【Earnings Highlights】 - Revenue: RMB 95.7 billion, up 10% year-over-year but showing significant slowdown - Net income: RMB 14.7 billion, down from RMB 28 billion in Q1 2024 - Operating profit margin declined to 19% from 33% last year - Company launched upgraded 100 billion RMB merchant support program
【Key Takeaways】
1. Challenging External Environment Impacting Growth - Macroeconomic uncertainties and policy changes like tariffs are creating significant pressure for merchants - As a third-party marketplace, PDD faces inherent limitations in passing on policy incentives to consumers compared to platforms with first-party businesses - Revenue growth slowed notably amid the rapidly changing external environment
2. Prioritizing Merchant Support Through Increased Investments - Launched upgraded 100 billion RMB support program to help merchants navigate challenges - Expanding coverage of high-quality merchant support from top/mid-tier to more small and medium-sized merchants - Increasing subsidies and marketing support to help merchants boost sales and reduce costs - Management views this as a necessary long-term investment, though it will impact near-term profitability
3. Consumer-Side Initiatives - Introduced new 10 billion RMB merchant giveback program under existing 10 billion RMB subsidy channel - Offering additional coupons across product categories to stimulate demand - Upgraded direct discount program to benchmark against national subsidy standards in multiple categories
4. Long-Term Focus Despite Near-Term Headwinds - Management emphasizes commitment to long-term ecosystem investments over quarterly financials - Believes supporting merchants and consumers through uncertainties is key to sustainable high-quality growth - Expects profitability to remain under pressure in the near-term due to increased investments
5. Consumption Trends and 618 Shopping Festival - Launched dedicated page for national subsidy program in January, now covering 20+ provinces - For 618 festival, introduced price protection service for promotional items - Focusing on simplified mechanisms and real savings to benefit both consumers and merchants
【Q&A Highlights】
Q: How is the company addressing challenges in competing with first-party platforms, especially regarding policy incentives?
A: PDD is leveraging internal resources and increasing investments to help merchants maintain competitiveness. Specific actions include: - Launching a dedicated national subsidy program page - Expanding subsidy coverage to more product categories, including daily necessities - Providing additional coupons on top of government subsidies - Benchmarking prices against national subsidy standards in multiple categories
While these investments may impact short-term profitability, management believes they are necessary to support merchants and create opportunities for high-quality, differentiated growth.
Q: Can you provide an update on consumption trends and the ongoing 618 shopping festival performance?
A: Management highlighted the following points: - Continuing to focus on simplified shopping mechanisms and real savings for consumers - Introduced price protection service for products participating in 618 promotions - Aiming to excel in quality and service to build consumer trust and drive sustainable sales growth - Working with merchants to offer high-quality products at compelling prices while driving sales
The company sees these efforts as part of building a win-win ecosystem that benefits all stakeholders in the long run.
Disclaimer: This earnings call summary is generated by AI and is for informational purposes only. Due to technical limitations, inaccuracies may exist. It does not constitute investment advice or commitments.