Credit：Visual China

PDD posted revenue of RMB68.84 billion (US$9.43 billion) in the quarter ended September 30, exceeding by about 25% more than the average analysts’ estimate. The sales surged 94% from a year earlier, accelerating from the previous quarter’s 66% year-over-year (YoY) increase, and refreshed the record set in the second quarter, increasing around 32% sequentially. The robust sales primarily came from robust growth of online marketing services and transaction services, which recorded a 39% YoY increase and a 315% YoY increase, respectively.

PDD’s bottom line also beat the Wall Street expectation. Non-GAAP net income jumped 37% YoY to RMB17.027 billion in the third quarter, versus the expected RMB12.974 billion. Non-GAAP diluted earnings per American depositary share (ADS) that quarter rose nearly 35% YoY to RMB11.61, compared with projection of RMB8.81.

“Last month, we celebrated our eighth anniversary. We sincerely thank all stakeholders for the support we received,” said  Zhao Jiazhen, Executive Director and Co-Chief Executive Officer of PDD. “Throughout the past third quarter, consumption vitality kept improving. We continued to provide consumers with more savings and better service through increased investments.”

Financial results indicated PDD, the operator of Chinese discount shopping site Pinduoduo and its overseas sister Temu, is a big winner when consumers became more sensitive to price change amid uncertainty of economic recovery in China. PDD salse growth outrun major domestic rivals in the September quarter. JD.com’s net revenue increased 1.7% YoY, slowing down from the second quarter with a 7.6% YoY increase. Alibaba’s total revenue recorded a 9% YoY increase, and sales of its two online marketplaces--Taobao and Tmall Group gained 4% YoY.

Analysts believed that revenue for the third quarter, to some extent, reflected Temu’s good performance and the stock market can gradually price in Temu as an additional source of valuation when it evaluates PDD.  PDD hasn’t released detailed financial indicators of Temu since the global business launched in U.S. on September 1, 2022. However, previous statistics showcased how fast it has developed into a popular shopping platform.  

Temu became one of the most popular applications in the United States in the past year. It was ranked the most frequently downloaded app in the country in both Apple App Store and Google Play’s rankings most of the year 2023, according Apptopia, an app data intelligence platform.Temu is available in 48 countries around the world. Chinese digital news media outlet LatePost said its app was downloaded 200 million times in the past year, and it attracted 120 million worldwide viewers in September alone, half of which came from markets outside the United States.

Spending on Temu for the first time outweighed Shein, Chinese fast fashion giant founded in 2009, in the U.S. market in May, and the former was 20% higher than the latter that month, according to Bloomberg Second Measure, which analyzes billions of credit and debit card transactions. The data provider also estimated that Temu has consolidated its lead every month since May, and its sales in September have grown into more than twice as much as Shein in the United States.

“Although our business outside of China is still at an early stage, it has made meaningful progress since its launch a year ago,” Chairman and Co-Chief Executive Officer Chen Lei told analysts on an earnings conference call. “While we have broadened our reach, the business is still in its early stage and we’ll face uncertainties.” Chen said the overseas expansion will be ierative process that will be challenging, but at the same time interesting.

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