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    PDD
    Earnings call· Dec 2024(Q4 FY24)

    PDD Holdings Inc. PDD

    Mar 20, 2025 Source

    Executive summary

    PDD Holdings Q4 FY24 — High-Quality Development Strategy Drives Stable Results Amidst Ecosystem Investments

    PDD Holdings delivered stable Q4 FY24 results, with revenue growth moderating amidst significant investments in its high-quality development strategy. The company is prioritizing ecosystem enhancements, merchant support, and supply chain transformation, which are expected to impact short-term financials but drive sustainable long-term returns. Despite external challenges, PDD remains committed to its consumer-centric approach and global expansion, focusing on compliance and localized solutions.

    Highlights

    5

    • Q4 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.

    • Non-GAAP diluted earnings per ADS increased to RMB 20.15 in Q4 FY24 from RMB 17.32 in Q4 FY23.

    • The CNY 10 billion fee reduction program enabled over 10 million merchants to enhance operational efficiency.

    • Logistics support measures drove double-digit order volume growth in remote regions and extended free shipping to nearly 100 million consumers.

    Concerns

    4

    • Revenue growth moderated in Q4 FY24 (24% YoY) compared to full year 2024 (59% YoY).

    • Significant ecosystem investments, a fast-changing external environment, and intensified competition are expected to impact short-term financials.

    • External changes and macro policies may bring challenges to the global business.

    • Increased investments in merchant support and platform ecosystem development may create fluctuations in profitability.

    Guidance & targets

    1
    CategoryTargetConfidence
    High-quality development strategy
    Will remain at the core and redouble efforts
    medium materiality
    High

    Operational metrics

    33
    Total Revenue
    RMB 110.6 billionup 24% year-on-year
    Q4 FY24
    Total Revenue
    RMB 393.8 billiongrowing 59% year-on-year
    FY24
    Online Marketing Services and Others Revenue
    RMB 57 billionup 17% compared to the same period of 2023
    Q4 FY24
    Transaction Services Revenue
    RMB 53.6 billionup 33% versus the same period of 2023
    Q4 FY24
    Total Cost of Revenues
    RMB 47.8 billionincreased 36% from RMB 35.1 billion in Q4 2023
    Q4 FY24
    Total Cost of Revenues
    RMB 153.9 billionincreased 68%
    FY24

    Mainly due to increased fulfillment fees and payment processing fees.

    GAAP Total Operating Expenses
    RMB 37.2 billionincreased 19% from RMB 31.4 billion in the same quarter of 2023
    Q4 FY24
    Non-GAAP Total Operating Expenses
    RMB 35.1 billionincreased from RMB 29.3 billion in Q4 2023
    Q4 FY24
    Non-GAAP Total Operating Expenses
    RMB 122 billionup from RMB 90.3 billion in 2023
    FY24
    Non-GAAP Total Operating Expenses as % of Total Revenues
    32%compared to 33% same quarter 2023
    Q4 FY24
    Non-GAAP Sales and Marketing Expenses
    RMB 31.1 billionup 19% versus the same quarter of 2023
    Q4 FY24
    Non-GAAP Sales and Marketing Expenses
    RMB 109.1 billionincreased from RMB 79.8 billion to RMB 109.1 billion in 2024
    FY24
    Non-GAAP Sales and Marketing Expenses as % of Revenue
    28%versus 30% for the same quarter in 2023
    Q4 FY24
    Non-GAAP G&A Expenses
    RMB 998 millionversus RMB 674 million in the same quarter of 2023
    Q4 FY24
    Non-GAAP G&A Expenses
    RMB 2.8 billionversus RMB 1.8 billion last year
    FY24
    Non-GAAP Research and Development Expenses
    RMB 3 billion
    Q4 FY24
    GAAP Research and Development Expenses
    RMB 3.8 billion
    Q4 FY24
    GAAP Operating Profit
    RMB 25.6 billionversus RMB 22.4 billion in the same quarter of 2023
    Q4 FY24
    Non-GAAP Operating Profit
    RMB 28 billionversus RMB 24.6 billion in the same quarter of 2023
    Q4 FY24
    Non-GAAP Operating Profit
    RMB 118.3 billionincreased from RMB 65.8 billion to RMB 118.3 billion in 2024
    FY24
    GAAP Net Income Attributable to Ordinary Shareholders
    RMB 27.4 billion
    Q4 FY24
    GAAP Net Income Attributable to Ordinary Shareholders
    RMB 112.4 billion
    FY24
    Non-GAAP Net Income Attributable to Ordinary Shareholders
    RMB 29.9 billion
    Q4 FY24
    Non-GAAP Net Income Attributable to Ordinary Shareholders
    RMB 122.3 billion
    FY24
    Basic Earnings Per ADS
    RMB 19.76versus RMB 17 in the same quarter of 2023
    Q4 FY24
    Diluted Earnings Per ADS
    RMB 18.53versus RMB 15.83 in the same quarter of 2023
    Q4 FY24
    Non-GAAP Diluted Earnings Per ADS
    RMB 20.15versus RMB 17.32 in the same quarter of 2023
    Q4 FY24
    Cash, Cash Equivalents and Short-Term Investments
    RMB 331.6 billion
    as of Dec 31, 2024
    CNY 10 billion fee reduction program
    over 10 million
    H2 FY24

    Program enabled merchants to enhance operational efficiency and reduce costs.

    Logistics support measures
    double-digit order volume growth
    Q4 FY24

    Drove order volume growth and extended free shipping to nearly 100 million consumers.

    Free shipping consumer reach
    nearly 100 million
    Q4 FY24

    Extended by logistics support measures.

    Double 11 shopping festival order volume
    61 million
    Q4 FY24

    Achieved in the first 2 rounds of super double savings.

    Merchant Rights Protection Committee establishment
    —
    January 2025

    Established to coordinate efforts across the platform, understand merchant needs, collect feedback, and optimize experiences.

    Industry KPIs

    4
    MetricValueDetails
    Segment revenue mixRMB 57 billionRMB
    Regional market performancedouble-digit order volume growth%
    Advertising revenue take rateRMB 57 billionRMB
    Operating income EBIT and adjusted EBITDARMB 28 billionRMB

    Risks & headwinds

    4
    Fast-changing external environment and intensified competitionShort-term

    Will impact short-term financials.

    Mitigation: Unwavering commitment to ecosystem investments for sustainable long-term returns.

    Macro policy changes related to global business operationsOngoing

    May bring some challenges to global business.

    Mitigation: Strictly comply with laws and regulations, proactively communicate with external parties, continuously refine services and compliance standards.

    Fluctuations in profitability due to increased investmentsNear term

    May create fluctuations.

    Mitigation: Expects ups and downs, confident in long-term goals, sustained investments and optimization for a healthy ecosystem.

    Homogeneous competition in certain industriesOngoing

    Squeezes profits for businesses and undermines innovation.

    Mitigation: Launching policies to support high-quality suppliers, cutting fees, streamlining operations, encouraging investment in products/services.

    What to watch in Q1 FY25

    4

    Impact of high-quality development strategy on financials

    Next quarter
    CurrentModeration in revenue growth (Q4 FY24 24% YoY), fluctuations in profitability due to investments.
    TargetEvidence of sustainable growth and improved profitability.

    Why it matters

    This strategy is core to the company's long-term value creation, and its financial impact is key to the investment thesis.

    Our Q4 revenue reached RMB 110.6 billion, up 24% year-on-year and full year 2024 revenue totaled RMB 393.8 billion, growing 59% year-on-year, which represents a moderation in revenue growth. As mentioned in previous quarters, our significant ecosystem investment, coupled with fast-changing external environment and intensified competition landscape will impact short-term financials.

    Q&A highlights

    6

    How will ecosystem investments drive future growth, and what are the long-term goals for platform ecosystem development?

    Chen Lei explained that initiatives like fee reductions and merchant support lower operational costs and enable product innovation, driving quality-driven growth. This leads to a stronger ecosystem, better products for consumers, and a healthy environment for all stakeholders, which is central to the high-quality development strategy.

    “By cutting fees and streamlining operations, we are encouraging merchants to invest more in their products and services. This is leading our platform onto a new stage of quality-driven growth.”

    asked by Joyce Ju · answered by Lei Chen

    2 min read5 chapters

    Detailed Narrative

    01

    High-Quality Development Strategy

    PDD Holdings is advancing its high-quality development strategy, aiming for sustainable growth across its platform and supply chain ecosystem. This involves a series of initiatives such as the CNY 10 billion fee reduction program, logistics support for remote regions, and a high-quality merchant support program. These efforts are designed to enhance the overall business environment for merchants and foster a platform ecosystem that benefits all participants, leading to a new phase of quality-driven growth.

    02

    Merchant and Supply Chain Empowerment

    The company has implemented programs to lower operational costs for merchants and encourage investment in product innovation and technology, driving meaningful supply chain upgrades. The CNY 10 billion fee reduction program has enabled over 10 million merchants to enhance efficiency. Examples include supporting manufacturers in specific industrial zones and helping traditional industries, such as women's footwear in Guangdong province, adapt to market shifts by leveraging platform data analytics for product development and supply chain transformation.

    03

    Consumer-Centric Initiatives

    PDD continues to focus on its consumer-centric strategy by upgrading promotional campaigns like 'super level savings' and launching '10 billion consumption vouchers' during peak seasons such as the Double 11 shopping festival, where order volume exceeded 61 million in the first two rounds. Investments in supply chain and logistics support have enriched consumer choices, particularly in remote Western regions, by accelerating the flow of high-quality products and seasonal specialties, extending free shipping to nearly 100 million consumers.

    04

    Global Business Strategy

    Despite accelerating changes in the external environment, fierce competition, and potential macro policy shifts, PDD remains committed to its global business. The strategy emphasizes strict compliance with laws and regulations, proactive communication with external parties, and continuous refinement of services and compliance standards. The company aims to deepen its core strengths in supply chain efficiency and operational capabilities while exploring new business models, localized supply chain solutions, and expanding product categories and services.

    05

    Social Responsibility and Long-Term Value Creation

    PDD is increasingly focusing on social responsibility, viewing it as aligned with long-term shareholder accountability. This includes sustained investments in agricultural technology, supply chain innovation, and training for next-generation farmers to promote agricultural modernization, improve supply chain efficiency, boost farmer incomes, and generate local employment. The company believes that building an inclusive ecosystem that creates value for all participants will set it up for sustainable growth and long-term returns.

    AI-generated summary of the company’s earnings call. Not investment advice.