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Pinduoduo Stock Gains 15% After Company Reports Triple-Digit Increase in Quarterly Revenue

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One year following its IPO, Chinese mobile and internet e-commerce platform company Pinduoduo Inc. reported 169% revenue growth and an 88% growth in monthly active users.

Shanghai-based virtual bazaar mobile e-commerce platform operator Pinduoduo Inc. (PDD:NASDAQ) today announced its unaudited financial results for the second quarter ended June 30, 2019.

The company reported that for Q2/19 total revenues were RMB7,290.0 million (US$1,061.9 million), an increase of 169% from RMB2,709.0 million in Q2/18. The increase was primarily due to an increase in revenues from online marketing services which in Q2/19 increased 173% to RMB6,467.1 million (US$942.0 million) compared to RMB2,371.0 million in Q2/18. Revenues from transaction services in Q2/19 were RMB822.9 million (US$119.9 million), an increase of 143% from RMB338.1 million in Q2/18.

The firm reported a much lower operating loss of RMB1,490.4 million (US$217.1 million), compared with operating loss of RMB6,636.2 million in Q2/18, and a non-GAAP operating loss of RMB898.4 million (US$130.9 million) in Q2/19, compared with a loss of RMB815.7 million Q2/18.

Net loss attributable to ordinary shareholders was RMB1,003.3 million (US$146.1 million), compared with net loss of RMB6,493.9 million in Q2/18. Non-GAAP net loss attributable to ordinary shareholders was RMB411.3 million (US$59.9 million), compared with non-GAAP net loss attributable to ordinary shareholders of RMB673.4 million in Q2/18.

Basic and diluted net loss per ADS in Q2/19 were RMB0.88 (US$0.12), compared with net loss per ADS of RMB13.40 in Q2/18. Non-GAAP basic and diluted net loss per ADS were RMB0.36(US$0.04), compared with non-GAAP basic and diluted net loss per ADS of RMB1.40 in the same corresponding periods.

Net cash provided by operating activities increased to RMB4,148.0 million (US$604.2 million) over RMB1,087.6 million in Q2/18, primarily due to an increase in online marketing services revenues.

The company also provided customer usage and buyer engagement data indicating that average monthly active users in Q2/19 numbered 366 million, an increase of 88% from 195 million in Q2/18. Active buyers in the 12-month period ended June 30, 2019 totaled 483.2 million, an increase of 41% from 343.6 million in the 12-month period ended June 30, 2018. Annual spending per active buyer in the 12-month period ended June 30, 2019 averaged RMB1,467.5 (US$213.8), an increase of 92% from RMB762.8 in the 12-month period ended June 30, 2018.

Zheng Huang, Pinduoduo's chairman and CEO commented, "We are pleased with our results in the second quarter of 2019...Putting users interests first, we worked with our merchants to provide our users with a targeted, compelling value proposition on their most coveted items. This unwavering focus on our users contributed to the significant increase in our annual active buyer base and annual spending per active buyer, which together led to the 171% increase in our last-twelve-month GMV to RMB709.1 billion."

The company's VP of Strategy, David Liu, added, "For the quarter ended June 30, 2019, our total revenues increased by 169% year-over-year to RMB7,290.0 million, primarily as a result of the robust growth in our online marketing services revenues...In comparison, our sales and marketing expenses for the same period grew by 105% year-over-year to RMB6,103.7 million, or 84% of our total revenues. Our investments in growing user engagement are showing signs of success. As users engage more on our platform, merchants also see improved marketing returns from greater exposure and conversion. We plan to continue investing strategically in our users and merchants in 2019 to drive further engagement."

In addition, the firm announced the appointment of Anthony Kam Ping Leung effective August 21, 2019, to serve as an independent director of the company. Leung, who is a Chartered Financial Analyst and a chartered accountant in Singapore with more than 30 years of experience in the financial services industry in Asia, will also serve as the chairperson of the Audit Committee.

Pinduoduo describe its business as an innovative and fast growing "new e-commerce" platform that provides buyers with value-for-money merchandise and fun and interactive shopping experiences. The Pinduoduo mobile platform offers a comprehensive selection of attractively priced merchandise, featuring a dynamic virtual bazaar social shopping experience that leverages social networks as an effective and efficient tool for buyer acquisition and engagement. The platform provides a range of online payment options that include Alipay, QQ Wallet, Weixin Pay and Apple Pay. The company1s platform offers numerous product categories including apparel, bags, shoes, food, beverage and fresh produce, childcare good, electronic appliances, furniture, household, cosmetics, sports and fitness items, and auto accessories.

PDD shares opened higher today at $29.40 (+$3.44, +13.25%) over the prior day1s closing price of $25.96. In morning trading, shares have traded between $28.86 and $30.20 and ended the day at $30.11 (+$4.15 +15.99%).

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