the adoption of agricultural technology.
Speaker 3: Our flagship smart agriculture competition is currently underway in Shanghai.
Speaker 3: This is an annual precision farming contest.
Speaker 3: and as in-class researchers to develop practical technology.
Speaker 3: We are partnering with China Agricultural University and Dejiang University for this competition.
Speaker 3: with the technical support from FAO China and the Shanghai Academy of Agricultural Scientists.
Speaker 3: of the competition this year is vertical farming.
Speaker 3: Participation terms will compete to produce letters in shipping containers.
Speaker 3: using lightning.
Speaker 3: cross-modeling algorithms to control input variables.
Speaker 3: Several participating teams from the first two editions have already implemented their technology in a working fund.
Speaker 3: as well as on large scale pilots to scale the solution.
Speaker 3: We hope that this initiative can inspire more young researchers to learn about the
Speaker 3: bring more research findings to the market.
Speaker 3: It's a polar development of agriculture.
Speaker 3: In the same way, we are improving agricultural digitization.
Speaker 3: We are helping to upgrade real economy enterprises and manufacturers
Speaker 3: by connecting them directly with the end consumer.
Speaker 3: Our pioneering team purchase model can quickly and directly connect demand supply to gathering consumer demand. honk and benefits to offer and could be taken by factor to which a
Speaker 3: We have leveraged digital technology to shorten the product environment cycle.
Speaker 3: and help manufacturers create products.
Speaker 3: They are closely matched market news.
Speaker 3: This can help manufacturers to build their brand.
Speaker 3: And in the past seven years, we have helped incubate nearly 1,000 manufacturing brands through technology.
Speaker 3: And since the beginning of this year,
Speaker 3: We have launched several activities to support the manufacturing industry.
Speaker 3: For example, this year we launched a new cross-mechanics campaign.
Speaker 3: to help local craftsmen and their manufacturers find a bigger market for their products through e-commerce.
Speaker 3: And we have allocated dedicated resources to support high quality local products.
Speaker 3: and help small enterprises upgrade their branding.
Speaker 3: The new Craftsman program is now in many regions across the country.
Speaker 3: helping local manufacturers to build their brand.
Speaker 3: We hope to use the pin noodle platform to help more of these undiscovered manufacturers reach more potential buyers.
Speaker 3: The increased demand and exposure also benefits the local community through more income and more job opportunities.
Speaker 3: We entered our 8th year of operation.
Speaker 3: We remain passionate and excited about the future.
Speaker 3: We are a young company with a team full of drive and energy.
Speaker 3: and we will constantly explore areas to create positive value through technology.
Speaker 3: There is that. Xing will take us through the financial.
Speaker 4: Thank you, Le.
Speaker 5: Hello everyone.
Speaker 5: I will go through our performance in the quarter ended September 30, 2022.
Speaker 5: In terms of P&L, our total revenues in a quarter were RMB 35.5 billion.
Speaker 5: 65.1% from RMB21.5 billion in the same quarter of 2021.
Speaker 5: This was mainly driven by an increase in revenues from online marketing services and transaction services.
Speaker 6: Thank you.
Speaker 5: Revenants from online marketing services and others.
Speaker 5: for RMB28.4 billion this quarter.
Speaker 5: 58.4%.
Speaker 5: compared with the same period of 2021.
Speaker 5: This was primarily due to an increase in merchant activities in Q3.
Speaker 5: Our transaction services revenue this culture will RMB 7 billion.
Speaker 5: up 103% versus the same period of 2021.
Speaker 5: only cost you any expenses.
Speaker 5: Our total cost of revenues increased 13% from RMB 6.6 billion in Q3 2021 to RMB 7.4 billion during the fiscal year.
Speaker 5: Total operating expenses this quarter were RMB 17.6 billion.
Speaker 5: versus RMB12.8 billion in the same quarter of 2021.
Speaker 5: Our investment in certain projects, including a few agriculture-related projects,
Speaker 5: which affected in Q3.
Speaker 5: As such, our total operating expenses as a percentage of our total revenues have declined from 59.6% in Q3 2021 to 49.7% in this quarter.
Speaker 5: Looking into specific expense items.
Speaker 5: Our non-GAAP sales in the marketing expenses in this culture warrant 13.4 billion.
Speaker 5: of 39% versus the same quarter of 2021.
Speaker 5: On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenue this quarter was 37.9%.
Speaker 5: compared with 44.9% for the same quarter in 2021.
Speaker 5: non-GAAP general and administrative expenses were RMB 226.3 million.
Speaker 5: This is RMB 178.1 million, Semakutta 2021.
Speaker 5: million gap research and development expenses for RMB 2.1 billion.
Speaker 5: An increase of 15% from RMB 1.9 billion in the same quarter of 2021.
Speaker 5: The increase was primarily due to an increase in head count and the recoulements of moisture and their nutrients aren't arc insomnia.
Speaker 5: We're committed to growing our R&D capabilities.
Speaker 5: and we step up our spending to drive innovation on our platform.
Speaker 5: So as to button-mate evolving consumer needs, a later foundation for sustainable growth.
Speaker 5: In the area of agriculture, we will continue to deepen our investment in every tag and promote its adoption.
Speaker 5: Technology is also key to increasing supply chain efficiency and helping facilitate the development of manufacturing industry.
Speaker 5: Operating profit for the culture with RMB 10.4 billion on a gap basis.
Speaker 5: compared with operating profit of RMB 2.1 billion in the same quarter of 2021.
Speaker 5: non-GAAP operating profit was RMB 12.3 billion.
Speaker 5: versus RMB 3.3 billion in the same quarter of 2021.
Speaker 5: Next income attributable to ordinary shareholders was RMB 10.6 billion.
Speaker 5: with RMB 1.6 billion in the same quarter of 2021.
Speaker 5: Base earnings per ADS was RMB8.38 and diluted earnings per ADS was RMB7.34.
Speaker 5: versus basic anions per ADH of RMB1.31 and dilute anions per ADH of RMB1.15 in the same quarter of 2021.
Speaker 5: Non-get net income by 2 billion to ordinary shareholders with earning 12.4 billion.
Speaker 5: compared with RMB 3.1 billion in the same quarter last year.
Speaker 5: Non-gap diluted earnings per ADS was RMB8.62 versus RMB2.18 in the same quarter of 2021.
Speaker 5: In summary, we think that current level of profitability in Q3 is temporary and unlikely to maintain.
Speaker 5: On the one hand, the reinvestment in certain projects was affected in the last quarter.
Speaker 5: On the other hand,
Speaker 5: We continue to see good user engagement, which contributed to revenue growth.
Speaker 5: This shows that our financial and business cycles are not always in sync.
Speaker 5: We plan to increase our investment to further drive innovations on our platform and strengthen our core capabilities.
Speaker 5: As such.
Speaker 5: We think it is unlikely that the proven level of the past quarter can be maintained.
Speaker 5: Conquers to profit and loss demons for the third quarter 2022.
Speaker 5: Now let me move on to cash flow.
Speaker 5: Our net cash flow generated from operating activities
Speaker 5: with RMB top 11.7 billion.
Speaker 5: Compiled with RMB 8.7 billion in the semi-quarter of 2021.
Speaker 5: primarily due to the increase in net income and changes in working capital.
Speaker 5: September 30, 2022.
Speaker 5: The company had RMB 137.8 billion in cash, cash-off coins and short-term investments.
Speaker 5: Thank you. This concludes my prepared remarks.
Speaker 2: Thank you, Jay.
Speaker 2: Next, we will move on to the Q&A session.
Speaker 2: For today's Q&A session, we will be discussing the
Speaker 2: Lei and Jun will take questions from analysts on the line.
Speaker 2: We could take a maximum of two questions, panelists.
Speaker 2: Lei will answer questions in Chinese and I will help translate Lei's remarks for ease of reference.
Speaker 2: Operator, we may now take questions on the line.
Speaker 2: Thank you very much.
Speaker 2: Ladies and gentlemen, we will now begin the question and answer session.
Speaker 2: If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.
Speaker 2: If you wish to cancel your request, please press pound or hash key.
Speaker 2: Participants are requested to restrict two questions at each time.
Speaker 1: Thank you.
Speaker 2: The first question comes from the line of Joyce Yu from Bank of America. Please go ahead.
Speaker 7: Thanks, management, for taking my question.
Speaker 7: I have two questions.
Speaker 7: My first question is, your online marketing services revenue this quarter delivered a faster growth rate than last quarter.
Speaker 7: What is the reason for this reaccelerated growth in the third quarter? How should we understand the growth rate momentum in the future?
Speaker 7: And the second question is, could management share the latest updates on your international initiative?ca
Speaker 7: Could you share your views or any takeaways at this stage? Does the current level of development meet the management's original expectation?
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Speaker 1: I appreciate it.
Speaker 3: Jefferson. Thank you for your attention.
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Speaker 2: Joyce, so let me take your two questions with regards to your first question on growth.
Speaker 2: During the third quarter, we worked closely with our merchants to create value for our consumers.
Speaker 2: And we keep bringing our consumers more savings, more fun shopping experience in the PingoDoll platform. And we adopted different methods including coupons and also promotional events to better serve our consumers.
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Speaker 3: We hope to see the future of the world as a whole. We hope to see the future of the world as a whole.
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Speaker 2: And at the same time, we saw that our consumers demand for high quality products are growing.
Speaker 2: we actively make efforts to satisfy their demand. And this year, more and more brands have started to cooperate with us.
Speaker 2: they provide more choices for consumers and categories such as agricultural produce electronics.
Speaker 2: home appliances, as well as cosmetics. These categories have received positive consumer feedback.
Speaker 2: and we are grateful toward the trust our consumers placing us.
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Speaker 2: But in the meanwhile, we should see that industry competition is still intense. And also consumer preferences and demand become more and more diversified.
Speaker 2: So we do have many areas to improve. And the impact of our overall investment activity, in fact is not beneficial to our long term competitiveness.
Speaker 2: So in the future, we will continue to step up investments.
Speaker 2: and we will invest to better understand our consumers' needs and serve them better. And we will also need to continue to immerse ourselves deeply in the real economy and invest in technology R&D.
Speaker 2: to help improve the efficiency of the agriculture, as well as the manufacturing sector. These would support our high quality development over the long run.
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Speaker 3: Thank you.
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Speaker 2: And as for your second question for our international business.
Speaker 2: In our last quarter's earnings conference call, we share with you the international business that we are working on. And I believe that many of you may have noticed that we rolled out our international marketplace in September .
Speaker 2: and it has just been a few months since we started this business.
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Speaker 2: And for our team, the international business is a new area to explore. And we will start from the fundamental needs of consumers and apply the operation and supply chain know-how and experiences.
Speaker 3: Thank you for your attention.
Speaker 3: And we'll move on to the next research session, then we'll come back to this.
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Speaker 2: And also, we fully respect that there are many differences across different markets.
Speaker 2: And we also understand the need to constantly experiment. And we expect that the process will be full of challenges.
Speaker 2: So we will be patient and work together with our partners to create long term value for consumers.
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Speaker 2: Currently, we are still in the early stage of exploration. We have many areas to improve in terms of the services that we provide. We need to learn and also optimize.
Speaker 2: the process itself will take time, but I'm pretty certain that the experience that we gain along the way will be very valuable for our company and also for our team. Thank you.
Speaker 2: So operator, we are ready to move on to the next question.
Speaker 2: Thank you. The next question is from the line of Thomas Zhuang from Jefferies. Please go ahead.
Speaker 3: I would like to ask the following questions to the members of the team. Thanks management for taking my questions. My first question is related to the main drivers behind this quarter's revenue growth.
Speaker 3: If we further break down the revenue to GMV and tick rate, can you share more about the trend in these two factors? Also, have you changed the tick rate policy for merchants on your platform? And then I have another quick follow up.
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Speaker 3: Apart from takeaway to policies, I'm also wondering, for merchants and the industry upstream, can you also help to share if you have support measures and policies? Could management share more about your progress and the pain in this area? Thank you.
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Speaker 2: Hi Thomas, so let me address your second question around our support for the manufacturing sector and the supply chain first.
Speaker 2: So from the beginning, we have been leveraging our technical background to help and improve the efficiency in the manufacturing sector. And the team purchase model that we pioneered and aggregates order and the...
Speaker 2: connect the demand side and the supply side directly. And this helps manufacturers reduce the intermediary layers, help them directly reach out to consumers. And in the process, it helps the brand create
Speaker 2: their own brand for manufacturers. So over the past seven years, Pinduoduo has helped to build up nearly 1,000 brands through technology and we are growing up with many manufacturers together.
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Speaker 2: In addition, we also provide one-stop digital solutions covering the entire value chain to our manufacturing partners.
Speaker 2: in order to help traditional manufacturers and factories to go through digital transformation.
Speaker 2: and we cooperate with the manufacturers on product designs and adjustments.
Speaker 2: This significantly lowers the cost and reduces the uncertainty during the R&D and also production processes.
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Speaker 2: And all of these that we have done also help consumers get quality products with savings.
Speaker 2: and we can generate value for consumers in the process.
Speaker 2: This in turn can create a virtual cycle amongst consumers, our manufacturing partners, and also the Pinduoduo platform.
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Speaker 8: Thank you for listening.
Speaker 2: And this year we have introduced several dedicated initiatives to support manufacturers with technology. This includes many industries such as consumer appliances, apparel,
Speaker 2: And this year we have introduced several dedicated initiatives to support manufacturers with technology. This includes many industries such as consumer appliances, apparel, sports.
Speaker 2: cosmetics, home care, as well as furniture.
Speaker 2: and we will continue to invest in this area to improve the efficiency of the supply chain. Thank you.
Speaker 5: Thanks, Thomas. I will take your first question about the GMV. In the third quarter, we worked closely with our merchants to serve our consumers and improve their shopping experience. As the consumer activities and engagement grow, we think the merchants are naturally coming to our platform for it.
Speaker 5: growth and opportunities. And for financial metrics such as GMV and revenue, they are mainly the reflection of the value we create.
Speaker 5: So for us, the most important thing is to constantly increase value creation.
Speaker 5: We will continue to invest to deeper use of much engagement and further build up our technology capabilities.
Speaker 5: This will lay the foundation for our long-term development. Thanks.
Speaker 2: We can move to the next panelist in line.
Speaker 2: Thank you. The next questions come from Eli Zhang from Aquari. Please go ahead.
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Speaker 7: Let me translate my question. First, could management talk about the latest industry trends, including what we saw in the fourth quarter to date?
Speaker 7: the impact for the third quarter and what level of investment do you expect to make going forward. Thank you.
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Speaker 2: Hi, Ellie. So let me take your question on industry transfers. So for this question, we always start from consumers fundamental needs.
Speaker 2: and we hope to create value for consumers each single day throughout the year. And I think it is the core driver for the industry and also for ourselves.
Speaker 2: And we also fully understand that to improve consumer experience and deepen their trust in us, it takes time and it is a gradual process.
Speaker 2: And for a shopping festival and promotion, they are just one of the many ways to serve our consumers well.
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Speaker 2: And we hope that consumers can get more savings and more fun from shopping on Pinduoduo. So when we plan shopping festivals and events, we remain consumer centric and we use simple rules.
Speaker 2: to provide consumers with an enjoyable shopping experience.
Speaker 2: This year we have cooperated with many brands as well as merchants to bring more quality products to consumers in order to satisfy their diversified needs across different categories and in different consumption scenarios.
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Speaker 2: And at the same time, if we look at the industry, we do see the competition remains intense.
Speaker 2: and we need to invest patiently in the supply side.
Speaker 2: And we need to step up our investment in technology and innovations to further improve the overall supply chain efficiency. We need to support the development of the agriculture sector and also the manufacturing sector. These would essentially enable us to...
Speaker 2: better serve our consumers increasing demand for quality of product.
Speaker 2: serve our consumers increasing demand for quality products. Thank you.
Speaker 5: Thanks, Ellie. I will take your question about the financial statements on our international initiative. Well, first of all, our international business is currently in a very early stage. We are in a very early stage. We are in a very early stage. We are in a very early stage.
Speaker 5: it should still go through constant trials. For us, we focus on how to create unique value. We believe that financial metrics are the natural results from the value that we create.
Speaker 5: and the international business still very early as I just mentioned. So if current impact on our financial numbers is small,
Speaker 5: And as with any other part of the business, we carefully evaluate the ROI of every investment. Thank you.
Speaker 2: Operator, we can move on to the next session.
Speaker 2: Thank you. The next question comes from Kenneth Fong from Credit Suisse. Please go ahead.
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Speaker 3: Thank you management for taking my question. May management share about the latest thoughts and developments in agriculture. Are there any cases or projects that you're putting resources into? What are the latest financial impact on your financial statement? And also for your 10 billion agriculture initiative, is there any update to share?
Speaker 2: And my second question is about profitability. We have deliver profitability for sixth quarter in a row.
Speaker 2: We have also noticed that many of your peers have started to focus more on cost control and efficiency improvement So does your profitability for the past quarter mean you have started to pursue a similar strategy? And should we expect a similar level of profitability to continue over the next quarter? Thank you
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Speaker 8: Ladies and gentlemen, We are now going to take a short break. We will now take a short break. We will now take a short break.
Speaker 8: This video will convey the new moment lamp. Please subscribe to our channel and share this video with your friends.
Speaker 8: Thank you very much.
Speaker 2: Hi, Kenneth. So let me address your question on agriculture first.
Speaker 2: So we have share with you before that agriculture is our long-term strategy.
Speaker 2: We hope to promote agricultural development through technology. And for many of our efforts, we are still in the early stage of our agricultural strategy. But we already see a lot of areas to create value.
Speaker 2: And we are also very happy to take this chance to introduce more about our latest developments in this area.
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Speaker 2: First of all, we saw a technical background.
Speaker 2: we help improve the distribution efficiency of agricultural produce.
Speaker 2: During the third quarter, in our dedicated promotional events, such as the Harvest Festival and Agricultural Festival, we cover thousands of production regions.
Speaker 2: and help farmers broaden their market access.
Speaker 2: This also helps consumers enjoy fresher and high quality agricultural produce within a shorter amount of time.
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Speaker 2: On top of that, sales volume can also help commercialize Agri-Tech solutions and support research efforts and improve how commercialization happens.
Speaker 2: So so for example in our harvest festival events we introduced many agricultural products created with the help of AgriTech and with resources that we devote into agriculture We can help these products roll out to the market quickly
Speaker 2: and help turn more agri-tech breakthroughs and innovations into consumer products.
Speaker 2: As for our Temberland Agriculture Initiative, we recently introduced a few new wheat varieties developed by China Agricultural University with support from this initiative.
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Speaker 2: In agriculture, we will continue to remain down to earth and make long-term patient investment as well as bring more agri-tech results to the market. Looking forward, we will continue to share updates with you.
Speaker 5: in the future. Thank you. Thanks, Kenneth. I will take your second question about our profitability.
Speaker 5: Well, first of all, I would like to point out the high profitability level for Q3 is unlikely to continue.
Speaker 5: Over the past quarter, some of our projects, such as a few agricultural related projects, as I just mentioned in my remarks, were impacted in terms of project timeline and investment pace. So the expenses like items shown in our quarterly results were affected.
Speaker 5: And on the other hand, our quarterly revenue increased as a result of increased merchant activities.
Speaker 5: Therefore, the possibility is partially due to such time lapse.
Speaker 5: This shows that our business cycle and financial reporting cycle are not always in sync.
Speaker 5: We think such profitability levels may not be sustainable.
Speaker 5: In addition, we are still in the development stage.
Speaker 5: profitability is not our current priority.
Speaker 5: We will continue to step up investments, especially to support agriculture and manufacturing industry through technology.
Speaker 5: And this may cause fluctuations in our future profitability, and the QCO level will not continue. Thank you.
Speaker 2: OK, operator, it's about time. And thank you, everybody, for joining us today on the conference call. If you have any further questions, please feel free to reach out to the ROT team. Thank you all, and have a great day.
Speaker 2: Thank you. Ladies and Gentlemen, that does conclude our conference for today.
Speaker 2: Thank you for your participation. We may all disconnect.
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Speaker 2: Welcome to PDD's third quarter 2022 earnings conference call.
Speaker 2: At this time, all participants are in the Listen Only mode.
Speaker 2: There will be a presentation followed by a question and answer session.
Speaker 2: at which time if you wish to ask a question
Speaker 2: You will need to press star 1 on your telephone.
Speaker 2: I must advise you that this conference call is being recorded today. I would now like to end the conference over to your host today Mr. Cheng Pen.
Speaker 2: this conference call is being recorded today. I would now like to hand the conference over to your host today Mr. Cheng Ken. Sir, please go ahead.
Speaker 2: Thank you, operator.
Speaker 2: Hello everyone and thank you for joining us today.
Speaker 2: My name is Chen and I will help host the earnings call.
Speaker 2: PDD earnings release was distributed earlier and is available on our website at investor.pddholdings.com as well as through Globe News Live services.
Speaker 2: Before we begin, I would like to refer you to our Safe Harbor statement in earnings press release which applies to this call as we will make certain forward-looking statements.
Speaker 2: Also, this call includes discussions of certain non-GAAP financial measures.
Speaker 2: So please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to GAAP measures.
Speaker 2: Joining us today on the call are Chen Lei, our Chairman and Chief Executive Officer. Zou Jin, our VP of Finance.
Speaker 2: Lei will make some general remarks on our performance for the past quarter and our strategic focus.
Speaker 2: June will then take us through our financial results for the third quarter ended September 30, 2022. During the Q&A session, Lei will answer questions in Chinese and I will help translate.
Speaker 2: Please kindly note that all translations provided are for reference purposes only.
Speaker 2: In case of any discrepancy between the original remarks and the translated version, statements in the original language should prevail.
Speaker 2: Now, it is my pleasure to introduce our chairman and chief executive officer, Chen Lei. Lei, please go ahead.
Speaker 8: Thank you Chen, and hello everyone. Thank you all for joining our 3 Q2 022 earnings call.
Speaker 8: Let me start by giving a brief overview of our third quarter results.
Speaker 8: Our total revenue for this quarter.
Speaker 8: revenue for this quarter with RMB 35.5 LAS.
Speaker 8: This represents a year-on-year increase of 65%.
Speaker 10: Over the past quarter.
Speaker 8: We work closely with our immersion partners to serve our customers.
Speaker 8: We continue to provide our users with an enjoyable and affordable shopping experience.
Speaker 10: to meet their growing demand for high quality and valuable money products.
Speaker 10: During the past few months, many product categories such as agriculture, consumer electronics, beauty and cosmetics, and manufacturing.
Speaker 10: They all enjoyed positive consumer feedback. Many brands joined Pinduoduo and extended our consumers their best use.
Speaker 10: We are happy to keep creating value for our consumers. But meanwhile, we still have many areas to improve and the color industry competition remains intact.
Speaker 10: We need to continue to deepen our value creation, increase our R&D investment to help further improve the supply chain efficiency.
Speaker 10: support upgrade of supply side and facilitate agricultural digital inclusion.
Speaker 10: We celebrated our seventh anniversary last month.
Speaker 10: And we are extremely grateful for the support and trust from our consumers, merchants, farmers, and society.
Speaker 10: and we will continue to upload our core values of putting people first.
Speaker 10: by defeating all and being more open so that we can create lasting value.
Speaker 10: to all the stakeholders.
Speaker 10: Technology is at the heart of our value creation.
Speaker 10: Through the very beginning, we committed to introducing technology to improve the efficiency of supply chain and create value for all the parties through digitalization.
Speaker 10: In the past year or so,
Speaker 10: We increase our investment in technology and focus on driving innovation through research and development.
Speaker 10: We have built a young, energetic, innovative team with strong technology backgrounds.
Speaker 10: And we are encouraged to see that our investment in technology is creating positive impacts to society.
Speaker 10: In agriculture, we keep promoting our holistic approach to digitalize the agricultural sector.
Speaker 10: so that more and more people can benefit from advances in science and technology.
Speaker 10: Our approach in agriculture is a holistic way of creating inclusive growth.
Speaker 10: By leveraging the resources of Qiduo Duo, we hope that more farmers will adopt agricultural technology to improve their productivity.
Speaker 10: and put their farming practices in a more sustainable future.
Speaker 10: The Harvest Festival last quarter is a good example of this approach.
Speaker 10: In September , Pinduoduo launched a dedicated harvest pavilion on the platform to support the annual harvest festival.
Speaker 10: exclusive ecommerce platform partner.
Speaker 10: Lasting three months.
Speaker 10: The harvest pavilion features over half a million types of agricultural products across the country. We wider the market for farmers by bringing them into digital economy. The millions of consumers also make it more feasible.
Speaker 10: features over half a million types of agricultural products across the country. We wider the market for farmers by bringing them into digital economy. The millions of consumers also make it more feasible to implement agricultural technology.
Speaker 10: Farmers are more willing to plant improved crops if they have confidence that consumers will buy them. This was a conversation with the experienced cattle Roose
Speaker 10: We worked with CCTV and several professors from the Chinese Academy of Agriculture Sciences.
Speaker 10: and the China Agricultural University to promote agricultural technology.
Speaker 10: For example, we introduced a new variety of sweet potatoes that are less prone to disease
Speaker 10: Divided by the research institute.
Speaker 10: The Pingdaozo platform helps this new sweet potato to reach more consumers nationally.
Speaker 10: And this crop is now grown in many parts of China and is available year-round.
Speaker 10: Its success has helped the magic farmers to prosper.
Speaker 10: This is a good example of how market demand can bring more science out of the lab and into the field. This is a good example of how market demand can bring more science out of the lab and
Speaker 10: We are committed to using the Pingdoodle platform for consumers to discover new agricultural charters.
Speaker 10: so that they can enjoy healthier and more nutritious food.
Speaker 10: Do you have a festival?
Speaker 10: We also showcase a series of new and improved wheat varieties cultivated by China Agricultural University.
Speaker 10: with the support of our 10 billion agricultural initiative.
Speaker 10: These wheat varieties have higher yield, higher quality.
Speaker 10: and are more resistant to disease.
Speaker 10: In addition, we continue to support various events to promote the adoption of agricultural technology. Our flagship smart agriculture competition is currently underway in Shanghai.
Speaker 10: This is an annual precision farming contest aimed at encouraging researchers to develop practical technology.
Speaker 10: We are partnering with China Agricultural University and Zhejiang University for this competition.
Speaker 10: with the technical support from FAO China at the Shanghai Academy of Agricultural Scientists.
Speaker 10: The theme of the competition this year is vertical farming.
Speaker 10: Participation teams will compete to produce lectures in shipping containers.
Speaker 10: Participating teams will compete to produce lectures in shipping containers using Lightning,
Speaker 10: clock modeling, and algorithms to control input variables.
Speaker 10: Several participating teams from the first two editions have already implemented their technology in a working fund.
Speaker 10: as well as on large scale pilots to scale a solution.
Speaker 10: We hope that this initiative can inspire more young researchers
Speaker 10: bring more research findings to the market.
Speaker 10: and support the development of agriculture. In the same way we are improving agricultural digitization,
Speaker 10: We are helping to upgrade real economy enterprises and manufacturers
Speaker 10: by connecting them directly with the end consumer.
Speaker 10: Our pioneering team purchase model can quickly and directly connect demand supply to gathering consumer demand.
Speaker 10: We have leveraged digital technology to shorten the product environment cycle.
Speaker 10: and help manufacturers create products.
Speaker 10: health manufacturers create products that closely match market needs.
Speaker 10: This can help manufacturers to build their brand.
Speaker 10: And in the past seven years, we have helped incubate nearly 1,000 and affecting brains through technology.
Speaker 10: And since the beginning of this year,
Speaker 10: We have launched several activities to support the manufacturing industry.
Speaker 10: For example, this year we launched a new craftsman campaign to help local craftsmen and their manufacturers buy a bigger market for their products through e-commerce.
Speaker 10: And we have allocated dedicated resources to support high quality local products.
Speaker 10: and help small enterprises upgrade their branding.
Speaker 10: The new Craftsman program is now in many regions across the country.
Speaker 10: helping local manufacturers to build their brand.
Speaker 10: We hope to use the pin noodle platform to help more of these undiscovered manufacturers reach more potential buyers.
Speaker 10: The increased demand and exposure also benefits the local community through more income and more job opportunities.
Speaker 10: As we enter our eight year of operation.
Speaker 10: We remain passionate and excited about the future.
Speaker 10: We are a young company with a team full of drive and energy.
Speaker 10: and we will constantly explore areas to create positive value through technology. With that, Qin will take us to the financial.
Speaker 4: Thank you, Le. Thank you, Le. Hello, everyone.
Speaker 5: I will go through our performance in the quarter ended September 30, 2022.
Speaker 5: In terms of P&L, our total revenues in the quarter were RMB 35.5 billion.
Speaker 5: 65.1% from RMB21.5 billion in the same quarter of 2021.
Speaker 5: This was mainly driven by an increase in revenues from online marketing services and transaction services. This was mainly driven by an increase in revenues from online marketing services and transaction
Speaker 5: Revenants from online marketing services and others.
Speaker 5: RMB 28.4 billion this quarter.
Speaker 5: 58.4% compared with the same period of 2021.
Speaker 5: This was primarily due to an increase in merchant activities in Q3.
Speaker 5: Our transaction services revenue this quarter will RMB 7 billion, up 102% versus the same of the markets countries in the last two years and we hope to have our teams continue following
Speaker 5: Moving on to cost and expenses. Our total cost of revenues increased 13% from RMB 6.6 billion in Q3 2021 to RMB 7.4 billion this quarter. Total operating expenses this quarter were RMB 17.6 billion.
Speaker 5: versus RMB 12.8 billion in the same quarter of 2021. Our investment in certain projects, including a few agriculture related projects,
Speaker 5: was affected in Q3. As such, our total operating expenses as a percentage of our total revenues have declined from 59.6% in Q3 2021 to 49.7% in this quarter.
Speaker 5: Looking into specific expense items,
Speaker 5: Our non-GAAP sales in the marketing expenses in this culture, warranty 13.4 billion.
Speaker 5: of 39% versus the same quarter of 2021.
Speaker 5: On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenue this quarter was 37.9%.
Speaker 5: compared with 44.9% for the same quarter in 2021.
Speaker 5: Our non-GAAP general and administrative expenses were RMB 226.3 million.
Speaker 5: versus RMB 100 and 78.1 million in the quarter of 2021. Our million gap research and development expenses were RMB 2.1 billion.
Speaker 5: an increase of 15% from RMB 1.9 billion in the same quarter of 2021.
Speaker 5: The increase was primarily due to an increase in head count and the recoulements of moisture into the Carolyn satisfying taco.
Speaker 5: We're committed to growing our RNG capabilities.
Speaker 5: and we step up our spending to drive innovation on our platform, show us the bottom-net evolving consumer needs and lay the foundation for sustainable growth.
Speaker 5: In the area of agriculture, we will continue to depend on our investment in every tag and promote its adoption.
Speaker 5: Technology is also key to increasing supply chain efficiency and helping facilitate the development of manufacturing industry.
Speaker 5: Operating profit for the culture with RMB 10.4 billion on a gap basis.
Speaker 5: compared with operating profit of RMB 2.1 billion in the same quarter of 2021.
Speaker 5: non-GAAP operating profit was RMB 12.3 billion versus RMB 3.3 billion in the same quarter of 2021.
Speaker 5: Next income attributes to ordinary shareholders, which are only 10.6 billion.
Speaker 5: with RMB 1.6 billion in the same quarter of 2021.
Speaker 5: Base earnings per ADS was RMB8.38 and diluted earnings per ADS was RMB7.34.
Speaker 5: versus basic anions per ADH of RMB1.31 and dilute anions per ADH of RMB1.15 in the same quarter of 2021.
Speaker 5: Non-GAF net income are too big to ordinary shareholders with RMB 12.4 billion, compared with RMB 3.1 billion in the same quarter last year.
Speaker 5: non-GAAP diluted earnings per ADS was RMB8.62 versus RMB2.18 in the same quarter of 2021. In summary, we think that current level of profitability in Q3 is temporary and unlikely to maintain.
Speaker 5: On the one hand, the reinvestment in certain projects was affected in the last quarter.
Speaker 5: On the other hand, we continue to see good user engagement, which contributed to revenue growth. This shows that our financial and business cycles are not always in sync.
Speaker 5: We plan to increase our investment to further drive innovations on our platform and strengthen our core capabilities. As such, we plan to increase our investment to further drive innovations on our platform
Speaker 5: We think it's unlikely that the proven level of the past quarter can be maintained.
Speaker 5: That concludes to profile and law statement for the third quarter 2022.
Speaker 5: Now let me move on to cash flow.
Speaker 5: Our net cash flow generated from operating activities
Speaker 5: was RMB 11.7 billion, compared with RMB 8.7 billion in the same quarter of 2021, primarily due to the increase in net income and Chiang Jiechi working capital.
Speaker 5: As of September 30, 2022, the company had RMB 137.8 billion in cash, cash-off funds, and short-term investments.
Speaker 5: Thank you. This concludes my prepared remarks.
Speaker 2: Thank you, Jing. Next, we will move on to the Q&A session.
Speaker 2: For today's Q&A session, Lei and Jun will take questions from analysts on the line.
Speaker 2: We could take a maximum of two questions, panelists.
Speaker 2: Lei will answer questions in Chinese and I will help translate Lei's remarks for ease of reference. Operator, we may now take questions on the line.
Speaker 2: Thank you very much. Ladies and gentlemen, we will now begin the question and answer session.
Speaker 2: If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press pound or hash key. Participants are requested to restrict two questions at each time.
Speaker 2: The first question comes from the line of Joyce Yu from Bank of America. Please go ahead.
Speaker 7: Thanks, management, for taking my question. I have two questions.
Speaker 7: My first question is your online marketing services revenue this quarter delivered a faster growth rate than last quarter. What is the reason for this accelerated growth in the third quarter? How should we understand the growth rate momentum in the future?
Speaker 7: The second question is, could management share the latest updates on your international initiative? Could you share your views or any takeaways at this stage? Does the current level of development meet the management's original expectation?
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and the choice. So let me take your two questions with regard to your first question on growth. In the third quarter, we worked closely with our merchants.
to create value for our consumers. And we keep bringing our consumers more savings, more fun shopping experience in the Pingoduo platform. And we adopted different methods including coupons and also promotional events to better serve our consumers.
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And at the same time, we saw that our consumers demand for high quality products are growing. We actively make efforts to satisfy their demand. And this year, more and more brands have started to cooperate with us.
they provide more choices for consumers. And categories such as agricultural produce, electronics, home appliances, as well as cosmetics, these categories have received positive consumer feedback.
and we are grateful toward the trust our consumers placing us.
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But in the meanwhile, we should see that industry competition is still intense.
and also consumer preferences and demand become more and more diversified.
So we do have many areas to improve and the impact of our overall investment activity in fact is not beneficial to our long term competitiveness. So in the future we will continue to step up investments and we will invest in the future.
to better understand our consumers' needs and serve them better. And we will also need to continue to immerse ourselves deeply in the real economy and investing in technology R&D to help improve the efficiency of agriculture as well as manufacturing.
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And as for your second question for our international business, in our last quarter's earnings conference call, we share with you the international business that we are working on.
And I believe that many of you may have noticed that we rolled out our international marketplace in September and it has just been a few months since we started this business.
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and for our team, the international business is a new area to explore. And we will start from the fundamental needs of consumers.
and apply the operation and supply chain know-how and experiences that we have gained over the years and strive to create our own unique value.
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If you have a question, please ask us. We will answer it. We will answer it. We will answer it. We will answer it. We will answer it.
and also we fully respect that there are many differences across different markets. And we also understand the need to constantly experiment and...
we expect that the process will be full of challenges. So we will be patient and work together with our partners to create the long-term value for our consumers. Thank you.
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Currently, we are still in the early stage of exploration. We have many areas to improve in terms of the services that we provide. We need to learn and also optimize.
the process itself will take time, but I'm pretty certain that the experience that we gain along the way will be very valuable for our company and also for our team. Thank you. So operator, we are ready to move on to the next question. Thank you.
The next question is from the line of Thomas Chong from Jefferies. Please go ahead. Hello, everyone. This is a question from the line of Thomas Chong. I would like to ask you to please tell us what is the most important part of your research in the industry? What is the most important part of your research in the industry? What is the most important part of your research in the industry?
I would like to thank the management for taking my questions. My first question is related to the main drivers behind this quarter's revenue growth. If we further break down the revenue to GMV and takeaways,
Can you share more about the trends in these two factors? Also, have you changed the take-away policy for merchants on your platform? And then I have another quick follow-up. ?????????????????????????????????????????????????????????????????????????????
I am a senior manager and I am a part of the business team at Zhiqiu. I am a senior manager and I am also a part of the business team at Zhiqiu. I am a part of the business team at Zhiqiu. And my second question is also related to the first one. Apart from takeaways policies, I am also wondering for merchants and industry upstream, can you also help to share if you have support managers and policies?
Could management share more about your progress and the pain in this area? Thank you.
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around our support for the manufacturing sector and the supply chain first. From the beginning, we have been leveraging our technical background to help improve the efficiency in the manufacturing sector.
and the team purchase model that we pioneered and aggregates order and connect the demand side and the supply side directly. And this helps manufacturers reduce the intermediary layers, help them directly reach out to consumers. And in the process, it helps the brand.
create their own brand for manufacturers. So over the past seven years, Pinduoduo has helped to build up nearly 1,000 brands through technology and we are growing up with many manufacturers together.
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In addition, we also provide one-stop digital solution covering the entire value chain to our manufacturing partners in order to help traditional manufacturers.
and factories to go through digital transformation.
and we cooperate with the manufacturers on product designs and adjustments.
This significantly lowers the cost and reduces the uncertainty during the R&D and also production processes.
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And all of these that we have done also help consumers get quality products with savings.
and we can generate value for consumers in the process.
This in turn can create a virtual cycle amongst consumers, our manufacturing partners, and also the Pinduoduo platform.
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And this year we have introduced several dedicated initiatives to support manufacturers with technology. This includes many industries such as consumer appliances, apparel,
And this year we have introduced several dedicated initiatives to support manufacturers with technology. This includes many industries such as consumer appliances, apparel, sports,
cosmetics, home care, as well as furniture. And we will continue to invest in this area to improve the efficiency of the supply chain. Thank you.
Thanks, Thomas. I will take your first question about the GMV. Well, in the third quarter, we worked closely with our merchants to serve our consumers and improve their shopping experience. As the consumer activities and engagement grow, we think the merchants are naturally coming to our platform for growth and opportunities.
And for financial metrics such as GMV and revenue, they are mainly the reflection of the value we create. So for us, the most important thing is to constantly increase value creation. We will continue to invest to deeper use of much engagement and for the build up of our technology capabilities.
This will lay the foundation for our long-term development. Thanks. We can move to the next analyst in line.
This will lay the foundation for our long-term development. Thanks. Ha, Prithu, we can move to the next analyst in line. Thank you.
The next questions come from Ellie Zhang from Guari. Please go ahead. In the next question, please go ahead.
Let me translate my question. First, could management talk about the latest industry trends, including what was the latest
What are the main financial statement items that impact? Could you talk, could you help us quantify the impact for the third quarter and what level of investment do you expect to make going forward? Thank you.
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We would also like to say that all of the supports being provided, including the
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Hi, Ali. So let me take your question on industry transfers. So for this question, we always start from consumers fundamental needs.
and we hope to create a value for consumers each single day throughout the year. And I think it is the core driver for the industry and also for ourselves. And we also fully understand that to improve consumer experience and deepen their trust in us.
It takes time and it is a gradual process. And for a shopping festival and promotion, they are just one of the many ways to serve our consumers well.
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If you have a question, please ask in the comments section. If you have any questions, please ask in the comments section. If you have any questions, please ask in the comments section. Please ask in the comments section.
And we hope that consumers can get more savings and more fun from shopping on Pinduoduo. So when we plan shopping festivals and events, we remain consumer centric and we use simple rules.
to provide consumers with an enjoyable shopping experience. This year we have cooperated with many brands as well as merchants to bring more quality products to consumers in order to satisfy their diversified needs.
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She And at the same time We look at the industry we do see the competition remains intense and we need to invest patiently in the supply side and We need to step up our other investment
in technology and innovations to further improve the overall supply chain efficiency. We need to support the development of the agriculture sector and also the manufacturing sector. These would essentially enable us to better serve our consumers, increasing demand.
for quality products. Thank you. Thanks, Dali. I will take your question about the financial statements on our international initiative. Well, first of all, our international business is currently in a very early stage. It is still going through constant trials.
For us, we focus on how to create unique value. We believe that financial metrics are the natural results from the value that we create.
and the international business still very early, as I just mentioned.
So is current impact on our financial numbers small?
And as with any other part of the business, we carefully evaluate the ROI of area investment. Thank you.
Operator, we can move on to the next question. Thank you. The next question comes from Kenneth Fong from Credit Suisse. Please go ahead.
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Thank you, management, for taking my question. May management share about the latest source and development in agriculture. Are there any cases or projects that you're putting resources into? What are the latest financial impact on your financial statement? And also for your 10 billion agriculture initiative, is there any update to share? And my second question is about profitability. We have delivered profitability for six quarters in a row. For more information, visit www.fema.gov
We have also noticed that many of your peers have started to focus more on cost control and efficiency improvement So does your profitability for the past quarter mean you have started to pursue a similar strategy? And should we expect a similar level of profitability to continue over the next quarter? Thank you.
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So, let me address your question on agriculture first.
So we have shared with you before that Agriculture is our long-term strategy We hope to promote agricultural development through technology and for many of our efforts are still in the early stage of our agricultural strategy.
but we already see a lot of areas to create value. And we are also very happy to take this chance to introduce more about our latest development in this area.
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we help improve the distribution efficiency of agricultural produce.
During the third quarter, in our dedicated promotional events, such as the Harvest Festival and Agricultural Festival, we cover thousands of production regions.
and help farmers broaden their market access.
This also helps consumers enjoy fresher and high quality agricultural produce within a shorter amount of time.
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On top of that, sales volume can also help commercialize Agri-Tech solutions and support research efforts and improve how commercialization happens.
So so for example in our harvest festival events we introduced many agricultural products created with the help of AgriTech and with resources that we devote into agriculture We can help these products roll out to the market quickly
and help turn more agri-tech breakthroughs and innovations into consumer products. As for our 10 billion agriculture initiative, we recently introduced a few new wheat varieties developed by China Agricultural University.
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In agriculture, we will continue to remain down to earth and make long-term patient investment as well as bring more agri-tech results to the market. Going forward, we will continue to share updates with you in the future. Thank you. Thanks, Kenneth.
I will take your second question about our profitability. Well, first of all, I would like to point out the high profitability level for Q3 is unlikely to continue. Over the past quarter, some of our projects, such as a few agricultural related projects, as I just mentioned in my remarks, were impacted in terms of project timeline and...
but our business cycle and financial reporting cycle are not always in sync.
We think such profitability level may not be sustainable. In addition, we are still in the development stage. Profibility is not our current priority.
We will continue to step up investments, especially to support agriculture and manufacturing industry through technology.
This may cause fluctuations in our future profitability, and the QCO level will not continue. Thank you.
OK, operator, it's about time. And thank you, everybody, for joining us today on the conference call. If you have any further questions, please feel free to reach out to our team. Thank you all, and have a great day.
Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may all disconnect.