PDD Holdings, Inc. Q4 FY2024 earnings call

• 2024 was a pivotal year for advancing high-quality development strategy, with initiatives like fee reductions, trust and safety updates, and proactive measures in platform operations, merchant services, etc.
• Implemented a 10 billion fee reduction program enabling over 10 million merchants to enhance efficiency and reduce costs; logistics support measures for remote regions drove double-digit order growth and extended free shipping to nearly 100 million consumers there; high-quality merchant support program helped many merchants transition to high-quality development.
• Remain committed to supporting agriculture through investments in agriculture technology, supply chain innovation, and training for next-generation farmers; long-term initiatives in agriculture delivered encouraging results.
• Global business focuses on providing global consumers with high-quality products, focusing on supply chain activity, service innovation, and ecosystem development while observing high compliance standards.

In the fourth quarter, PDD Holdings' revenue reached RMB 110.6 billion, up 24% year-on-year. Full year 2024 revenue totaled RMB 393.8 billion, growing 59% year-on-year. Online marketing services revenue in Q4 was RMB 57 billion, up 17% compared to the same period of 2023, contributing a significant portion to total revenue. Transaction services revenue this quarter was RMB 53.6 billion, up 33% for the same period of 2023.

• 2025 will remain focused on high-quality development, continuing to focus on healthy and sustainable development of merchants and supply chain, strengthening merchant rights protection, backing support for high-quality merchants, and broadening quality supply on the platforms.
• Aim to accelerate the supply of high-quality products to remote regions to enhance product offerings for consumers in less accessible areas and foster a win-win ecosystem.
• Continue to prioritize investments in platform ecosystems as the cornerstone of long-term value creation strategy.

• Intense competition in the domestic e-commerce market may impact the company's development strategies.
• Global business may face changes in macro conditions and policy, which could bring challenges to the company's operations.

Q: How should we think about the long-term goals for platform ecosystem development and how this will drive the platform’s further growth?

A: Since the second quarter of 2024, initiatives around merchant rights protection like the 10 billion fee reduction program and high-quality merchant support program have been effective. These drive supply chain upgrades, leading to more high-quality merchants and products, providing consumers with better experiences and creating a healthy ecosystem benefiting all stakeholders.

Q: The competitions in the domestic e-commerce market has been intensifying. Could management share some insights into any recent developments in the competitive landscape and whether there will be any adjustment to the company’s development strategies in the future?

A: Competition is inherent in the e-commerce industry and drives its advancement. Our platforms are refining strategies and services to respond to shifting consumer preferences, continuously optimizing platform ecosystem and services under quality-driven strategy, and making meaningful long-term high-quality investments to strengthen advantage.

Q: The company’s revenue growth has slowed in the recent quarters and profit have been fluctuating. So how should we think about the revenue and profits trend in the near term?

A: External uncertainties and intense competition have impacted short-term revenue growth, and increased investments in merchant support and platform ecosystem development may cause profit fluctuations. But through sustained investments and optimization, a healthy e-commerce ecosystem can be created, and current efforts have started to foster a virtuous cycle.