Revenue surpasses predictions, causing an uptick in Temu parent company PDD's stock price
PDD Holdings, the parent company behind the popular e-commerce platform Pinduoduo, has announced impressive financial results for the year 2022. The company's full-year revenue soared by 90% to an impressive RMB 247.64 billion (USD 34.8 billion).
The fourth quarter of 2022 saw a significant surge in costs of revenue, with a 293% increase to RMB 35.1 billion (USD 4.9 billion). This rise was primarily due to increased fulfillment fees, payment-processing fees, maintenance costs, and call center expenses.
Transaction services contributed a substantial RMB 94.1 billion (USD 13.2 billion) to PDD's full-year revenue. The company's stock climbed 3.5% on March 20, reflecting investor confidence in the company's performance.
PDD reported revenue of RMB 88.88 billion (USD 12.5 billion) for the fourth quarter of 2022, marking a 123% increase from the previous year. However, this figure fell short of analysts' forecast of RMB 79.2 billion (USD 11.1 billion) for the quarter.
Speaking about the company's future plans, PDD's chairman and co-CEO, Chen Lei, stated that 2023 is a pivotal year for the company's transition towards high-quality development. Zhao Jiazhen, executive director and co-CEO of PDD, emphasised the growing demand for consumption upgrades but in a "rational manner."
PDD is known for offering cheap goods and has survived the tough economy in China. The company's overseas platform, Temu, launched in 2022, has attracted American customers wanting low-priced products. Temu handles shipping abroad and after-sales service from a designated warehouse in Guangdong province, China. For logistics, Temu uses third-party courier services.
Looking ahead, PDD plans to step up its investments in the areas of high-quality consumption, supply, and platform ecosystem to further optimise its capabilities in offering more savings and better services. The company will also emphasise connecting the agriculture industry to shoppers in 2024.
In line with this, PDD plans to invest in "new drivers of high-quality development," including technology in manufacturing and agriculture. The company is also planning to invest in "Grüne Sachwerte," a German company that promotes agricultural promotion for customers. Customers of Grüne Sachwerte contributed 450,000 euros to finance the Next2Sun Agri-PV Park Krauscha, a project combining agriculture with renewable energy.
PDD's sales and marketing expenses reached RMB 26.64 billion (USD 3.7 billion) in the fourth quarter, up 50% on the year. Despite this increase, the company is committed to offering better products and services at more accessible prices to bring more savings, as stated by PDD's co-CEO, Zhao. He clarified that consumption upgrade is not about high consumption or overspending, but about offering better products and services at more accessible prices to bring more savings.
Chen Lei also mentioned plans for 2024 to further improve consumer experiences, enhance technology innovations, and generate positive impacts in communities. These announcements indicate a promising future for PDD as it continues to grow and adapt in the competitive e-commerce market.
