PDD Holdings Inc.

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Pinduoduo Third Quarter 2021 Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's prepared remarks, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I will now turn the call over to your host for today's call, Mr. Changpeng. Please go ahead, sir.

Thank you, operator. Hello, everyone, and thank you for joining us today. My name is Chen, and I will help host the earnings call today. Pinduoduo earnings release was distributed earlier and is available on our website at investor.pinduoduo.com, as well as through global newswire services. Before we begin, I would like to refer you to our safe harbor statement in earnings press release, which applies to this call, as we will make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to GAAP measures. Joining us today on the call are Chen Lei, our Chairman and Chief Executive Officer, Tony Ma, our VP of Finance. Lei will make some general remarks on our performance for the past quarter and our strategic focus going forward. Tony will then elaborate further on specific strategic initiatives and take us through our financial results for the third quarter ended September 30, 2021. After that, we will open the floor to questions from analysts. During the Q&A session, they will answer questions in Chinese, and Preston will help translate. Please kindly note that all translations provided are for ease of reference only. In case of any discrepancy between the original remarks and translated version, statements in the original language should prevail. Now, it is my pleasure to introduce our Chairman and Chief Executive Officer, Chen Lei. Lei, please go ahead.

Thank you, Chen. Hello, everyone, and thank you for joining our result announcement for the third quarter of 2021. Our total revenue for this quarter Excluding revenue from merchandise sales was RMB 21.4 billion. This represents a year-on-year increase of 55%. Our annual active buyers reached 867.3 million for the 12 months ending on September 30th. Over the quarter, average MAU increased to 741.5 million. We are grateful for opportunities to serve our users, farmers, merchants, and everyone who has interacted with us in the past six years, and we hope to continue serving them. It has been over a year since I took over as a CEO, and half a year as chairman of the board. We have been busy working on a transition, which I'm happy to report has been gradual and on track. There are two major things to this transition that has been happening behind the scenes. The first is grooming younger talent and leaders, and the second is shifting to more focused investments in R&D from a previous focus on sales and marketing in the first five years. And now, let me elaborate. First, ongoing younger talent and leaders. Since the beginning of last year, we have witnessed many of our younger team members stepping up to take more responsibilities. These young men and women demonstrated their core value of commitment to our users. When COVID-19 first struck and disrupted our daily lives, many of our young team immediately took actions to source essential supplies and deliver to users in need. When heavy rains struck Henan in July, they sprang into action to source out-of-stock goods and coordinate in logistics so that our users would not run out of daily necessities. This unfortunate event has accelerated their maturity and sense of servanthood to our users and society. who have been encouraged to see more with potential to become future leaders of our business. They make practical business decisions exceeding our expectations. I'm proud to be able to work alongside with this young team. Despite their age, many of them have been with the company for a number of years and have matured on the job. They are shaping the future of this company. Young talent brings creativity and vigor and constantly innovates. You will see more of them taking on critical roles in the next 6 to 12 months as we continue to create opportunities for them to step up. And the second should tend to more focus and investment in research and development. We're already serving 867 million users. To leverage on our strength of having a management with years of engineering training, we have been increasing our research development investments. This is a significant shift in strategy from our first five years when we were focusing much more on sales and marketing. Agriculture has been a main theme and a backbone of our business since the very beginning. when we saw an opportunity to create value by bringing agriculture into a digital economy. Trained as engineers, my team and I have devoted ourselves to find technology solutions to implement across the agricultural supply chain. We have only scratched the surface after six years. There is still much more for us to do in agriculture, especially with technology. we plan to deepen our investment in tech-enabled agriculture solutions to address critical needs in this sector. This includes, first, bringing more agricultural products and agriculture communities into a digital economy, and second, further improving efficiency in agriculture supply chains to meet user demand and reduce waste. Over the past six years, Pinduoduo has provided consumers across China with a wider variety of agricultural produce at better prices, while helping farmers to increase their income. When we started six years ago, we were among the first to sell agricultural produce online, and now we are connecting 16 million farmers to 867.3 million consumers nationwide. during China's Golden Week in October. Agriculture-related orders in our platform surged 279% over the same period last year. We hope Pinduoduo will be the go-to platform for quality agricultural products for farmers and consumers. We look forward to leveraging our platform to help more farmers in order to improve their livelihood and benefit their communities. To this end, we will continue to focus our efforts in digital inclusion in agricultural industries. We will expand our course offering on DoDo Academy to upskill farmers on e-commerce and store operations. It helps them to control price, quantity, and in a way, their own destiny in their own hands as they can sell directly to consumers. In order to exercise agricultural digitization, we practice to maintain our zero commission policy on agricultural products. At the same time, we will continue to improve consumer awareness and appreciation of agricultural produce, geographical indications, and agricultural brands through technology innovation, such as live streaming, media marketing, et cetera. The more awareness consumers have, the more educated farmers are, the more value can be created to agriculture communities in China. We are also designing tech-enabled services to increase supply chain efficiency to the agriculture sector. One of them is to match local supply with local demand. At the same time, it helps reduce unnecessary transit to provide fresh options for consumers. to further cut down transportation time and reduce food loss and waste. We are developing proprietary technology solutions like route planning, algorithm design, analytics, and culture optimization. These solutions help to lay the foundation for an infrastructure that's more suitable for agriculture produce and more environmentally sustainable. Our efforts in applying agricultural technology go beyond matching supply and demand and extend into identifying upstream technology solutions to improve productivity, nutritional profiles, and environmental sustainability. By strengthening agri-tech applications, we also hope to make agriculture attractive to a tech-savvy younger generation. A good example of our efforts in this area is our smart agriculture competition. It has demonstrated that precision farming techniques can make real improvements to farm output. Some teams from our competition last year have started to commercialize their technology on strawberry cultivation, instruction them on startups and bring tangible productivity gains to farmers. This year, we have joined force with China Agricultural University and Zhejiang University, with technical guidance from the UN Food and Agricultural Organization and the Wuhan University of Research. In line with our priorities, we are expanding the challenge to accept not just yield, but the nutritional value, environmental sustainability, and commercial viability. Contestants have adopted a multidisciplinary approach, applying nutrition science, precision farming, and other relevant technologies to cultivate tomatoes. The final team comes from cross-disciplinary backgrounds, ranging from agricultural to computer sciences. Currently, they are remotely planting tomatoes in our smart greenhouse space in Yunnan. We are encouraged to see that 80% of the team members are in their 20s, bringing vitality and new ideas to a traditional agriculture sector. At the same time, we are partnering with world-class agriculture institutes to offer these young agri-tech talents tailored courses and trainings on topics such as greenhouse, horticulture, crop management, and monitoring. Agriculture is an industry with great potential for young people to see a future in technology and who aspire to make impact on society. As an agri-focused platform, we want to leverage our platform and technology to provide more opportunities for young talent to join the agriculture sector, working with them to apply technology to improve every link of agriculture supply chain. Investing in technology to improve agriculture sectors is an important yet challenging task. It requires our long-term commitment, and we will be patient and systematic. We hope that through our efforts, we can help build a smarter and more sustainable future for agriculture. Last quarter, we announced the launch of a $10 billion agriculture initiative. which seeks to address critical needs in the agriculture sector and rural areas. The initiative will not be driven by profit or commercial goals, but strive to facilitate the advancement of agri-tech, promote digital inclusion, and provide agri-talent with greater motivation and sense of achievement. Profits from the second quarter and any potential profits in the future quarters will go into this initiative until the final goal of $10 billion is met. The profits for the third quarter will also go into these initiatives. After receiving bulk endorsement, we held an EGM at the end of September, and the initiative was approved by our shareholders. Pinduoduo is closely connected to the community that we operate in. Their support has been crucial in our development, and we in turn want to support them to the best of our ability. Therefore, we are committed to take on more responsibility for society. In July, we struck into action after heavy rains struck Henan. We donated 100 million RMB to flood relief and launched a portal to support emergency relief distribution. The Duo Duo Grocery Network in Zhengzhou took stock of food and emergency supplies and worked with suppliers inside and outside Henan to secure and distribute necessities to our nearly 20,000 partners there. In October, we also contributed to the relief effort in Shanxi in response to the heavy rain there, donating 15 million 50 million RMB to the Science Charity Foundation to carry out emergency disaster relief and post-disaster reconstruction work. Looking forward, we pledge to do more to contribute to our society. We will continue to proactively leverage our platform and resources to serve our users, farmers, merchants, and their communities better. Thank you. And now, let me pass the time to Thomas.