拼多多 (PDD) 2023 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings, Inc. First Quarter 2023 Earnings Conference Call. (Operator Instructions) I must advise you that this conference is being recorded today.

女士們，先生們，感謝您的支持，歡迎來到 PDD Holdings, Inc. 2023 年第一季度收益電話會議。 （操作員說明）我必須通知您，今天正在錄製此會議。

I would now like to hand the conference over to your host today, Mr. Cheng Peng. Sir, please go ahead.

現在我想把會議交給今天的主持人程鵬先生。先生，請繼續。

Thank you, operator. Hello, everyone, and thank you for joining us today. My name is Cheng, and I will help host the earnings call. PDD Holdings earnings release was distributed earlier and is available on our website at investor.pddholdings.com as well as through growth new flat services.

謝謝你，運營商。大家好，感謝您今天加入我們。我叫 Cheng，我將協助主持財報電話會議。 PDD Holdings 收益發布較早發布，可在我們的網站 investor.pddholdings.com 上獲取，也可通過 growth new flat 服務獲取。

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 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 take us through our financial results for the first quarter ended March 31, of 2023.

在我們開始之前，我想請您參考我們在收益新聞稿中的安全港聲明，該聲明適用於本次電話會議，因為我們將做出某些前瞻性聲明。此外，此次電話會議還討論了某些非 GAAP 財務措施。請參閱我們的收益發布，其中包含非 GAAP 措施與 GAAP 措施的調節。今天與我們一起參加電話會議的有我們的董事長兼聯席首席執行官陳磊；我們的執行董事兼聯席首席執行官趙家珍；我們的財務副總裁劉軍。 Lei 和 Jiazhen 將對我們過去一個季度的業績和我們的戰略重點做一些一般性的評論。然後，Jun 將向我們介紹截至 2023 年 3 月 31 日的第一季度財務業績。

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 purposes only. In case of any discrepancy between the original remarks and the translate version, statements in the regional language should prevail.

問答環節，雷和家珍會用中文回答問題，我們會幫忙翻譯。請注意，所有提供的翻譯僅供參考。原文與譯文如有出入，以當地語言表述為準。

Now it's my pleasure to introduce our Chairman and Co-Chief Executive Officer. Chen Lei. Lei, please go ahead.

現在我很高興介紹我們的董事長兼聯席首席執行官。陳磊。蕾，請繼續。

Hello, everyone. Thank you for joining our earnings call for the first quarter of 2023. I will start by giving a brief overview of our first quarter results. We achieved a total of RMB 37.6 billion in revenue this quarter representing a 58% year-on-year increase. During the past quarter, we saw consumer sentiment continue to improve. We have seen a surge in demand across various categories, reflecting consumer eagerness to explore a wide range of products we offer. The quarterly results also show that our long-term strategic focus on high-quality development is starting to pay off. We are glad to see that the focus on quality development not only sets a solid [but] for the future, but also delivered immediate gains for consumers and sellers.

大家好。感謝您參加我們 2023 年第一季度的財報電話會議。我將首先簡要介紹一下我們第一季度的業績。本季度我們共實現收入人民幣 376 億元，同比增長 58%。在上個季度，我們看到消費者信心繼續改善。我們看到各種類別的需求激增，反映出消費者渴望探索我們提供的各種產品。一季報也顯示，我們對高質量發展的長期戰略關注開始見效。我們很高興看到，對質量發展的關注不僅為未來奠定了堅實的基礎，而且為消費者和賣家帶來了立竿見影的收益。

We are encouraged by the strong backing from our stakeholders. We work hard to create a limited marketplace where consumers can find what they are looking for and where high-quality values can drive and succeed. Technology is very important to our machine to build a healthy and vibrant platform ecosystem. It is also a vital catalyst to drive efficiency and opportunities in manufacturing and the retailer sectors. That is why we are putting more time and resources into R&D to foster sustainable progress. Our engineers make up about half of our total employees.

我們對利益相關者的大力支持感到鼓舞。我們努力創造一個有限的市場，消費者可以在這裡找到他們想要的東西，高質量的價值可以推動和成功。技術對我們的機器來說非常重要，它可以構建一個健康而充滿活力的平台生態系統。它也是提高製造和零售部門效率和機會的重要催化劑。這就是我們將更多時間和資源投入研發以促進可持續發展的原因。我們的工程師約占我們員工總數的一半。

R&D helped us meet the unique needs of consumers, provide merchants with deeper understanding in shocking trends and allow manufacturers to response quickly to evolving demand.

研發幫助我們滿足消費者的獨特需求，讓商家更深入地了解令人震驚的趨勢，並讓製造商能夠快速響應不斷變化的需求。

Finally, in supply and demand was better together, we can help unlock the potential in different industries. We will continue to step up our investment in R&D.

最後，在供求關係更好的情況下，我們可以幫助釋放不同行業的潛力。我們將繼續加大研發投入。

And now let me talk about our globalization efforts. Last year, we launched to offer quality products at affordable prices to consumers around the world. By working closely with sellers and manufacturers, (inaudible) offers a wide selection of merchandise reduces supply chain inefficiencies, passing savings to consumers. As we move forward, we will keep seeking ways to meet diverse consumer needs. And we are still in the early stage of exploration. We will always start from the fundamental needs of consumers adapt quickly and drive to create our own unique value.

現在讓我談談我們的全球化努力。去年，我們開始以實惠的價格向全球消費者提供優質產品。通過與銷售商和製造商密切合作，（聽不清）提供了廣泛的商品選擇，減少了供應鏈的低效率，為消費者節省了成本。在我們前進的過程中，我們將不斷尋求滿足不同消費者需求的方法。而我們還處於早期探索階段。我們始終從消費者的根本需求出發，快速適應並驅動創造屬於自己的獨特價值。

As we continue to grow, we are finding more ways to generate a positive impact to the society. A vibrant as a sustainable ecosystem -- e-commerce ecosystem can all be achieved by encouraging broader engagement in a digital economy. For instance, the advent of mobile Internet has created a space for female entrepreneurs in e-commerce, enabling them to balance the work and family. By providing the opportunities we have been able female to utilize their unique skills in managing successful e-commerce enterprises. In fact, many of our platforms series starting their first business with us. They have created jobs and injected new mortalities into their communities. We are committed to providing more opportunities for individuals to become entrepreneurs through training and while the market progress.

隨著我們的不斷發展，我們正在尋找更多方法來對社會產生積極影響。一個充滿活力的可持續生態系統——電子商務生態系統都可以通過鼓勵更廣泛地參與數字經濟來實現。例如，移動互聯網的出現為女性創業者在電商領域創造了空間，使她們能夠兼顧工作與家庭。通過提供機會，我們使女性能夠利用她們獨特的技能來管理成功的電子商務企業。事實上，我們的許多平台系列都與我們一起開始了他們的第一筆業務。他們創造了就業機會，並為他們的社區注入了新的死亡率。我們致力於通過培訓和市場進步，為個人提供更多的創業機會。

We are probably leading among the younger generation. We believe that maturing a passion for reading can open doors to knowledge. To this end, we hold regular reading events and donate books, and we invite reputable authors to talk with students in rural areas. We hope this will help young students broaden their horizon.

我們可能在年輕一代中處於領先地位。我們相信，培養對閱讀的熱情可以打開知識之門。為此，我們定期舉辦讀書會和贈書活動，並邀請知名作家與農村學生進行對話。我們希望這將有助於年輕學生開闊視野。

We are also looking to promote agricultural digital inclusion. We are helping young people were passionate about agriculture, to bring new technology from lab to the field, we are working with top universities and institutes to encourage innovation. We also hold competition for young people to realize their skills and ideas, which help create innovative and sustainable farming practices.

我們還希望促進農業數字包容性。我們正在幫助對農業充滿熱情的年輕人，將新技術從實驗室帶到田間，我們正在與頂尖大學和研究所合作以鼓勵創新。我們還為年輕人舉辦比賽，以實現他們的技能和想法，這有助於創造創新和可持續的農業實踐。

As a young company, still in the development stage, we believe that through the increasing business opportunities facilitated by us, we have uplift communities and make contributions to this (inaudible). We will do more as we grow.

作為一家仍處於發展階段的年輕公司，我們相信通過我們促進的越來越多的商業機會，我們可以提升社區並為此做出貢獻（聽不清）。隨著我們的成長，我們會做得更多。

And finally, I want to introduce my longtime colleague, Mr. Zhao Jiazhen who was recently appointed as co-CEO and Executive Director by our Board. Jiazhen concentrates more on supply chain management and China operations. While my focus is more on globalization. Jiazhen is a founding member of our company. He led the team to launch and expand our total grocery business and also led our supply chain efforts. Jiazhen and I have been working closely together for over a decade. We have established deep trust in each other. His new leadership role shows that our team is full of vitality and our next generation of leaders are ready to take on more changes.

最後，我想介紹一下我的長期同事趙家珍先生，他最近被董事會任命為聯席首席執行官兼執行董事。嘉珍更專注於供應鏈管理和中國業務。而我的重點更多地放在全球化上。家珍是我們公司的創始成員。他帶領團隊推出並擴大了我們的整體雜貨業務，還領導了我們的供應鏈工作。十多年來，家珍和我一直密切合作。我們彼此建立了深厚的信任。他的新領導角色表明我們的團隊充滿活力，我們的下一代領導者已準備好迎接更多的變化。

And now I will hand over to Jiazhen.

而現在就交給家珍了。

[Interpreted] Thank you, Lei. Hello, everyone. This is Zhao Jiazhen. I'm glad to join this earnings call. In Q1, many places introduced measures to promote consumption. We see clear recovery trends. Online retail continues to pick up. Users on Pinduoduo show a higher willingness to shop consumption vitality is becoming increasingly evident. These favorable trends lay a solid foundation for the steady growth of consumption for the whole year. We are very optimistic about the process of the consumption market.

【解讀】謝謝雷。大家好。這是趙家珍。我很高興參加這次財報電話會議。一季度，多地出台促進消費措施。我們看到明顯的複蘇趨勢。在線零售繼續回暖。拼多多用戶表現出更高的購物意願，消費活力日趨明顯。這些利好趨勢為全年消費平穩增長奠定了堅實基礎。我們非常看好消費市場的進程。

Over the past quarter, we actively mobilized platform resources to stimulate and realize the consumption potential. As always, we provide users quality merchandise with more savings in the various large-scale promotional campaigns in Q1, such as the Chinese New Year promotion and the New Year sales, we step up discounts and issued extra coupons to benefit as many users as possible.

過去一個季度，我們積極調動平台資源，激發和釋放消費潛力。我們一如既往地為用戶提供更優惠的優質商品，在Q1的各種大型促銷活動中，如春節促銷、年貨促銷等，我們加大折扣力度，額外發放優惠券，讓盡可能多的用戶受益.

Recently, in this year's Double 5 shopping festival in Shanghai, we invested over RMB 4 billion in coupons and discounts, marking a new high. During this event, we partnered with China Central Television and Oriental TV on live streaming sales showcasing a wide range of products to viewers in an interactive and direct manner, enhancing consumer trust in online shopping.

最近，在今年上海雙五購物節上，我們在優惠券和折扣方面投入了超過40億元人民幣，創下了新高。在此次活動中，我們與中央電視台和東方衛視合作進行直播銷售，以互動和直接的方式向觀眾展示了廣泛的產品，增強了消費者對在線購物的信任。

Furthermore, our total growth rate team actively explores innovation by creating new consumption scenarios and deepening the spillover effect of the pickup points of surrounding areas consumption. We hope this can further promote the development and integration of online and offline consumption.

此外，我們的總增長率團隊積極探索創新，創造新的消費場景，深化周邊地區消費提貨點的溢出效應。我們希望這能進一步促進線上線下消費的發展和融合。

In addition to our strong suit of more savings, we have further improved our ability to provide better services to optimize the consumer experience. We launched the electronics shopping season in advance in April and introduced the concept of everyday is June 18. We not only ensure good prices, but also upgrade services on many fronts to improve consumer experience.

除了我們更節省的優勢外，我們還進一步提高了提供更好服務以優化消費者體驗的能力。我們在4月份就提前推出了電子購物季，引入了每天6月18日的概念。我們不僅保證了好價格，還多方面升級服務，提升消費者體驗。

In the Pinduoduo (inaudible) , which kicked off in late April, we invested hundreds of millions RMB to promote high-quality and universal access to reading. A third party-evaluation report shows that in 5 dimensions, including price, authenticity, after sales support, logistic efficiency and promotion levels, the Pinduoduo platform's overall shopping experience for books run as 1 of the best among many e-commerce peers.

在4月下旬啟動的拼多多（聽不清）中，我們投入了數億人民幣來推動高質量和全民閱讀。第三方測評報告顯示，在價格、正品、售後支持、物流效率、促銷力度等5個維度，拼多多平台的整體圖書購物體驗在眾多電商同行中名列前茅。

Against the backdrop of consumption recovery to satisfy the diversified needs of consumers and form a driving force for expanding consumption. It's both an opportunity and a challenge for us. We aim to further improve the platform ecosystem through a series of impactful measures, including increasing discounts upgrading services and fully protecting consumer rights. We hope to further boost consumption vitality through our focus on quality development of the platform ecosystem.

在消費回暖背景下，滿足消費者多元化需求，形成擴大消費新動能。這對我們來說既是機遇也是挑戰。我們旨在通過一系列有影響力的措施進一步完善平台生態系統，包括增加折扣升級服務和充分保護消費者權益。我們希望通過注重平台生態的高質量發展，進一步激發消費活力。

As consumption rebound it also brings about more intense industry competition. As competition further intensified, some competitive behaviors have gone beyond the scope of normal business activities. For example, since late March, dozens of flagship stores on Pinduoduo bombarded with malicious order. The attackers disrupted its store's normal operation clearly organized and purposeful way or seeing significant losses. We immediately provided protection to the affected stores and upgraded our defense strategy. The stores were back in normal business operations very soon.

消費回暖也帶來了更加激烈的行業競爭。隨著競爭的進一步加劇，一些競爭行為已經超出了正常的經營活動範圍。例如，自3月下旬以來，拼多多數十家旗艦店遭到惡意訂單轟炸。攻擊者破壞了其商店的正常運營，其組織明確且有目的的方式或造成重大損失。我們立即為受影響的商店提供保護併升級我們的防禦策略。這些商店很快就恢復了正常的業務運營。

We believe that competition can motivate us to learn more efficiently and innovate more quickly so that we can speed up the iteration of our services. We will continue to be consumer oriented and react positively and actively to all types of competition, even when we face malicious attacks, we will maintain positive thinking. We will -- attack from competitors into our motivation to move forward we are (inaudible), improve ourselves constantly, innovates with a clear direction and guide the platform towards higher quality development. For example, we have upgraded the shipping processing time for most merchandise categories from 72 hours after placing the order to no later than 48 hours.

我們相信競爭可以激勵我們更高效地學習和更快地創新，從而加快我們服務的迭代。我們將繼續以消費者為導向，積極主動地應對各類競爭，即使面臨惡意攻擊，我們也會保持積極的思考。我們將——把來自競爭對手的攻擊變成我們前進的動力我們是（聽不清），不斷完善自我，明確方向創新，引導平台向更高質量發展。例如，我們已將大多數商品類別的發貨處理時間從下單後的 72 小時升級為不遲於 48 小時。

We will provide a preferential after sales services for elderly consumers and consumers in remote area. In addition, we take a more proactive approach in customer service, such as offering consumers the option to receive refund without returning the item.

我們將為老年消費者和偏遠地區消費者提供優惠的售後服務。此外，我們在客戶服務方面採取了更積極主動的方式，例如為消費者提供無需退貨即可獲得退款的選項。

At the same time, we will further step up our support for quality supply and our investment in the supply chain. We are launching the 10 billion Ecosystem Initiative to offer resources and support to quality sellers and products so that we can promote the quality growth of SMEs and quality sellers and improved overall sellers efficiency and standards. For supply chain, over the years, we have rooted ourselves deeply in major production areas and industrial belts reconnect products directly with end consumers, reduce distribution layers and lower the procurement and sales costs between supply and demand. We will continue to increase investments optimize our supply chain capabilities, strengthen the buildup of physical supply chain infrastructure contribute to the transformation and upgrade of traditional sectors and further deepen our competitive advantages.

同時，我們將進一步加大對優質供應的支持和對供應鏈的投入。我們發起百億生態計劃，為優質賣家和優質產品提供資源和支持，促進中小企業和優質賣家的高質量發展，提升整體賣家效率和水平。在供應鏈方面，多年來，我們深耕主產區和產業帶，將產品與終端消費者直接對接，減少流通層級，降低供需採購和銷售成本。我們將繼續加大投入，優化供應鏈能力，加強實體供應鏈基礎設施建設，助力傳統產業轉型升級，進一步深化競爭優勢。

This year, Pinduoduo has continuously optimized platform governance and actively take some social responsibilities. We strive to bring more responsibility. For example, we have recently launched several dedicated initiatives such as the initiative protect the miners and the initiatives on our authentic book to name a few, so that we can be the positive ecosystem for sustainable development.

今年以來，拼多多不斷優化平台治理，積極承擔一些社會責任。我們努力帶來更多的責任。例如，我們最近發起了幾項專門的倡議，例如保護礦工倡議和我們正版書的倡議等等，以便我們成為可持續發展的積極生態系統。

We also promote digitization in agriculture, and we launched the agriculture cloud initiative. To date, our dedicated team has gone deep into the various production regions many products. We provide specialized e-commerce training for pharma sellers and help connect them with logistics infrastructure suitable for agriculture products such as warehousing and co-chain logistics to reduce transportation space and improve product competitiveness to support brand building agriculture, we search for high-quality specialty products provide strong traffic support and help them gain recognition by including them in our 10 billion program through initiatives similar to the agriculture cloud initiatives, we hope to enable more local production regions to emerge as leaders of certain products and drive the digital transformation of the entire industry value chain.

我們還推動農業數字化，啟動了農業雲計劃。迄今為止，我們敬業的團隊已經深入到眾多產品的各個產區。我們為醫藥銷售商提供專業的電商培訓，幫助他們對接適合農產品的物流基礎設施，如倉儲、連鎖物流等，減少運輸空間，提高產品競爭力，支持品牌建設農業，我們尋找優質特產產品提供強大的流量支持，幫助他們獲得認可，通過類似於農業雲計劃的舉措將其納入我們的百億計劃，我們希望能夠讓更多的地方產區成為某些產品的領導者，並推動整個數字化轉型。產業價值鏈。

We continue to deepen our cooperation with top economic institutes to support the role of agritech in agricultural transformation and promote agritech adoption. We have hosted various events focusing agricultural development, such as the Pinduoduo Crop Growing Competition, the Smart Agriculture Competition and the Global Agricultural Innovator Competition. These competitions promote innovation and inspire more young people to join agriculture. It also leverages sales to support research and helps bring more research funding to the market. As a part of our 10 billion Agriculture Initiative, we recently donated RMB 100 million to set up the Pinduoduo and China Agricultural University Research Fund to further support fundamental research and innovation in agritech.

我們繼續深化與頂級經濟機構的合作，以支持農業科技在農業轉型中的作用並促進農業科技的採用。舉辦了拼多多種草大賽、智慧農業大賽、全球農業創新大賽等聚焦農業發展的賽事。這些比賽促進創新，激勵更多年輕人投身農業。它還利用銷售來支持研究，並幫助為市場帶來更多的研究資金。作為百億農業計劃的一部分，我們最近捐贈了1億元人民幣設立了拼多多和中國農業大學研究基金，以進一步支持農業技術的基礎研究和創新。

We are proud to receive the FAL 2022 Innovation Award from the United Nations Food Agriculture Organization, which recognizes our innovation in the agricultural supply chain. We were the sole recipient of this award globally in 2022. We will continue to work hard, support digital transformation and technology adoption agriculture and uphold the principle of tech for. We will stick to our quality first principle, continue to live up to our role and proactively take up bigger social responsibilities. Additionally, we will remain rooted in the real economy, increase investment in the supply chain and search for strong driving forces towards our high-quality development. We will speed up the process of building up a healthy ecosystem featuring more savings and better services. I look forward to working together with the team to promote high-quality development and promote a healthy win-win outcome for our platform ecosystem.

我們很榮幸獲得聯合國糧食農業組織頒發的 FAL 2022 創新獎，該獎認可了我們在農業供應鏈方面的創新。我們是 2022 年全球唯一獲得該獎項的人。我們將繼續努力，支持數字化轉型和技術採用農業，並秉承科技為先的原則。我們將秉承質量第一的原則，繼續做好本職工作，積極承擔更大的社會責任。此外，我們將繼續紮根實體經濟，加大供應鏈投入，為高質量發展尋找強勁動力。加快構建節流多、服務優的健康生態圈。期待與團隊共同努力，推動高質量發展，促進平台生態良性共贏。

Now let me hand it over to Jun. She will provide you with an update on our financial performance.

現在讓我把它交給 Jun。她將為您提供我們財務業績的最新情況。

Thank you, Jiazhen. Hello, everyone. Let me walk you through our financial performance for the first quarter ended March 31, 2023. In terms of income statement, our total revenues in the quarter (inaudible), up 58%, RMB 23.8 billion in the second quarter of 2022. This increase mainly came from encouraging trends in consumer sentiment and positive responses from consumers and merchants towards our focus on high-quality development. Revenues from online marketing services and others RMB 27.3 billion this quarter, up 50% compared with the same period of 2022. Revenues from transaction services this quarter, RMB 10.4 billion, up 86% versus the same period of 2022.

謝謝家珍。大家好。讓我向您介紹一下我們截至 2023 年 3 月 31 日的第一季度的財務業績。在損益表方面，我們本季度的總收入（聽不清）增長 58%，2022 年第二季度為 238 億元人民幣。這一增長主要來自消費者信心向好趨勢，以及消費者和商家對我們聚焦高質量發展的積極響應。本季度網絡營銷服務及其他收入273億元，較2022年同期增長50%。本季度交易服務收入104億元，較2022年同期增長86%。

Moving on to cost and expenses. Our total core ship revenues increased 55% from RMB 7.2 billion in Q1 2022, (inaudible) to RMB 11.1 billion this quarter, mainly due to increased fulfillment fees and payment processing fees. Total operating expenses this quarter were RMB 19.6 billion on a GAAP basis versus RMB 14.5 billion in the same quarter of 2022.

繼續成本和費用。我們的核心船舶總收入從 2022 年第一季度的 72 億元人民幣（聽不清）增長 55% 至本季度的 111 億元人民幣，這主要是由於履約費和支付處理費的增加。按 GAAP 計算，本季度總運營費用為人民幣 196 億元，而 2022 年同期為人民幣 145 億元。

On a non-GAAP basis, our total operating expenses increased to RMB 18.1 billion this quarter from RMB 13 billion in Q1, '22. (inaudible) several large-scale promotional campaigns to help with user sentiment, and we continue to invest in our long-term forecast areas to support our high-quality development. Our total non-GAAP operating expenses as a percentage of total revenues this quarter is 48% compared to 54% in the same quarter last year.

按非美國通用會計準則計算，本季度我們的總運營費用從 22 年第一季度的 130 億元人民幣增至 181 億元人民幣。 （聽不清）幾次大規模的促銷活動，以幫助用戶情緒，我們繼續投資於我們的長期預測領域，以支持我們的高質量發展。本季度我們的非 GAAP 總運營費用佔總收入的百分比為 48%，而去年同期為 54%。

Looking to specific expense items. Our non-GAAP sales and marketing expenses this quarter were RMB 15.8 billion up 47% versus the second quarter of 2022. On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenue this quarter was 42% compared with 45% for the same quarter in 2022.

尋找特定的費用項目。本季度我們的非美國通用會計準則銷售和營銷費用為人民幣 158 億元，比 2022 年第二季度增長 47%。按非美國通用會計準則計算，本季度我們的銷售和營銷費用佔收入的百分比為 42%，而同期為 45% 2022 年同一季度的百分比。

In Q1, we actively leveraged the platform resources to facility consumption recovery. Our non-GAAP general and administrative expenses were RMB 338.3 million versus RMB 208.8 million in the second quarter of 2022. Our non-GAAP research and development expenses were RMB 2 billion this quarter.

一季度，我們積極利用平台資源恢復設施消費。我們的非美國通用會計準則一般和管理費用為人民幣 3.383 億元，而 2022 年第二季度為人民幣 2.088 億元。本季度我們的非美國通用會計準則研發費用為人民幣 20 億元。

R&D is a top-priority and a long-term forecast for us. We are committed to further strengthening our R&D capabilities, and we continue to increase investment in this area. Operating profit for the quarter was RMB 6.9 billion on a GAAP basis compared with operating profit of RMB 2.2 billion in the third quarter of 2022. Non-GAAP operating profit was RMB 8.5 billion, versus operating profit of RMB 3.7 billion in the same quarter of 2022. Net income attributable to ordinary shareholders was RMB 8.1 billion compared with RMB 2.6 billion in the same quarter of 2022.

研發是我們的首要任務和長期預測。我們致力於進一步加強我們的研發能力，並不斷加大在這方面的投入。根據美國通用會計準則，本季度營業利潤為人民幣 69 億元，而 2022 年第三季度營業利潤為人民幣 22 億元。非美國通用會計準則營業利潤為人民幣 85 億元，而去年同期營業利潤為人民幣 37 億元。 2022年歸屬於普通股股東的淨利潤為人民幣81億元，而2022年同期為人民幣26億元。

Basic earnings ADS was RMB 6.13 and diluted earnings per ADS was RMB 5.55 versus base earnings per ADS of RMB 2.06 and diluted earnings per ADS of RMB 1.84 in the same quarter of 2022. Non-GAAP net income attributable to ordinary shareholders was RMB 10.1 billion compared with RMB 4.3 billion in the same quarter last year. Non-GAAP diluted earnings per ADS was RMB 6.92 versus RMB 2.95 in the firm quarter of 2022. We continue to increase investment and focus on creating sustainable and vibrant ecosystem to support our long-term high-quality development.

ADS 基本收益為 6.13 元人民幣，每股 ADS 稀釋收益為 5.55 元人民幣，而 2022 年同一季度的基本收益為 2.06 元人民幣，每股 ADS 稀釋收益為 1.84 元人民幣。歸屬於普通股股東的非美國通用會計準則淨利潤為 101 億元人民幣去年同期為 43 億元人民幣。非美國通用會計準則每股 ADS 攤薄收益為 6.92 元人民幣，而 2022 年第一季度為 2.95 元人民幣。我們繼續增加投資，專注於打造可持續和充滿活力的生態系統，以支持我們的長期高質量發展。

That completes the income statements. Now let me move on to cash flow. Our net cash flow generated from operating activities was RMB 1.3 billion compared with the cash outflow of RMB 9.1 billion in the same quarter of 2022, mainly due to the increase in net income and changes in working factor. As of March 31, 2023, the company had RMB 157 million in cash, cash equivalents and short-term investments.

這樣就完成了損益表。現在讓我繼續談談現金流。我們的經營活動產生的現金流量淨額為人民幣 13 億元，而 2022 年同季度的現金流出為人民幣 91 億元，主要是由於淨收入的增加和工作因素的變化。截至2023年3月31日，公司持有現金、現金等價物及短期投資1.57億元。

Thank you. This concludes my prepared remarks.

謝謝。我準備好的發言到此結束。

Thank you, Jun. Next, we will move on to the Q&A session. Today's Q&A session Lei ,Jiazhen and Jun will take questions from analyst down the line. We could take a maximum two questions per analyst. Lei and Jiazhen will answer questions in Chinese, and we will help translate their remarks for easier (inaudible).

謝謝Jun，接下來我們進入問答環節。今天的問答環節，雷家珍和君將在線下回答分析師的問題。每個分析師最多可以回答兩個問題。雷和家珍將用中文回答問題，我們將幫助翻譯他們的發言以便更容易（聽不清）。

Operator, we may now take questions on the line.

接線員，我們現在可以在線提問。

(Operator Instructions) Your first question today comes from Joyce Ju with Bank of America.

（操作員說明）您今天的第一個問題來自美國銀行的 Joyce Ju。

I will translate myself. My first question is noting PDD recently implemented the co-CEO structure, how does the change affect your group strategies? What are your key growth drivers going forward? Per your announcement how's the Co-CEO structure change? Lei will focus more on the globalization side, does that mean your globalization strategy now has a higher priority?

我會自己翻譯。我的第一個問題是注意到 PDD 最近實施了聯席 CEO 結構，這種變化對你們的集團戰略有何影響？您未來的主要增長動力是什麼？根據您的公告，聯席首席執行官的結構有何變化？雷會更關注全球化方面，那是否意味著您的全球化戰略現在具有更高的優先級？

My second question is related to top line growth. Your online marketing services revenue increased by 50% year-over-year this quarter accelerating from the last quarter. How should we think about this reaccelerated momentum what PDD has done this quarter contributing to this?

我的第二個問題與收入增長有關。本季度您的在線營銷服務收入同比增長 50%，比上一季度增長更快。我們應該如何看待 PDD 本季度為此做出的貢獻而重新加速的勢頭？

[Interpreted] Hi Joyce, thank you very much for your question, and this is Lei. I can take your first question on strategies. Jiazhen and I have been working together for many years and we have established deep trust. With our goal of high-quality development in mind, we have constructed a very clear long-term strategies, and we will continue to lead our team in terms of execution. And on top of that, we will leverage our different backgrounds and ideas and be efficient in decision-making. Over the past period of time, we are steadily shifting our strategic focus from the speed of growth towards the quality of growth. And we have seen positive feedback from both consumers and sellers on the ship, which is also reflected in this quarter's results. Under our long-term strategies, we are continuously strengthening our supply chain capabilities and also expanding the supply of high-quality merchandise, we will further increase our support for quality sellers by launching our 10 billion Ecosystem Initiative and further push forward our platform overall quality and in addition, we will continue to optimize our platform ecosystem. As a tech-driven company, the value we create is inseparable from our R&D capabilities.

[翻譯] 嗨喬伊斯，非常感謝你的問題，我是雷。我可以回答你關於策略的第一個問題。我和家珍一起工作多年，建立了深厚的信任。我們以高質量發展為目標，構建了非常清晰的長期戰略，我們將繼續在執行力上引領團隊。最重要的是，我們將利用我們不同的背景和想法，提高決策效率。過去一段時間，我們正在穩步將戰略重心從增長速度轉向增長質量。而且我們在船上看到了消費者和賣家的積極反饋，這也反映在本季度的業績中。在我們的長期戰略下，我們在不斷加強供應鏈能力的同時，也在擴大優質商品的供應，我們將進一步加大對優質賣家的支持力度，啟動百億生態計劃，進一步提昇平台整體質量此外，我們將繼續優化我們的平台生態系統。作為一家技術驅動型公司，我們創造的價值離不開我們的研發能力。

So we are also strengthening our R&D capabilities and increasing our R&D investment. Currently, our R&D team makes up about half of our total employees. The China market is huge, and we see big potential for us to further grow. We believe that in the foreseeable future, China market is our biggest market. At the same time, we also note that it is changing very fast, and competition is intense, which demonstrates both challenges and opportunities. This is why our Board has appointed Jiazhen as Co-Chief Executive Officer to design and execute strategies together with me and further strengthened our China operations team.

所以我們也在加強研發能力，加大研發投入。目前，我們的研發團隊約佔員工總數的一半。中國市場巨大，我們看到了進一步發展的巨大潛力。我們相信在可預見的未來，中國市場是我們最大的市場。同時，我們也看到，變化非常快，競爭非常激烈，挑戰與機遇並存。這就是為什麼我們的董事會任命 Jiazhen 為聯席首席執行官，與我一起設計和執行戰略，並進一步加強我們的中國運營團隊。

Next, let me hand over to Jiazhen.

接下來，讓我交給家珍。

[Interpreted] Thank you, Lei. And first, an honor that our Board put their trust in me. I'm very excited from a new role. At the same time, I feel our responsibilities and challenge. As the industry recovers, we are also entering a new stage and in the past few years, we successfully shifted from marketing drivers to R&D driven, and this lays a solid foundation for our development. Now we reach the gate of another stage which is the stage of dedicating ourselves to promoting holistic high-quality development.

【解讀】謝謝雷。首先，很榮幸我們的董事會信任我。我對擔任新角色感到非常興奮。同時，我也感受到了我們的責任和挑戰。隨著行業的複蘇，我們也進入了一個新的階段，在過去的幾年裡，我們成功地從營銷驅動轉向研發驅動，這為我們的發展奠定了堅實的基礎。現在我們又到了一個階段的大門，那就是致力於推動全面高質量發展的階段。

In this new stage, we are further improving our platform ecosystem, upgrading consumer services, increasing support for quality supply and also deepening our supply chain expertise. We constantly optimize platform governance to further build a socially responsible platform. And we believe that investing in our platform, ecosystem, supply chain and also R&D can create long-term value, and we will lead our team together to execute these strategies with determination, accelerating our footsteps in entering this new stage of high-quality development.

在這個新階段，我們正在進一步完善我們的平台生態系統，升級消費者服務，增加對優質供應的支持，並深化我們的供應鏈專業知識。我們不斷優化平台治理，進一步打造對社會負責的平台。我們相信投資於我們的平台、生態、供應鍊和研發可以創造長期價值，我們將帶領我們的團隊一起堅定地執行這些戰略，加快我們進入高質量發展新階段的腳步.

And let me also take your question on revenue growth. In the past quarter, many places introduced policies to support consumption we see a continued improvement in consumer segment. And these trends show a good beginning for 2023. We have also benefit from this and our platform consumption mortality is further boosted. To support consumption recovery, we continue to start from consumer demand and actively mobilize our platform resources to give consumers more savings, we organized several large-scale (inaudible) events in a row and gave out actual coupons to boost consumer assessment.

讓我也回答你關於收入增長的問題。上個季度，多地出台政策支持消費，我們看到消費板塊持續向好。這些趨勢顯示了 2023 年的良好開端。我們也從中受益，我們的平台消費死亡率進一步提高。為支持消費回暖，我們繼續從消費需求出發，積極調動平台資源，為消費者多省錢，連續舉辦多場大型（聽不見）活動，發放實物優惠券，提升消費者評價。

We also strive to give better services to our consumers. So we have upgraded consumer production and also services throughout the entire shopping experience. For example, for most of the product categories. The shipping processing time has been cut down from 72 hours to within 48. Our virtual platform ecosystem of more savings and better services has earned us a decent consumer and seller feedback. Also, our Q1 growth is the early testament to our progress in building up the platform ecosystem. Looking ahead, we still need to remain down to earth and further strengthen our core capabilities so that we can create more value for consumers. For example, we are launching the 10 billion Ecosystem Initiative to further support quality supply. Thank you.

我們還努力為我們的消費者提供更好的服務。因此，我們在整個購物體驗中升級了消費者生產和服務。例如，對於大多數產品類別。運輸處理時間已從 72 小時縮短到 48 小時以內。我們的虛擬平台生態系統提供更多的節省和更好的服務，為我們贏得了良好的消費者和賣家反饋。此外，我們第一季度的增長是我們在構建平台生態系統方面取得進展的早期證明。展望未來，我們仍需腳踏實地，進一步強化核心能力，為消費者創造更多價值。比如，我們正在啟動“百億生態計劃”，進一步支持優質供給。謝謝。

Hi, operator, I think we are ready to take the next question on the line.

嗨，接線員，我想我們已經準備好接受下一個問題了。

The next question comes from Natalie Wu with Haitong International.

下一個問題來自海通國際的Natalie Wu。

Let me translate myself in English. Therefore, I take my question. So I have 2 questions here. First 1 is with June 18 approaching, we see that many of your peers have rolled out the this year promotion, which seems to be very aggressive. Just wondering what's your response and how do you explain -- how do you plan to maintain your competitive advantage, specifically for pricing? Do you think there will be an analyst spiral of increasing discounts in short, the lowest price? And (inaudible) we noticed that your profitability margin this quarter is another sequential decrease. Just wondering what are the major reasons behind? Is it because of the seasonality or competition? Does it mean that you are now actively spending (inaudible)?

讓我自己翻譯成英文。因此，我接受我的問題。所以我在這裡有兩個問題。一一臨近6月18日，我們看到你們很多同行都推出了今年的促銷活動，看起來很激進。只是想知道您的回應是什麼以及您如何解釋——您打算如何保持競爭優勢，特別是在定價方面？簡而言之，您認為分析師會出現折扣增加的螺旋式增長，即最低價格嗎？而且（聽不清）我們注意到您本季度的利潤率是另一個連續下降。只是想知道背後的主要原因是什麼？是因為季節性還是競爭？這是否意味著您現在正在積極消費（聽不清）？

[Interpreted] This is Jiazhen here, and thank you for your questions. (inaudible) on competition. So instead of paying too much attention to what competitors are doing, we actually focus more on how we grow in competition. We view competition as a testing ground, and it motivates us to iterate quickly. Just I have mentioned in my remarks, we are always consumer-oriented, and we actively and positively embrace all types of competition. We are accelerating to build up a healthy ecosystem of more series and better services. Our more savings essentially comes from retail efficiency improvement. And we will continue to strengthen our R&D to help better match supply and demand. We will also run ourselves deeply in more production regions to connect quality products to consumers directly. So for example, in initiatives such as our agriculture initiative -- agricultural cloud initiative, we are leveraging our supply chain expertise to offer more users quality and also affordable agriculture products. And we hope to further improve our efficiency and turn it into a sustainable price advantage for consumers. At the same time, we also continue to increase discounts and issue more coupons to give back to consumers.

[翻譯] 我是家珍，謝謝你的提問。 （聽不清）關於競爭。因此，與其過分關注競爭對手在做什麼，我們實際上更關注我們如何在競爭中成長。我們將競爭視為試驗場，它激勵我們快速迭代。剛才我在發言中提到，我們始終以消費者為導向，我們積極主動地擁抱各種類型的競爭。我們正在加速建立更多系列和更好服務的健康生態系統。我們更多的節省，本質上是來自於零售效率的提升。我們將繼續加強研發，以幫助更好地匹配供需。我們也將在更多的產區深耕，將優質產品直達消費者。因此，例如，在我們的農業計劃——農業雲計劃等計劃中，我們正在利用我們的供應鏈專業知識為更多用戶提供優質且價格合理的農產品。我們希望進一步提高我們的效率，並將其轉化為消費者可持續的價格優勢。同時，我們也不斷加大優惠力度，發放更多優惠券回饋消費者。

And better services is another important area we are optimizing our service quality throughout the entire shopping experience. So for example, we offer extra care to the elderly people and also consumers living in remote areas, and we give them preferential customer services. We have also upgraded our post-sales services such as offering consumers the option to receive a refund without having to return items. And we are launching a dedicated 10 billion Ecosystem Initiatives. And this aims to channel more resources towards high-quality sellers to support SMEs and also quality businesses. And enhance the platform overall service efficiency and quality, and we will continue to focus on self- improvement in competition and strive to create more value for our consumers. Thank you.

更好的服務是我們在整個購物體驗中優化服務質量的另一個重要領域。例如，我們對老年人和偏遠地區的消費者給予額外的關懷，我們為他們提供優惠的客戶服務。我們還升級了我們的售後服務，例如為消費者提供無需退貨即可獲得退款的選項。我們正在啟動專門的 100 億生態系統計劃。這旨在將更多資源引向優質賣家，以支持中小企業和優質企業。並提昇平台整體服務效率和質量，我們將繼續在競爭中專注於自我提升，努力為我們的消費者創造更多價值。謝謝。

This is Jun. Thanks, Nat, for your questions. I will address your question on profitability. Well, as just Lei pointed out, we have very clear long-term strategies, and we see many areas to further improve. We're executing these strategies with determination. We will continue to nurture the development of healthy, more savings and better services platform ecosystem. We firmly believe our patient investment can generate value for consumers, sellers and the platform ecosystem.

我是 Jun。Nat，謝謝你提出的問題。我會回答你關於盈利能力的問題。那麼正如剛才雷軍所指出的，我們有非常明確的長期戰略，我們看到有很多地方可以進一步改進。我們正在堅定地執行這些戰略。我們將繼續培育發展健康、更省、更優服務的平台生態系統。我們堅信我們耐心的投資可以為消費者、賣家和平台生態系統創造價值。

Feedback from consumers and sellers also make us more determined in seeking quality development. So we plan to further step up our long-term investment. For example, we are launching our 10 b Ecosystem Initiative to support quality sellers and improve our overall platform ecosystem. As we deepen our efforts our profitability level decreased in the past 2 quarters on a quarter-to-quarter basis. We think it is normal for profitability to (inaudible) between quarters.

消費者和賣家的反饋也讓我們更加堅定了追求品質發展的決心。因此，我們計劃進一步加強我們的長期投資。例如，我們正在啟動 10b 生態系統計劃，以支持優質賣家並改善我們的整體平台生態系統。隨著我們加深努力，我們的盈利水平在過去兩個季度環比下降。我們認為盈利能力在兩個季度之間（聽不清）是正常的。

Operator, we may take questions from the next analyst on the line.

接線員，我們可能會在線回答下一位分析師的問題。

The next question comes from Kenneth Fong with Credit Suisse.

下一個問題來自瑞士信貸的 Kenneth Fong。

I have 2 questions. First, for your global business, may management share what is the level of financial impact from Temu? How many users do you serve now? Could you -- may be able to give us an update matrix order volume? And then my second question, now we see more sellers are opening up stores across multiple platforms. So it seems the merchant stay selection of different platforms are becoming more and more similar. Can management share with us what's the differentiation on the supply side, especially for your agricultural products?

我有兩個問題。首先，對於您的全球業務，管理層能否分享 Temu 的財務影響程度？你現在服務了多少用戶？你能不能給我們一個更新矩陣訂單量？然後是我的第二個問題，現在我們看到越來越多的賣家正在跨多個平台開店。由此可見，不同平台的商戶住宿選擇越來越相似。管理層能否與我們分享一下供應方面的差異是什麼，尤其是你們的農產品？

Thanks, Kenneth. I will take your first question about the financial impact of Temu. Well, this business is currently in its early stage and compared to our overall scale. Its revenue contribution is small. For Temu, as we mentioned before, our focus is always how to better understand consumer needs and how to satisfy this need. Financial metrics will be a natural result of our value creation. We will follow our financial discipline and ROI-driven approach when evaluating each investment opportunity.

謝謝，肯尼斯。我會回答你關於 Temu 的財務影響的第一個問題。好吧，與我們的整體規模相比，這項業務目前處於早期階段。它的收入貢獻很小。對於Temu，正如我們之前提到的，我們的重點始終是如何更好地理解消費者的需求，以及如何滿足這種需求。財務指標將是我們價值創造的自然結果。在評估每個投資機會時，我們將遵循我們的財務紀律和投資回報率驅動的方法。

[Interpreted] This is Jiazhen, and let me take your questions on supply chain and agriculture. In many categories, we see a lot of room to expand and optimize supply. For example, the digitization rates of agriculture products is still low. We see a lot of on net demand, and we also see a lot of quality agricultural produce are not efficiently distributed. And we are committed to leveraging our resources to increase supply chain efficiency and also to help more quality produce connect to the nationwide market.

【解讀】我是家珍，我來回答你關於供應鍊和農業的問題。在許多品類中，我們看到了擴大和優化供應的很大空間。例如，農產品的數字化率仍然很低。我們看到很多的淨需求，我們也看到很多優質的農產品沒有得到有效的分配。我們致力於利用我們的資源來提高供應鏈效率，並幫助更多優質產品連接到全國市場。

We provide e-commerce, training and connect farmers with agri-focused logistics resources, which helps more produce expand their distribution media and also helps preserve quality as well as nutrition during transportation. On top of that, our total grocery business continues to explore innovation and we help consumers get a convenience as well as a broader selection of fresh produce.

我們提供電子商務、培訓並將農民與以農業為重點的物流資源聯繫起來，這有助於更多的農產品擴大其分銷渠道，並有助於在運輸過程中保持質量和營養。最重要的是，我們的整體雜貨業務不斷探索創新，我們幫助消費者獲得便利和更廣泛的新鮮農產品選擇。

We also continue to drive agritech innovation as well as adoption. And we are deepening our cooperation with top economic institutes. For example, we recently donated RMB 100 million to support a cutting-edge research at China Agriculture University. In addition to that, our platform sales can allow more research findings quickly reach the market, which can help bring more quality products to consumers. And we also proactively support every sells with our platform resources, including traffic to help quality produce reach more end consumers. So in this way, the quality sellers and the platform can grow together healthily and constantly improve our products and service quality.

我們還繼續推動農業技術創新和採用。我們正在深化與頂級經濟機構的合作。例如，我們最近捐贈了1億元人民幣支持中國農業大學的一項前沿研究。除此之外，我們的平台銷售可以讓更多的研究成果快速到達市場，這有助於為消費者帶來更多優質的產品。我們還利用我們的平台資源（包括流量）積極支持每一筆銷售，以幫助優質產品觸及更多終端消費者。這樣才能讓優質賣家和平台一起健康成長，不斷提升我們的產品和服務質量。

Agriculture is our long-term strategy. So we will continue to mobilize platform resources and also our inputs go deep into the supply chain and bring more quality of product to consumers. Thank you.

農業是我們的長期戰略。所以我們會繼續調動平台資源，我們的投入也會深入供應鏈，為消費者帶來更多品質的產品。謝謝。

Okay. It's about time, and thank you, everybody, for joining us on the conference call today. Thank you, and have a great day.

好的。時間到了，謝謝大家今天加入我們的電話會議。謝謝你，祝你有美好的一天。

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

女士們，先生們，我們今天的會議到此結束。感謝您的參與。你們都可以斷開連接。