PDD Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to PDD Holdings, Inc. Second Quarter 2023 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 will need to press star 1 on your telephone. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your host today, Mr. Cheng Teng. So please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us today. My name is Cheng, and I will help host the earnings call. PD Holdings earnings release was distributed earlier and is available on our website at investor.pdholdings.com. as well through group 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 non-GAAP measures to GAAP measures. Joining us today on the call are Chen Lei, our Chairman and Co-Chief Executive Officer, Zhao Jiazhen, our Executive Director and Co-Chief Executive Officer, Liu Jun, our VP of Finance. Lei and Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus. Jun will then walk us through our financial results for the second quarter ended June 30, 2023. During the Q&A session, Lei and Jiazhen will answer questions in Chinese and we 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 language should prevail. Now, it's my pleasure to introduce our chairman and co-chief executive officer, Chen Lei. Lei, please go ahead.

Hello, everyone. Thank you for joining our earnings call for the second quarter of 2023. I will start by giving a brief overview of our second quarter results. We achieved a total of RMB $52.3 billion in revenue this quarter, representing a 66% year-on-year increase. This reflects the growing trust that consumers place in our products and services. During the past quarter, we observed a continued improvement in consumer sentiment, resulting in increasing consumer demand across multiple product categories. We also actively launched various promotional initiatives that boosted consumer demand. For instance, we supported a June 18 shopping festival with attractive promotions and discount coupons to encourage spending. The response from consumers was positive. Recognizing this trend, we remain devoted to connecting products directly with consumers so that they can enjoy a wide range of quality products at attractive value with great service satisfaction. Since the start of 2023, our main focus has been high-quality development. The results from this quarter offer concrete evidence that our strategy is starting to bear fruit. This gives us more confidence that we are on the right path and that our investments are laying the foundation for continued quality growth. A cornerstone for achieving high-quality growth is our commitment to research and development, which is the lifeblood of innovation. Over the past 12 months, our IND expenditure exceeded IND 10 billion, with Q2's IND spending hitting a new high, reflecting our dedication to investing in the future. We will continue to increase our investments in IND as innovation represents the future engine of growth for the company. As a company with its roots in agriculture, We have been firsthand witnesses to how technology can transform and drive farming practices. Through technological advancement, we have optimized the matching of demand and supply, helping farmers to sell their products and consumers to get fresher produce. A key driving force behind our emphasis on agriculture is our belief in social impact of innovation. This has motivated us to support talent cultivation, promote the adoption of practical and cost-effective technology, and transform scientific research into tangible, commercially viable solutions. For the past three years, our annual Smart Agriculture Competition has been a platform to advance precision farming. We partnered with leading agronomic institutes, including China Agriculture University, Zhejiang University, FAO China, and the Shanghai Academy of Agricultural Sciences. The latest iteration involves the use of compact spaces, like shipping containers, for vertical farming. Aspiring teams challenge themselves to come up with cost-effective ways to growing and marketing high-quality greens. With our help, many teams have turned their innovations into real-time applications. For example, a pioneering team from our inaugural competition deployed 40 cutting-edge systems, empowering farmers to boost their yields by 30%. They achieved this while at the same time reducing overhead costs related to labor, fertilizer, and prime protection. A team from this year's event is in the process of utilizing an algorithm that moderates neutral combinations with the aim to make it easy for more people to use. Our diverse projects aim to bridge the gap between research and real-world application. We have supported the creation of many agri-tech demonstration hubs. These centers of excellence serve as fertile grounds to combine academic learning with hands-on experience. By giving budding sciences the platform to validate their research under real-world conditions, we envision speeding up the digital transformation of agriculture to the collective benefit of society. We also strive to help push the boundary of agri-tech through our support for fundamental research. In May, to further accelerate the pace of innovation, we made a donation of 100 million RMB to China Agriculture University. As a part of our 10 billion agriculture initiative, this contribution established a dedicated research fund aimed at addressing critical needs in agriculture. Additionally, we have partnered with FAO China to start a three-year research program that focuses on four key themes, namely agricultural modernization, precision farming, sustainability, and health nutrition. Here, I'm happy to announce the appointment of Professor Yvonne Richards as an independent director to PDD's board. Professor Luchens, with her long standing tenure since 2001 as a professor at One Handicap University, and currently a department head of toxicology, is a well respected expert in food tech research. Her three decades expertise in food safety will no doubt be a huge support to our agri-tech initiative. With her on board, our board of directors now have seven members, and the majority being independent directors. The appointment not only enriched our board of expertise, but also adds to its diversity. In addition, to strengthen our global footprint and operations, we will set up a legal and a compliance committee to build and oversee regional, legal, and complex matters, given their complexity and different requirements of each region. I will chair this committee, which will replace the general council role and function. As we stated in our IPO letter, PED is still a young organization that will continue to adapt as he strives to be a mature global institution. During this journey, our goals remain the same. We will continue to champion innovation, nurture emerging talents, and constantly seek to bring on the best people to guide us towards our goal of seeking quality development. And now, I will head over to our co-CEO, Jiazhen, who will go into more details about our quality development.