拼多多 (PDD) 2024 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings Inc., second-quarter 2024 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

女士們、先生們，感謝大家的支持，歡迎參加 PDD Holdings Inc. 2024 年第二季財報電話會議。 （操作員指示）請注意，今天的會議正在錄製中。

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

我現在想把今天的會議交給東道主。先生，請繼續。

Thank you, operator. Hello, everyone, and thank you for joining us today. PDD Holdings' earnings release was distributed earlier and is available on our website at investors.pddholdings.com, as well as through the GlobeNewswire services.

謝謝你，接線生。大家好，感謝您今天加入我們。 PDD Holdings 的收益報告已於早些時候發布，可在我們的網站 Investors.pddholdings.com 以及 GlobeNewswire 服務上取得。

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.

在我們開始之前，我想請您參閱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，本次電話會議也討論了某些非公認會計準則財務措施。請參閱我們的收益報告，其中包含非公認會計原則措施與公認會計原則措施的調節表。

Joining us today on the call are Mr. Chen Lei, our Chairman and Co-Chief Executive Officer; Mr. Zhao Jiazhen, our Executive Director and Co-Chief Executive Officer; as well as Ms. 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, 2024.

今天加入我們電話會議的還有我們的董事長兼聯合執行長陳雷先生；趙家楨先生，我們的執行董事兼聯合執行長；以及我們的財務副總裁劉軍女士。雷和家震將對我們上一季的業績以及我們的策略重點進行一些總體評價。接下來，Jun 將向我們介紹截至 2024 年 6 月 30 日的第二季財務表現。

During the Q&A session, Lei and Jiazhen will answer questions in Chinese that will help translate. Please kindly note that the English translation is for reference only. And in case of any discrepancy, statements in the original language should prevail.

在問答環節，雷和家珍將用中文回答有助於翻譯的問題。請注意，英文翻譯僅供參考。如有差異，以原文為準。

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

現在我很高興向大家介紹我們的董事長兼聯合執行長陳雷先生。雷，請繼續。

Thank you. Hello, everyone. Thank you, all, for joining our earnings call for the second quarter of 2024. In the first half of 2024, we have remained committed to our high-quality development strategy and consistently invested in our platform ecosystem.

謝謝。大家好。感謝大家參加我們的 2024 年第二季財報電話會議。

We received positive feedback for these efforts. Consumer experience and our services have continued to improve. A number of new merchants and products have grown significantly. This further meets the diverse needs of our consumers. This quarter, we benefited from the improving macro environment and achieved robust financial results.

我們收到了對這些努力的正面回饋。消費者體驗和我們的服務持續改善。一批新商戶、新產品大幅成長。這進一步滿足了我們消費者的多樣化需求。本季度，我們受惠於宏觀環境的改善，並取得了穩健的財務表現。

Our total revenues reach R&B $97 billion, which represents a year-on-year increase of 86%. However, we are seeing many new challenges ahead, from changing consumer demand, intensifying competition, and uncertainties in global environment. As a result, we will enter a new phase of high-quality development that calls for increased investments, and our profitability will affect it as a result.

我們的 R&B 總營收達到 970 億美元，年增 86%。然而，我們也看到了許多新的挑戰，包括消費者需求的變化、競爭的加劇以及全球環境的不確定性。因此，我們將進入高品質發展的新階段，需要加大投入，獲利能力也會受到影響。

Since the beginning of this year, we are seeing that consumer preferences have become more diverse. On one hand, consumers are increasingly choosing experience-based consumption over material purchases. On the other hand, there is a growing emphasis on rational consumption. Consumers are making more thoughtful decisions to balance quality and value.

今年以來，我們看到消費者的偏好變得更加多元。一方面，消費者越來越多選擇體驗型消費而非物質購買。另一方面，人們越來越重視理性消費。消費者正在做出更深思熟慮的決定來平衡品質和價值。

In response, we have collaborated with high-quality brands and manufacturers to create customized products that cater to these diverse demands. This approach has not only propelled many new brands to success, but also revived the popularity of many established brands. So this is just one example of how digital technology and manufacturing can come together to create new opportunities.

為此，我們與優質品牌和製造商合作，打造滿足這些多樣化需求的客製化產品。這種做法不僅推動了許多新品牌的成功，也重振了許多老品牌的知名度。因此，這只是數位科技和製造業如何結合創造新機會的一個例子。

At this moment, the competition among e-commerce platforms is quickly escalating. And therefore, it's even more important that we go back to the basics of supply chain improvement and invest firmly in supply chain efficiencies. This will be the key focus for our high-quality development going forward. For example, in the second quarter, our team continued to bring our agriculture crowd initiative to major production regions, helping local growers to bring seasonal foods directly to people's homes.

此刻，電商平台之間的競爭正在快速升級。因此，更重要的是我們要回到供應鏈改善的基礎，並堅定地投入供應鏈效率。這將是我們下一步高品質發展的著力點。例如，第二季度，我們的團隊繼續將我們的農業眾創計畫帶到主要產區，幫助當地種植者將時令食品直接帶到人們的家中。

And in this process, promoting local agriculture brands, In addition, to further improve the agricultural supply chain, nurture research talents, and promote technology inclusion, we continue to support the Smart Agriculture Competition and the Pinduoduo Academy Growing Competition.

而在這個過程中，在推廣本土農業品牌的同時，為了進一步完善農業供應鏈、培養科研人才、促進技術包容，我們持續支持智慧農業大賽和拼多多學院成長大賽。

The Agricultural Research Fund we established in cooperation with China Agricultural University has also started to bear fruit. On the manufacturing side, we are pleased to find that many small and medium-sized businesses have been using the digital capabilities from our platform to support product iteration and innovation.

我們與中國農業大學合作設立的農業科研基金也已初見成效。在製造方面，我們很高興地發現，許多中小企業已經在利用我們平台的數位化能力來支援產品的迭代和創新。

Through this process, they have not only emerged stronger from the competition, but also led the local industries towards high-quality development. These results have strengthened our commitment to further investing in high-quality development. We have communicated on a number of occasions that the profit growth in the past few quarters should not be used as a long-term guidance, and it is a result of mismatch between the business investment and the financial reporting cycles.

透過這個過程，他們不僅在競爭中脫穎而出，而且引領當地產業邁向高品質發展。這些成果堅定了我們進一步投入高品質發展的決心。我們曾多次溝通過，過去幾季的利潤成長不應該作為長期指引，這是業務投資與財務報告週期不符的結果。

As we enter a new investment phase, I would like to make it clear to our investors that our process will gradually trend down starting in Q3, and there will be fluctuations or rebounds in the short term. In the long run, the decline in profitability is inevitable.

隨著我們進入新的投資階段，我想向投資者明確的是，從第三季開始，我們的進程將逐漸下降，短期內將有波動或反彈。從長遠來看，獲利能力下降是不可避免的。

Certainly, our platform has reached a considerable scale, and we will remain committed to high-quality development and a focus on creating a healthy and sustainable platform ecosystem. And to this end, we adopt the necessary policies to vigorously support high-quality merchants and tackle low-quality ones.

當然，我們的平台已經具備了相當的規模，我們將繼續致力於高品質發展，並著力打造健康可持續的平台生態系統。為此，我們採取必要的政策，大力扶持優質商戶，並打擊低質商戶。

On the supply side, we will invest substantial resources to support high-quality merchants who are willing to innovate and improve quality. And we will offer a significant transaction fee reduction to these merchants, with an initial target of $10 billion in the first year. By doing so, our goals provide clear initial incentives for the merchants to join high-quality developments.

在供給側，我們將投入大量資源支持願意創新、提升品質的優質商家。我們將為這些商家大幅降低交易費用，第一年的初始目標是 100 億美元。透過這樣做，我們的目標為商家參與高品質發展提供了明確的初始激勵。

On the other hand, we will further deepen our trust and safety capabilities to improve our merchant ecosystem and strengthen our supply chain. We are actively identifying and removing unknowable bad actors from our platforms, and we will continue to strengthen these efforts. At the moment, we have already started a new round of investments in operations and R&D to streamline the merchant onboarding and product listing process.

另一方面，我們將進一步深化信任與安全能力，完善我們的商家生態系統，強化我們的供應鏈。我們正在積極識別並從我們的平台中清除不可知的不良行為者，我們將繼續加強這些努力。目前，我們已經開始新一輪的營運和研發投資，以簡化商家入駐和產品上市流程。

Leveraging technology, we will gradually improve the quality of the products sold on our platforms and create a fair and transparent business environment for our merchants. In this process, we believe that sacrificing short-term profits is necessary. A clear downward trend in profits is expected. We are prepared to invest firmly and patiently in the platform's long-term health.

我們將利用科技，逐步提昇平台上銷售的產品質量，為商家創造公平透明的商業環境。在這個過程中，我們認為犧牲短期利潤是必要的。預計利潤將出現明顯下降趨勢。我們準備堅定而耐心地投資於該平台的長期健康發展。

This is a decision that has received unanimous support from all our management team. And now, moving on to the global business. In the past few quarters, we have noticed the rapid shift in external environments, which brought significantly greater uncertainty. Our operations have also become increasingly affected by non-business factors.

這個決定得到了我們所有管理團隊的一致支持。現在，轉向全球業務。過去幾個季度，我們注意到外部環境快速變化，不確定性明顯增加。我們的營運也越來越受到非商業因素的影響。

And meanwhile, the competition we face is growing stronger. Competition is here to stay and is expected to intensify in our industry. Our global business is facing significant uncertainty from intense competition and evolving external environment. These factors combined will inevitably cause frustrations to our business. As shown in this quarter's results, high revenue growth is not sustainable, and a downward trend in profitability is inevitable.

同時，我們面臨的競爭也越來越激烈。我們行業的競爭將持續存在，並預計將加劇。由於激烈的競爭和不斷變化的外部環境，我們的全球業務面臨巨大的不確定性。這些因素結合在一起將不可避免地為我們的業務帶來挫折。從本季的業績來看，營收的高成長是不可持續的，獲利能力的下降趨勢是不可避免的。

And finally, as the environment evolves and our company continues to grow, the IR management team and I often discuss how we can better fulfill our corporate social responsibilities. We believe there are still many things that can be done, for example, Through enhancing our governance structure and adjusting resources, we can better adapt to changing times.

最後，隨著環境的變化和公司的不斷發展，我和IR管理團隊經常討論如何更好地履行企業社會責任。我們認為還有很多事情可以做，例如透過完善治理結構、調整資源，可以更好地適應時代的變化。

We can also do more to give back to society, to support agriculture and other industry sectors, and offer greater support to the people who need it most. We fully recognize that simply measuring our company's performance by shortened capital returns no longer aligns with where we are today. As a global company in this era, we are committed to driving innovation, adapting to change, and taking on greater social responsibilities in the regions across the globe.

我們也可以多做一些事來回饋社會，支持農業等工業領域，為最需要幫助的人提供更多支持。我們充分認識到，僅僅透過縮短資本回報來衡量公司業績已不再符合我們今天的情況。作為這個時代的全球化公司，我們致力於在全球各地區推動創新、適應變化、承擔更大的社會責任。

Now, I will hand it over to our Co-CEO, Zhao Jiazhen, to talk more about our operations in the second quarter.

現在，我將把它交給我們的聯合執行長趙家臻，並更多地談談我們第二季的營運情況。

(interpreted) Thank you, Lei. Hello, everyone. This is Zhao Jiazhen. Thank you all for joining our earnings call for the second quarter of 2024. In the first half of this year, online retail in China continues to perform well, bringing fresh energy to the overall consumption market. Over the past quarter, we continue to advance our high-quality development strategy, making steady long-term investments to support both supply and demand side of our platforms.

（翻譯）謝謝你，雷。大家好。這是趙家珍。感謝大家參加我們的2024年第二季財報電話會議。過去一個季度，我們持續推動高品質發展策略，穩定長期投資，支撐平台供需兩端。

Looking ahead to the second quarter of this year and beyond, we're very confident in the future of the Chinese consumer market. This quarter, we continued to focus on consumer demand, further enhanced our more savings and better services capabilities and upgraded our after-sales services to provide consumers with more value and more enjoyable shopping experiences.

展望今年第二季及以後，我們對中國消費市場的未來充滿信心。本季，我們持續聚焦消費者需求，進一步增強多省優服務能力，升級售後服務，為消費者提供更超值、更愉悅的購物體驗。

During the agents promotion, we continue to provide consumers with straightforward savings and introduced new promotions to meet the increasingly diverse consumer preferences. We also brought product categories like fresh produce, daily necessities and high-end into third and full tier cities, and made our contribution to consumption upgrades across the regions.

在代理商促銷期間，我們持續為消費者提供直截了當的優惠，並推出新的促銷活動，以滿足日益多樣化的消費者喜好。我們也將生鮮、日用品、高端等品類引進三線及全線城市，為區域消費升級做出了貢獻。

On the supply side, we stepped up our support for quality merchants and brands, directing more traffic to high-quality products through 10 Billion Program and fresh sales. We have also focused on enhancing the quality and efficiency of the supply chain, bringing more value to the agricultural areas and industry regions, and benefiting more producers quality, agricultural and domestic group.

供給側，加大對優質商家和品牌的支持力度，透過百億計畫、生鮮銷售等方式，引導優質產品引流。我們也著重提升供應鏈品質和效率，為農業領域和工業領域帶來更多價值，讓更多生產者、農業和家庭群體受益。

To support the countryside home appliance program and the consumer group in, we invested RMB1 billion during the first week of June 18. This boost led to remarkable growth for many local brands in categories such as electronics, home appliances, kitchenware and household products.

為了支持家電下鄉和消費群體，我們在6月18日第一週就投入了10億元人民幣。 。

For example, utilizing our digital technology, we helped a local brand with 36 years of history to understand the latest market demand and return to growth with a blockbuster product. It achieved RMB100 million in sales after joining the platform for just 2 months.

例如，利用我們的數位技術，我們幫助一家擁有36年歷史的本土品牌了解最新的市場需求，並以一款重磅產品回歸成長。入駐平台僅2個月，銷售額就突破1億元。

In addition, the number of new merchants and new products support our platforms saw meaningful growth. In the first week of June 18, the number of merchants participating in the 10 Billion Program grew by over 90% year-on-year, and the number of agricultural merchants increased by 83% year-on-year. Our platform also attracted a great number of new merchants in categories such as electronics, home appliances and cosmetics.

此外，支援我們平台的新商家和新產品數量也出現了顯著成長。 6月18日首周，參與百億計畫的商家數量較去年同期成長超90%，農產品商家數量較去年同期成長83%。我們的平台也吸引了大量電子、家電、化妝品等品類的新商家進駐。

To create a better business environment for high-quality merchants, we have a new round investments in operations and R&D. Our goal is to build industry-leading compliance capabilities and foster a healthy platform ecosystem. For example, we continue to streamline our merchant onboarding and product listing processes to better control product quality and offer consumers a safe and reliable shopping experience.

為了為優質商家創造更好的營商環境，我們進行了新一輪的營運和研發投入。我們的目標是打造業界領先的合規能力，培育健康的平台生態系統。例如，我們繼續簡化商家入駐和產品上市流程，以更好地控制產品品質，並為消費者提供安全可靠的購物體驗。

We integrate automatic technology for product screening with manual reviews by our trust and safety chain. This approach ensures regrowth oversight on product compliance while avoiding unintended penalties for quality products and merchants. At the same time, we have invested heavily in developing comprehensive user-friendly training materials for merchants to boost their compliance capabilities.

我們將產品篩選的自動技術與我們的信任和安全鏈的手動審查相結合。這種方法確保了對產品合規性的重新監督，同時避免對優質產品和商家的意外處罰。同時，我們投入大量資金為商家開發全面、易用的訓練資料，提升商戶合規能力。

This effort aims to enhance our supply chain quality, while helping merchants lower compliance costs and expand their market reach. We also deeply recognize that building a healthy platform ecosystem and achieving high core development is a gradual process, especially given the consumer scale of our platforms. So we are committed to a dual approach.

此舉旨在提高我們的供應鏈質量，同時幫助商家降低合規成本並擴大市場範圍。我們也深刻認識到，建立健康的平台生態系統並實現高核心發展是一個漸進的過程，特別是考慮到我們平台的消費者規模。因此，我們致力於採取雙重方法。

One side, providing strong support to high-quality merchants while addressing issues with old ones. This way, we aim to create a healthy and sustainable ecosystem. In this process, we will inevitably face short-term cost, as Lei has mentioned. Our managing team is fully committed to investing heavily for the long-term health of our platforms.

一方面，為優質商家提供強力支持，同時解決舊商家問題。透過這種方式，我們的目標是創造一個健康、永續的生態系統。在這個過程中，我們不可避免地會面臨短期成本，正如雷軍所說。我們的管理團隊完全致力於為我們平台的長期健康進行大量投資。

While profits might vary or even rebound in the next few quarters, it is unavoidable that profitability will turn lower over the long term. As the largest platform for agricultural products in China, this quarter, we further advanced our agricultural strategy. We launched the Science and Technology Courtyard project in Valley and (inaudible) and also kicked off the fourth smart agricultural competition in collaboration with top research team from around the world. We will continue to increase investments in agricultural research to promote the commercial application of research funding and accelerate the market adoption of high-quality agricultural products.

儘管未來幾季利潤可能有所變化甚至反彈，但長期來看獲利能力下降是不可避免的。作為中國最大的農產品平台，本季我們進一步推動農業戰略。我們在山谷啟動了科技庭院計畫（聽不清楚），並與來自世界各地的頂尖研究團隊合作啟動了第四屆智慧農業競賽。持續加大農業科研投入，推動科研經費轉化，加速優質農產品進入市場。

Meanwhile, we also leverage our strength as a platform, working with ecosystem partners to proactively take on more social responsibilities. We invested tens of millions in (inaudible) and subsidies to launch a (inaudible) total mount. This initiative provides direct discounts on thousands of products, making knowledge more accessible to more people.

同時，我們也發揮平台優勢，與生態夥伴合作，積極承擔更多社會責任。我們投入了數千萬美元（聽不清楚）和補貼來啟動（聽不清楚）總額。該舉措為數千種產品提供直接折扣，讓更多人更容易獲得知識。

2024 is a critical year on our path towards high-quality development. We will focus on creating healthy and sustainable platform ecosystem and empowering our ecosystem partners with more platform resources and technical support. Together, we will lay a solid foundation towards the high-quality of our platform.

2024年是我們邁向高品質發展的關鍵年。我們將專注於打造健康永續的平台生態，為生態合作夥伴提供更多的平台資源和技術支援。我們將共同為平台的高品質奠定堅實的基礎。

Next, I will hand over to Jun. She will provide an update on our financial performance for the second quarter.

接下來，我將把工作交給 Jun。

Thank you, Jiazhen. Hello, everyone. Let me walk you through our financial performance for the second quarter ended June 30, 2024. In terms of income statements in the second quarter, Our total revenues increased 86% year-over-year to RMB97.1 billion. This was mainly driven by an increase in revenues from online marketing services and transaction services.

謝謝你，家珍。大家好。讓我帶您了解我們截至2024年6月30日的第二季財務業績。這主要是由於線上行銷服務和交易服務收入的成長所致。

Revenues from online marketing services and others were RMB49.1 billion this quarter, up 29% from the same quarter of 2023. Revenues from transaction services for R&B 47.9 billion, up 234% from the same quarter last year. In Q2, uptick time frame slowed down significantly versus the last few quarters. Further slowdown is inevitable as a result of competition and global uncertainties.

本季網路行銷服務及其他營收為人民幣491億元，較2023年同季成長29%。在第二季度，上漲時間框架與過去幾季相比顯著放緩。由於競爭和全球不確定性，經濟進一步放緩是不可避免的。

Moving on to cost and expenses, our total cost of revenues increased 80% from RMB18.7 billion in Q2 2023 to RMB33.7 billion this quarter, mainly due to increasing fulfillment fees and payment processing fees. On a gap basis, total operating expenses this quarter increased 48%, to R&B 30.8 billion, from R&B 20.9 billion in the same quarter of 2023.

說到成本和費用，我們的總收入成本從 2023 年第二季的 187 億元人民幣增加到本季的 337 億元，成長了 80%，這主要是由於履行費用和支付處理費用的增加。以缺口計算，本季總營運支出成長 48%，從 2023 年同一季度的 209 億 R&B 增至 308 億 R&B。

On a long GAAP basis, total operating expenses increased to R&B 28.4 billion this quarter, from R&B 19 billion in Q2 2023. In Q2, one continued to invest thoroughly to support high-quality development of our platforms. Our total non-GAAP operating expenses as a percentage of total revenue this quarter was 29%, compared to 36% in the second quarter last year.

以長期公認會計原則（GAAP）計算，本季總營運支出從 2023 年第二季的 190 億 R&B 增至 284 億 R&B。本季我們的非 GAAP 總營運費用佔總收入的百分比為 29%，去年第二季為 36%。

Looking into specific expense items, Our non-GAAP sales and marketing expenses this quarter will earn $25.4 billion, up 54% versus the same quarter last year. Throughout Q2, we stepped up our promotion efforts to give back to consumers and invest in marketing to promote our platforms. On a non-GAAP basis, Our sales and marketing expenses as a percentage of our revenue this quarter was 26%, versus 32% for the same quarter last year.

從具體費用項目來看，本季我們的非 GAAP 銷售和行銷費用將達到 254 億美元，比去年同期成長 54%。在整個第二季度，我們加大了促銷力度，回饋消費者，並投資行銷來推廣我們的平台。以非公認會計原則計算，本季我們的銷售和行銷費用佔收入的百分比為 26%，而去年同期為 32%。

Our non-GAAP general and administrative expenses were RMB594 million versus RMB370 million in the same quarter of 2023. Our research and development expenses were RMB2.4 billion on a non-GAAP basis, up 15% year-over-year, and RMB2.9 billion on a GAAP basis. It is critical that we maintain our long-term focus and continue to invest in R&D to drive supply chain efficiency and customer experience.

我們的非公認會計準則一般及管理費用為人民幣5.94 億元，而2023 年同季為人民幣3.70 億元。 2.7 億元。至關重要的是，我們必須保持長期關注並繼續投資於研發，以提高供應鏈效率和客戶體驗。

On a GAAP basis, operating profit for the quarter was RMB32.6 billion versus RMB12.7 billion in the same quarter last year. Non-GAAP operating profit was RMB35 billion versus RMB14.6 billion in the same quarter last year. Non-GAAP operating profit margin was 36% this quarter, compared with 28% for the same quarter last year. Net income attributable to ordinary shareholders was RMB$32 billion for the quarter, compared to RMB$13.1 billion in the same quarter last year.

以公認會計原則計算，本季營業利潤為人民幣 326 億元，而去年同期為 127 億元。非 GAAP 營業利潤為 350 億元，去年同期為 146 億元。本季非 GAAP 營業利益率為 36%，去年同期為 28%。本季歸屬於普通股股東的淨利為人民幣 320 億元，去年同期為 131 億元人民幣。

Basic earnings per ADS was RMB$23.14 and diluted earnings per ADS was RMB$21.61 versus basic earnings per ADS of RMB$9.64 and diluted earnings per ADS of R&B 9 in the same quarter of 2023. Long gap net income attributable to ordinary shareholders was R&B 34.4 billion versus R&B 15.3 billion in the same quarter last year. Long gap diluted earnings per ADS was R&B 23.24 versus R&B 10.47 in the same quarter of 2023.

每份美國存託憑證基本獲利為人民幣23.14 元，稀釋後每份美國存託憑證獲利為人民幣21.61 元，而2023 年同季每份美國存託憑證基本獲利為人民幣9.64 元，稀釋後每份美國存託憑證獲利為R&B 9。每 ADS 的長差距攤薄收益為 R&B 23.24，而 2023 年同一季度為 R&B 10.47。

As noted last quarter, our business does not follow a linear path, and profitability in the last few quarters does not represent future. Looking ahead, we will invest firmly to support a healthy ecosystem that encourages high-quality merchants. Our profitability may fluctuate in the short term, but will gradually trend lower in the long run.

正如上個季度所指出的，我們的業務並不遵循線性路徑，過去幾季的獲利能力並不代表未來。展望未來，我們將堅定投資，支持鼓勵優質商家的健康生態系統。我們的獲利能力短期內可能會有波動，但長期來看會逐漸下降。

This is inevitable as we focus on the long-term, high-quality development of our platforms. That concludes income statements. Now let me move on to cash flow. Our net cash generated from operating activities was RMB43.8 billion, compared with RMB23.4 billion in the same quarter last year. As of June 30, 2024, We have RMB284.9 billion in cash, cash equivalents, and short-term investments.

這是我們著眼於平台長期高品質發展的必然結果。損益表到此結束。現在讓我繼續討論現金流。經營活動產生的現金淨額為 438 億元，去年同期為 234 億元。截至2024年6月30日，我們擁有現金、現金等價物及短期投資人民幣2,849億元。

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. In today's Q&A session, Lei, Jiazhen, and Jun will take questions from analysts on the line. We will take a maximum of two questions from each analyst. Lei and Jiazhen will answer questions in Chinese and will help translate for convenience purpose.

謝謝Jun。在今天的問答環節中，雷家珍、Jun將在線上回答分析師的提問。我們將向每位分析師提出最多兩個問題。雷和家珍將用中文回答問題，並幫忙翻譯方便起見。

Operator, we are open for questions.

接線員，我們歡迎提問。

(Operator Instructions) Joyce Ju, Bank of America.

（操作員指示）Joyce Ju，美國銀行。

(interpreted) I will translate for myself. I have two questions. My first question is we have seen total profit growth remained robust this quarter. But in the prepared remarks, management mentioned there will be increased investment and profitability fluctuations caused by the competition. Could management share how you assess the profit plan in the future?

（翻譯）我自己翻譯。我有兩個問題。我的第一個問題是，我們看到本季總利潤成長仍然強勁。但在準備好的演講中，管理層提到競爭將導致投資增加和獲利波動。管理階層能否分享您如何評估未來的獲利計畫？

In addition, in terms of shareholder returns, does management have any plan for share buyback or dividend payout? My second question is, in the prepared remarks, we noted that management emphasized a lot on the merchant ecosystem and the merchant supporting policies. Could you please elaborate a bit on your understanding on the how you see merchant ecosystem, how to review it, how to understand it and why this will become the focus of the platform in the next stage?

另外，在股東回報方面，管理階層是否有回購或派息的計畫？我的第二個問題是，在準備好的發言中，我們注意到管理階層非常重視商家生態系統和商家支援政策。您能否詳細說明您對商家生態的理解，如何檢視、如何理解，以及為什麼這會成為平台下一階段的重點？

(interpreted) This is Chen Lei. Let me take your first question. We have communicated on a number of locations that profit growth in the past few quarters should not be used as long-term guidance. And it was a result of the mismatch between the business investment and financial reporting cycle.

（翻譯）我是陳雷。讓我回答你的第一個問題。我們已經在多個地點進行了溝通，過去幾個季度的利潤成長不應被用作長期指導。這是商業投資與財務報告週期不符的結果。

In addition, our business is currently facing intense competition and shifting external factors, which will inevitably bring fluctuations to our business and also slow down our top line growth. We are now entering a new phase of a steady transformation towards high-quality development.

此外，我們的業務目前面臨激烈的競爭和外部因素的變化，這將不可避免地為我們的業務帶來波動，也減緩我們的收入成長。目前，我們正進入穩定轉型、邁向高品質發展的新階段。

And we need to invest patiently in the platform's long-term health. And to support a sustainable development of our platform ecosystem, we will invest substantial resources over the next 12 months to support high-quality merchants. And looking ahead, our profitability may fluctuate in the short run, but directionally, it will gradually enter a downward trend.

我們需要對平台的長期健康進行耐心投資。為了支持我們平台生態系統的永續發展，我們將在未來12個月內投入大量資源來支持優質商家。而展望未來，我們的獲利能力短期內可能會有波動，但方向上會逐漸進入下降趨勢。

And empowering and supporting merchants is crucial to building our high-quality supply chain and also creating a robust platform ecosystem. Over the long run, this will start off a virtuous cycle for the platform. And therefore, we will remain committed to patient investments even though short-term profits will be affected.

賦能與支持商家對於打造優質供應鏈、打造強大的平台生態系統至關重要。從長遠來看，這將為平台開啟一個良性循環。因此，儘管短期利潤會受到影響，我們仍將保持耐心投資。

In terms of shareholder returns, the company is still in the investment phase, and we are facing intense competition on different fronts and also uncertainties from external factors. And therefore, our management team and I unanimously believe that it is not an appropriate time for share purchase -- for share repurchases or dividends. And in the foreseeable years ahead, we also do not see such a need

從股東回報來看，公司仍處於投資階段，面臨各方面的激烈競爭以及外部因素的不確定性。因此，我們的管理團隊和我一致認為，現在不是購買股票、回購股票或發放股利的適當時機。在未來可預見的幾年裡，我們也看不到這樣的需要

(interpreted) This is Zhao Jiazhen. Let me take your question on merchant ecosystem. Our platform is a mutually dependent community as merchants, consumers and our operations teams. Merchants are our key partners in our joint efforts to serve consumer. The increased competition in our industry brings new demands on our community.

（譯）我是趙家珍。讓我回答你關於商業生態系統的問題。我們的平台是一個作為商家、消費者和我們的營運團隊相互依賴的社群。商家是我們共同服務消費者的重要夥伴。我們行業競爭的加劇為我們的社區帶來了新的要求。

In this process, we feel a strong sense of responsibility as a platform. On one side, we must ensure strict oversight of product quality to prevent substandard goods and protect consumer rights. On the other side, we must ensure fairness so that dedicated high-quality merchants can earn meaningful rewards, which is essential for the healthy development of ecosystem.

在這個過程中，我們感受到了作為平台的強烈責任感。一方面，要嚴格監管產品品質，杜絕不合格品，保護消費者權益。另一方面，我們要確保公平，讓專注的優質商家能獲得有意義的獎勵，這對生態系統的健康發展至關重要。

To achieve balance in the ecosystem, we have no choice but to firmly transition towards high-quality development. Therefore, we will adopt the necessary policies to provide strong support to high-quality merchants while addressing issues with low-quality ones.

要實現生態平衡，必須堅定不移地邁向高品質發展。因此，我們將採取必要的政策，對優質商家給予大力支持，同時解決低品質商家問題。

On the supply side, we will strongly support merchants with product and technology innovation capabilities. We will significantly reduce transaction fees for these high-quality merchants with an expected amount of RMB10 billion in the following years. We will continue to enhance incentives for the merchants to drive our high-quality development of ecosystem.

在供給側，我們將大力支持有產品和技術創新能力的商家。我們將在未來幾年大幅降低這些優質商家的交易費用，預計金額將達到100億元。我們將持續加強對商家的激勵力度，推動生態系統高品質發展。

On the other side, we will further enforce strong governance of our platform and merchants. This includes identifying and removing unlawful merchants from our platform to strengthen our supply chain. As of now, we have already started a new round of investment in operations and technology to optimize the merchant onboarding and product listing processes, use advanced technology to ensure strict product quality control and create a better environment for our high-quality merchants.

另一方面，我們將進一步加強對平台和商家的嚴格治理。這包括識別並從我們的平台中刪除非法商家，以加強我們的供應鏈。目前，我們已經開始新一輪的營運和技術投入，優化商家進駐和產品上架流程，利用先進技術確保嚴格的產品品質控制，為優質商家創造更好的環境。

We grow together with our high-quality merchant partners working together to offer consumers high-quality products and services. The consumers can in turn bring new growth opportunities to the ecosystem, creating a virtuous cycle, which is the key to the long-term healthy development of our community. To achieve the goal of high-quality development of the merchant ecosystem, our management has reached the consensus to firmly commit to long-term investments and create a healthy, sustainable platform ecosystem. Thank you, all.

我們與優質商家合作夥伴共同成長，為消費者提供高品質的產品和服務。消費者反過來可以為生態系統帶來新的成長機會，形成良性循環，這是社區長期健康發展的關鍵。為實現商戶生態高品質發展的目標，我們管理階層達成共識，堅定長期投資，打造健康、永續的平台生態。謝謝大家。

Operator, let's move on to the next analyst on the line.

接線員，讓我們轉到線路中的下一位分析師。

Yang Bai, CICC.

白楊，中金公司。

(interpreted) I have two questions. The first one, we have observed that the growth of your global business remains strong. Some external data suggests that the growth rates and the investment in certain markets are slowing down.

（翻譯）我有兩個問題。第一，我們觀察到你們的全球業務成長依然強勁。一些外部數據表明，某些市場的成長率和投資正在放緩。

In your prepared remarks, we also noticed that the company takes a relatively cautious approach towards the future development of your global business. Is the company trying to manage some risks proactively? Could the management please elaborate on your thinking in this regard?

在您準備的發言中，我們也注意到，公司對於您全球業務的未來發展採取了相對謹慎的態度。公司是否正在嘗試主動管理某些風險？請管理階層詳細闡述您對此的想法？

The second one is we saw that the overall competitive environment is quite intense. Has it caused any impact on the company's growth? In such a competitive environment, how will the company adjust to your investment priorities? And how does the management think about your positioning?

第二個是我們看到整個競爭環境還是比較激烈的。對公司的發展有沒有造成影響？在如此競爭的環境下，公司將如何調整您的投資重點？管理階層如何看待你的定位？

(interpreted) This is Lei. Let me take your question on the global business. Our global business is still evolving, and we are actively exploring new opportunities. Currently, our global business has entered over 70 markets. And during this call, we have always prioritized compliance and see it as the foundation for our development.

（解釋）這是雷。讓我回答你關於全球業務的問題。我們的全球業務仍在不斷發展，我們正在積極探索新的機會。目前，我們的全球業務已進入70多個市場。在這次通話中，我們始終將合規放在首位，並將其視為我們發展的基礎。

And over the past few quarters, we have invested significant resources in building a safe shopping environment. As our business develops, we have noticed that the changes in the external environment are accelerating. And our operations are increasingly affected by some nonbusiness factors, and we are seeing a significant increase in uncertainty.

在過去的幾個季度中，我們投入了大量資源來建立安全的購物環境。隨著業務的發展，我們注意到外部環境正在加速變化。而且我們的營運越來越受到一些非商業因素的影響，我們看到不確定性顯著增加。

And meanwhile, competition is a constant theme in the e-commerce industry and is expected to intensify. At this moment, such intense competition combined with the impact of external factors will inevitably lead to disruptions on our global business.

同時，競爭是電子商務行業永恆的主題，並且預計將加劇。此時此刻，如此激烈的競爭加上外部因素的影響，不可避免地會導致我們的全球業務受到干擾。

But nevertheless, we remain committed to our vision of allowing more consumers worldwide to enjoy the benefits of the digital economy, and this has not changed. And in response to the complex environment, we will focus on our core strength, and continuously improve our capabilities in supply chain, customer services and compliance to better meet the expectations of consumers around the world and also achieve high-quality development in our global business.

但儘管如此，我們仍致力於讓全球更多消費者享受數位經濟的好處，這一點並沒有改變。面對複雜的環境，我們將聚焦核心優勢，不斷提升供應鏈、客戶服務、合規能力，更能滿足全球消費者的期望，並實現全球業務高品質發展。

(interpreted) This is Zhao Jiazhen. Let me take your question on competition. Over the past few quarters, the competition has been intensifying, which is natural to the e-commerce sector. In such a competitive environment, our revenue growth mix was down.

（譯）我是趙家珍。讓我回答你關於競爭的問題。過去幾個季度，競爭不斷加劇，這對電子商務產業來說是很自然的。在如此競爭的環境下，我們的營收成長組合下降了。

For instance, in the second quarter, our revenue growth declined indicating that high revenue growth is not sustainable. Currently, consumer demand is becoming more diversified and e-commerce platforms are actively adjusting their strategies to meet these evolving needs.

例如，在第二季度，我們的收入成長下降，顯示收入的高成長是不可持續的。目前，消費者需求日益多元化，電商平台正積極調整策略以滿足這些不斷變化的需求。

Each platform has its own strength and competitive edge and commit substantial resources to cater to consumer demand. At this moment, we need to focus on our core strength and continue on our task to high-quality environment.

每個平台都有自己的實力和競爭優勢，並投入大量資源來滿足消費者的需求。此時此刻，我們需要聚焦核心力量，繼續實踐高品質環境的使命。

For e-commerce platform, a robust supply chain is essential to providing good services to consumers. To meet the diversified needs of consumers, we remain focused on the fundamentals and strive for innovation in the supply chain.

對於電商平台來說，健全的供應鏈對於為消費者提供良好的服務至關重要。滿足消費者多元化需求，我們堅持立足根本，努力創新供應鏈。

In the second quarter, our teams continue to bring agricultural core initiatives to major production regions, helping local agricultural products to their brands and empowering small and medium-sized agricultural merchants through collective marketing efforts.

第二季度，我們的團隊繼續將農業核心措施帶到主產區，幫助當地農產品品牌化，透過集體行銷為中小農商賦能。

Apart from agricultural products, we have expanded our support to the manufacturer through digitalization. By collaborating with high-quality national brands and manufacturers, we have successfully launched tailored products for niche categories. This brand and merchants have achieved higher quality developments through continuous technological updates and product innovation.

除了農產品之外，我們還透過數位化擴大了對製造商的支持。透過與優質民族品牌和製造商合作，我們成功推出了針對利基品類的客製化產品。這個品牌和商家透過不斷的技術更新和產品創新，實現了更高品質的發展。

Thank you, Jiazhen, and thank you all for joining us today. We look forward to speaking with you again next quarter. And thank you. Have a nice day.

謝謝家珍，也謝謝大家今天加入我們。我們期待下個季度再次與您交談。謝謝你。祝你今天過得愉快。

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

謝謝。女士們、先生們，今天的會議到此結束。感謝您的參與。你們現在可以斷開連結了。