PDD Holdings Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Pink Door Draw's second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, you need to press star 11 on your telephone. I must advise you that this conference is being recorded today. I'd now like to hand the conference over to your host today, Mr. Chen Peng. Sir, please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us today. My name is Chen, and I will help host the earnings call. Pinduoduo earnings release was distributed earlier and is available on the AI 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 the earnings press release, which applies to this call, as we will make certain forward-looking statements. This call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures. Joining us today on the call are Chen Lei, our Chairman and Chief Executive Officer, Liu Jun, our VP of Finance. Lei will make some general remarks on our performance for the past quarter and our strategic focus. Jun will then take us through our financial results for the second quarter and the June 30, 2022. During the Q&A session, Lei will answer questions in Chinese, and I will help translate. Please kindly note that all translations provided are for reference purpose only. In case of any discrepancy between the original remarks and the translated version, statements in the original remarks should prevail. Now, it is my pleasure to introduce our Chairman and Chief Executive Officer, Chen Lei. Lei, please go ahead.

Thank you, Chen, and hello, everyone. Thank you for joining our earliest call for the second quarter of 2022. Let me start by giving a brief overview of our second quarter results. Our total revenue for this quarter was RMB 31.4 billion. This represents a year-on-year increase of 36%. We witnessed the resilience of China's consumption during the second quarter. After being temporarily affected in early part of the quarter, Pent-up demand was released as things returned to normal, and consumer sentiment gradually recovered in the second half of Q2. Since mid-May, we launched several campaigns and distributed coupons to bolster consumer confidence. Such recovery in consumer confidence was also reflected in a positive reception for this year's June 18 shopping festival. During the June 18 shopping festival, we continue to focus on bringing our customers more savings and more fun. We are encouraged to see consumers buying from a wide range of categories. For example, categories such as agriculture produce, FMCG, household electronics, and cosmetics all experience solid consumer demand during the festival. Also, more and more brands are partnering with us, and many of them use our platform to launch their new products. These are signs that consumers and merchants are finding value in our platform. Having said that, we still have a long way to go before fully meeting our consumers' evolving needs. Our business activities and investments were affected during the last quarter, especially in the first half. Short-term external factors such as remote working and the travel restrictions caused delays of certain projects, including promotional events and agri-tech initiatives. Even though this might make the quarterly financials look better, the long-term prospects of our platform may be affected. especially considering the current industry dynamics. Therefore, it has become more important than ever to step up our investment and build up our core capabilities. We must make every possible improvement and create value for our consumers, business partners, and the society. For consumers, We are constantly on the lookout for new unmet needs and iterating our services to address those needs. For example, during April, we saw a spike in consumer demand for fresh food, groceries, and the daily necessities in Shanghai. To meet this demand, we set up a special section in the Pinduoduo app for residents to buy fresh food and essential items and have been delivered within 48 hours. From the initial 25 items, we quickly expanded the selection to around 300 products, from essentials like rice and cooking oil to diapers and hygiene products. Given the surge in demand and limited logistical capability capacity, we also offered more delivery flexibility through the pooling of orders by housing community. Here, we would like to take a moment to express our gratitude to our colleagues who work hard to ensure the operation of our platform in the past quarter. Their hard work served many consumers in their time of need. and we are deeply thankful and proud of their contribution. As things gradually return to normal, we also launched various events to promote seasonal agricultural produce. For instance, in late May, in response to consumer demand, we launched a campaign to help consumers discover and enjoy seasonal fruits from across the country. This event was well received by consumers. Sales of lychee surged 158% compared with a year ago, while orders increased significantly for other foods, such as watermelon, coconut, and grapes. Seeing consumer feedback, we wrote out a year-old fresh produce of China initiative, together with daily newspaper. This initiative will introduce the unique characteristics of different agricultural specialties across the country to our consumers and contribute to better income for local farmers. For merchants, we work closely with them to ensure stable supply, especially at the start of a quarter when the supply chain was affected. For example, we proactively provided traffic updates to help our merchants better plan and adjust their logistics. We also launched special campaigns and measures to help the small and medium-sized businesses and agricultural merchants on our platform. For example, Our doodle grocery operations quickly contacted local suppliers where we learned that farmers in certain regions were unable to sell their vegetables due to traffic disruption. Within a short period of time, they managed to sell hundreds of tons of vegetables through our platform, directly helping the farmers to avoid financial losses. To support our farmer merchants, we will continue to waive the sales commission of agricultural producers. As a technology company with its roots in agriculture, we firmly believe that technology can serve as a force for good. We see rural communities benefiting from agricultural e-commerce by new jobs and higher incomes. Young people now have the opportunity to start their own online businesses in their hometowns and be close to their families. These benefits are both economic and social, tangible and intangible. We mentioned before that we have trained hundreds of thousands of new farmers, supporting them to set up online businesses and helping their local communities to sell their produce. In addition to farming, we hope to further unleash the vitality of the rural economy by starting a new craftsman program. As with agriculture, we aim to help local artisans and craftsmen promote traditional crafts, build their brands, and widen their access to market. We also expanded our DoDo Reading Month campaign to promote the love of reading among young students in rural areas. As of today, we have donated over 250,000 carefully selected books. We hope that through such efforts, we can do our part in contributing to a better future for these youth. To conclude, as we deal with change from quarter to quarter, we remain focused on building long-term intrinsic value and investing for the future. We will speak closely to our core principles of benefit all, people first, and more open. and stay committed to be the platform that serves as a force for good. Thank you. With that, I will hand over to Jun.