This time, Pinduoduo handed over a relatively eye-catching report card.
On May 26, Pinduoduo (NASDAQ:PDD) released its 2021 Q1 financial report. According to the financial report, Pinduoduo's revenue in the quarter was 22.171 billion yuan, an increase of 239% year-on-year; the net loss attributable to the mother was 2.905 billion yuan, compared with 4.193 billion yuan in the same period last year. As of March 31, 2021, the number of annual active buyers on the Pinduoduo platform reached 823.8 million, officially entering a new era of 800 million users at a record speed.
The number of annual active buyers reached 823.8 million, which is already more than most of its peers. On the occasion of the release of the 2020 annual results, Huang Zheng announced his withdrawal from the front line and was succeeded by Chen Lei as the chairman and CEO of Pinduoduo. That is to say, Chen Lei's first financial report after taking over the baton pinduoduo has performed remarkablely, and Huang Zheng's choice is not wrong.
Moreover, it can also be seen from the financial report that Pinduoduo's revenue is accelerating and the loss margin is narrowing. Pinduoduo's fundamentals are gradually stabilizing.
Why did Pinduoduo's revenue surge by 239%?
In Q1 2021, Pinduoduo achieved operating income of 22.171 billion yuan, an increase of 239% year-on-year, continuing the high growth trend of the previous quarter, and the revenue growth rate in the quarter exceeded the data of the same period in 2019, which was mainly driven by marketing service revenue and sales service revenue.
At present, Pinduoduo's operating income mainly comes from three parts: marketing service revenue (advertising promotion), transaction service revenue and commodity sales revenue.
Among them, the sales revenue of commodities is the new business of Pinduoduo in the fourth quarter of 2020, which is a self-operated business, which is to include all the income from the sale of commodities into operating income, which will greatly promote the revenue scale of Pinduoduo and increase the revenue growth rate. At present, the revenue of this business is 5.124 billion yuan, accounting for 23.11% of the revenue, which is the second largest revenue source of Pinduoduo.
If the contribution of this revenue is excluded, Pinduoduo achieved operating income of 21.19 billion yuan, an increase of 160.62% year-on-year, which is still a high increase, which is due to the strong growth of marketing service revenue. In the quarter, Pinduoduo's marketing service revenue was 14.1115 billion yuan, an increase of 156.93% year-on-year.
Driving the strong growth in Pinduoduo's marketing service revenue is the increase in active users.
As of March 31, 2021, the number of annual active buyers of Pinduoduo reached 823.8 million, a net increase of 195.7 million from the same period of the previous year, an increase of 35.4 million from the previous year, once again winning the largest e-commerce platform in China. The average number of monthly active users of Pinduoduo APP reached 724.6 million, an increase of 49% from 487.4 million in the same period last year.
Of course, the growth of users is mainly due to Pinduoduo's increased market investment. In the quarter, Pinduoduo's sales and marketing expenses increased by 78% year-on-year to 12.9974 billion yuan, mainly due to Pinduoduo's increased subsidies and coverage of high-quality goods.
The high marketing expenses did not put pressure on Pinduoduo's profitability, but driven by strong revenue, Pinduoduo's operating loss and net loss in the quarter narrowed at the same time. According to the financial report, under non-GAAP, the net loss attributable to the mother of Pinduoduo was 1.8903 billion yuan, which was significantly narrower than the net loss of 3.1696 billion yuan in the same period last year.
GaAP full name is Generator Accepted Accounting Principle, that is, the U.S. generally accepted accounting principles, U.S. listed companies are generally required to disclose their performance and financial position on a regular basis in accordance with GAAP.
Non-GAAP is the company's own adjustment on the basis of GAAP standards according to its own situation, generally excluding many non-operating related and incidental profits and losses, in order to better show the actual operating conditions of the company.
What drives pinduoduo's basic aspects to be good?
Undoubtedly, the basic aspects of Pinduoduo are good, and the "tens of billions of subsidies" are indispensable. Since the launch of the "10 billion subsidy", the effect has become more and more prominent.
According to the data, the "10 billion subsidy" channel was launched in June 2019, after 2 years of development, the 10 billion subsidy on the one hand has been extended from the earlier digital 3C, maternal and infant beauty to fresh agricultural products, books and picture books and other categories; on the other hand, on the other hand, in the brand, it has also expanded from domestic time-honored brands to cutting-edge brands, along the path of "what consumers need, we subsidize", vigorously promoting the direct connection between brand source goods and consumers, and creating a platform activity into a consumption phenomenon.
Within Pinduoduo, the tens of billions of subsidies have been upgraded to a long-term strategy. At the same time, the "tens of billions of subsidies" have also driven the growth of Pinduoduo's users and revenues.
According to Pinduoduo's financial report, the number of active buyers in the 12-month period from Q2 to Q2 2019 was 483 million, an increase of 41% year-on-year. After the launch of the "10 billion subsidy", the number of active buyers in Q2-2020 in 2019 increased to 683 million, a year-on-year growth rate of 41%.
The above figures reflect that under the "10 billion subsidy" plan, the average number of active buyers in Pinduoduo has increased by 50 million per quarter, which means that the net increase of 200 million active buyers in a year is equivalent to 500 million. Under the fierce competition in the e-commerce stock market, the growth rate of Pinduoduo is difficult to imagine.
Because in Q2 2017 to Q2 2018, the number of annual active buyers of Pinduoduo was 344 million, and by Q2 of 2019, the number of annual active buyers of Pinduoduo reached 823.8 million. Comparing the data on the number of active buyers in recent years, it will be obvious that the "tens of billions of subsidies" have boosted the rapid increase in users.
At present, in the "10 billion subsidy" channel, the number of active users has exceeded 100 million, and more than 10 million people select goods in the channel every day, covering digital, beauty, fresh, home appliances, clothing and other categories.
As of December 31, 2020, the cumulative scale of Pinduoduo merchants has exceeded 8.6 million.
Under the subsidy of tens of billions, the price of many genuine brands can reach the lowest price of the whole network. The latest news shows that in Pinduoduo, the official price of 6299 yuan iPhone 12, tens of billions of subsidies directly down 1500 yuan, as long as 4799 yuan; SK-II immortal water direct drop of 941 yuan, as long as 599 yuan; 53 ° Feitian Moutai as long as 2599 yuan.
I have to say that this price hollowing out consumer wallet is not a big problem, this is a large "true fragrance" scene, what reason do consumers have not to spend less money to buy their favorite goods. This is very important for Pinduoduo to build user minds and brand awareness.
Earlier, Pinduoduo said that the original intention of the online "10 billion subsidy" is to hope that consumers can buy their own brand products at a low price, so that consumers can pass 618 every day and double 11 every night.
Now, the major domestic e-commerce platforms are preparing for the 618 shopping festival, whether it is to Tmall or Jingdong, Pinduoduo, etc., in their office buildings, the air is filled with the smell of 618 promotion.
This year marks the second anniversary of pinduoduo's "10 billion subsidy" program. On the occasion of the second anniversary, Pinduoduo will also increase the subsidy of "10 billion subsidies", and double the subsidies under the richer variety of goods than before, and strive to reach the lowest price of big-name genuine products on the whole network, so that consumers can enter the 618 Carnival Shopping Festival in advance.
In addition, at 618 this year, the "10 billion subsidy" also opened a new "official cooperation flagship store" entrance, and the newly settled brand official flagship store increased by more than 10 times year-on-year, of which digital home appliances, beauty and clothing and other brands increased the most obviously, and only small household appliance brand flagship stores added more than 600.
Then, in the category of tens of billions of subsidies, fresh agricultural products are very worthy of our attention. Because agricultural products are what Pinduoduo has been doing since the early stage of development, it has been implemented from founder Huang Zheng to CEO Chen Lei, and Pinduoduo is also very clear about the strategy of heavy warehouse agriculture. At present, Pinduoduo, with agriculture as its founding business, accounts for about 5 times the total GMV of its agricultural products, which is about 5 times the industry average.
It can be said that the development of agricultural products is in the C position in the Pinduoduo strategy.
Agricultural products occupy the C position
According to the financial report, Pinduoduo's agricultural product orders in Q1 of 2021 soared by more than 300% year-on-year, directly connecting 16 million farmers, and the number of agricultural (sideline) products with a single product sales of more than 100,000 singles reached 2645, an increase of 156% year-on-year, 179% in the whole of 2019.
For the growth trend of agricultural products, the relevant person in charge of Pinduoduo Agriculture introduced that this is mainly due to the growth of a large number of new users placing orders and buying vegetables, which also reflects that the moat of Pinduoduo's domestic agricultural products is continuing to deepen.
In the performance conference call after the release of the earnings report, Chen Lei said that Pinduoduo, as China's largest agricultural products uplink platform, is also an infrastructure-based platform focusing on agricultural products, "we hope that consumers have healthier and more environmentally sustainable eating habits, and also hope to help further improve all aspects of the agricultural industry chain."
According to the financial report, next, Pinduoduo will make more heavy investment in agricultural products, build an infrastructure platform for agricultural products, and hope to promote the accurate matching of large-scale production and marketing, and promote the upward movement of agricultural products and rural revitalization.
In terms of agricultural products, Pinduoduo also pays more attention to agricultural scientific research, and has carried out in-depth cooperation with a number of top scientific research institutions, academicians and experts at home and abroad, and continues to invest in scientific planting, agricultural robots, smart agriculture, future food and other fields. For example, Pinduoduo has launched scientific research projects based on pesticide residue detection to explore food safety issues, and cooperated with the Singapore Food and Biotechnology Innovation Institute to study new plant-based meats.
"Pinduoduo is working towards the goal of becoming the world's largest agricultural and daily necessities platform", Chen Lei said, in the next 5 years, Pinduoduo will continue to cooperate with local governments and agricultural institutions to increase technical training for farmers, empower agricultural production with technology, and help rural revitalization.
In the second anniversary of the 10 billion subsidy activity, Pinduoduo will continue to tilt resources to fresh agricultural goods, through the platform traffic to drive fresher and more affordable agricultural products up, Pinduoduo tens of billions of subsidies responsible person introduced, "Pinduoduo in the '10 billion subsidies' to provide a large number of high-quality and affordable fresh agricultural products, hope to support the uplink of agricultural products through the platform traffic, drive farmers and farmers to participate in the consumption carnival, but also to meet the daily needs of consumers for high-quality fresh products." ”
At present, for the fruits of fresh, agricultural and sideline products, meat, poultry and eggs and other livelihood supplies, the "10 billion subsidies" have been implemented normalization subsidies. For example, Hainan Concubine Laughing Lychee, Shandong Big Cherry, Enshi Small Potato and other seasonal fresh foods all receive subsidies ranging from 5-20 yuan / catty. In addition to seasonal freshness, imported tropical fruits such as Thai durian and mangosteen are subsidized to the best price of the same kind.
Pinduoduo said that their platform will also continue to help farmers operate better and make more money, using platform tools to optimize sales, and they promise to train 100,000 new farmers in the next 5 years.
During the epidemic period, community group buying ushered in the second spring, Pinduoduo took advantage of its first-mover advantage in agricultural products, riding on the outlet of community group buying, launched the "more buy vegetables" in August 2020, increasing the number of community group buying, matching 800 million consumer needs and supply chain locally, and seizing the entrance to the sinking market traffic.
Community group buying is a trillion-level market, according to Kantar Consulting's forecast, by 2021, the market size of community group buying will exceed 120 billion yuan. But behind the vastness of the market is the congestion of the track. Internet giants such as Meituan, Pinduoduo, JD.com, ByteDance and Didi have long been scrambling to enter the game.
Despite the fierce competition, Pinduoduo also has the opportunity to become the ultimate player of community group buying.
First of all, Pinduoduo's entry into community group buying has natural advantages. Community group buying is to cut into the fresh category, while Pinduoduo started in the field of agricultural products, and buying more vegetables is an extension of Pinduoduo's e-commerce business. Pinduoduo has a first-mover advantage in the supply chain.
Secondly, the traffic of Pinduoduo APP is huge. Up to now, the number of annual active buyers of Pinduoduo has reached 823.8 million, leading the domestic e-commerce platform. Moreover, community group buying and Pinduoduo users are highly overlapping, and the main battlefield of both is a sinking market with high price sensitivity.
Finally, community group buying is a protracted battle, but Pinduoduo has abundant funds to fight. As of March 31, 2021, Pinduoduo's cash and cash equivalents and short-term investments amounted to $83.4 billion.
Chen Lei said that China's retail market still has great potential, Duoduo is still in the early stage of providing consumers with a new shopping experience, with the improvement of service standards and consumer experience, the size of the market will be further expanded.
In the long run, the deep cultivation of community group buying will enhance the certainty of Pinduoduo's future performance. And at present, Pinduoduo has more than 800 million users, which can tell more new stories and look forward to the future.