拼多多 (PDD) 2021 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Pinduoduo's Fourth Quarter and Full Year 2021 Earnings Conference Call. (Operator Instructions) I must advise you that this conference is being recorded today. I would now like to hand the conference over to your host for today's conference, [Mr. Chen Pen]. Please go ahead, sir.

女士們、先生們，感謝大家的支持，歡迎參加拼多多2021年第四季及全年業績電話會議。 （操作員指示）我必須通知您，今天我們正在錄製這次會議。現在，我想將會議移交給今天會議的主持人[先生]。陳鵬.先生，請繼續。

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's earnings release was distributed earlier and is available on IR website at investor.pinduoduo.com as well as through GlobeNewswire services.

謝謝您，接線生。大家好，感謝大家今天加入我們。我叫陳，我將協助主持財報電話會議。拼多多的收益報告已於早些時候發布，可在 IR 網站 investor.pinduoduo.com 以及 GlobeNewswire 服務上查閱。

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 contains 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.

在我們開始之前，我想請您參閱我們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陳述。此外，本次電話會議也涉及某些非公認會計準則財務指標的討論。請參閱我們的收益報告，其中包含非 GAAP 指標與 GAAP 指標的對帳。

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 fiscal year 2021 and our strategic focus. Jun will then take us through our key operating and financial results for the fourth quarter and fiscal year ended December 31, 2021.

今天參加電話會議的還有我們的董事長兼執行長陳雷；劉軍，我們的財務副總裁。雷軍將對我們過去一個季度和2021財年的業績以及戰略重點做一些總體評價。然後，Jun 將向我們介紹截至 2021 年 12 月 31 日的第四季和財政年度的主要營運和財務表現。

During the Q&A session, Lei will answer the 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 translative version, statements in the original language should prevail.

在問答環節，雷會用中文回答問題，我會幫忙翻譯。請注意，提供的所有翻譯僅供參考。若原文與譯文有出入，以原文為準。

Now it is my pleasure to introduce our Chairman and Chief Executive Officer, Chen Lei. Lei, please go ahead.

現在我很高興介紹我們的董事長兼執行長陳雷。雷，請說。

Thank you, Chen, and thank you, everyone. Thank you for joining us on our earnings call for the fourth quarter and the fiscal year of 2021.

謝謝陳，謝謝大家。感謝您參加我們的 2021 年第四季和財年財報電話會議。

Let me first recap our results in Q4 and full year 2021. Our total revenue in the fourth quarter, excluding revenue from merchandise sales, was RMB 27.1 billion. This represents a year-on-year increase of 28%. Our annual active buyers reached 868.7 million for the 12 months, ending on December 31, with RMB 733.4 million average quarterly MAUs. Our GMV in 2021 was RMB 2,441 billion, representing 46 year-on-year growth -- 46% year-on-year growth. Total revenue for 2021, excluding revenue from merchandise sales, was RMB 86.7 billion, representing 61% growth year-on-year.

首先，我來回顧我們2021年第四季和全年的業績。這比去年同期增長了 28%。截至 12 月 31 日的 12 個月內，我們的年度活躍買家數量達到 8.687 億，平均季度月活躍買家數量為人民幣 7.334 億元。我們2021年的GMV是人民幣24,410億元，年增46%，年增46%。 2021年總收入（不含商品銷售收入）為人民幣867億元，較去年同期成長61%。

2021 was a year of transition for Pinduoduo. Over the course of the year, during which I took over role of Chairman, we shifted our priority from sales and marketing towards research and development. I'm glad to see that this shift is well on track. It will lay a solid foundation for us over the long run. We are grateful for our users' continued trust and support.

2021年對於拼多多來說，是轉型的一年。在我擔任董事長的一年裡，我們將工作重點從銷售和行銷轉向研發。我很高興看到這一轉變正在順利進行中。從長遠來看，這將為我們奠定堅實的基礎。我們感謝用戶一直以來的信任與支持。

To keep up with the evolving and increasingly multidimensional preferences, we constantly ask ourselves how we can serve them better. As a team with engineering background, our focus has always been to use technology to benefit all. We were fortunate to be early in identifying opportunities to contribute to and increase value in agriculture. Agriculture is a sector that touches everyone's daily life, yet has low levels of digitalization.

為了滿足不斷變化且日益多維度的偏好，我們不斷問自己如何能更好地為他們服務。作為一支擁有工程背景的團隊，我們的重點一直是利用科技造福所有人。我們很幸運能夠很早就發現為農業做出貢獻並增加其價值的機會。農業是與每個人日常生活息息相關的行業，但數位化程度較低。

Since Pinduoduo's establishment in 2015, we have been facilitating agricultural modernization and digital inclusion. An efficient, resilient, sustainable and vibrant agricultural sector benefits all stakeholders in the value chain, and we remain focused on our goal.

拼多多自2015年成立以來，一直致力於推動農業現代化和數位包容。高效、有彈性、可持續和充滿活力的農業部門使價值鏈中的所有利益相關者受益，我們將繼續專注於我們的目標。

In 2021, we deepened our agricultural digital inclusion efforts in various ways and that includes: one, helping farmers to expand their access to the market; two, advancing the use of smart agriculture; and three, encouraging and enable more young and tech-savvy talent into agricultural sector.

2021年，我們透過多種方式深化農業數位包容工作，包括：一是幫助農民擴大市場進入；二是推動智慧農業發展。第三是鼓勵和支持更多年輕、精通科技的人才進入農業領域。

And now let me elaborate. In the downstream we continue to bring farmers into a digital economy by expanding their market assets. We are working hard to build a platform that effectively matches consumer demand in agricultural production across the country. This enables farmers to ship their fresh and perishable agri food products directly to consumers, bypassing layers of distribution to deliver in a shorter time frame. The result is higher income for farmers, lower price for consumers and the fresh produce consumers could receive.

現在讓我詳細說明一下。在下游，我們透過擴大農民的市場資產，繼續將農民帶入數位經濟。我們正在努力建立一個有效對接全國農業生產消費需求的平台。這使得農民能夠將新鮮和易腐爛的農產品直接運送給消費者，繞過層層分銷，在更短的時間內交付。結果是農民收入增加，消費者獲得新鮮農產品的價格降低。

Our platform has opened up a market of nearly 870 million users to farmers and agri producers in China directly. We have also provided them with various tools to promote their unique agricultural produce.

我們的平台直接向中國農民和農業生產者開放了近8.7億用戶的市場。我們也為他們提供了各種工具來推廣他們獨特的農產品。

One commitment that we have is our zero commission policy of agricultural products. We waived sales commissioning and proactively gained more exposure for agricultural products. We plan to continue this zero commission policy of agricultural products. We aim to create a virtual cycle like what we have done for SMEs in the past, in which farmers earn more while consumers get fresher and more affordable produce.

我們的一個承諾就是我們對農產品實施零佣金政策。取消銷售佣金，積極拓展農產品曝光管道。我們計劃繼續實施農產品零佣金政策。我們的目標是創造一個虛擬循環，就像我們過去為中小企業所做的那樣，讓農民賺更多錢，而消費者獲得更新鮮、更實惠的農產品。

To amplify its effectiveness, we launched numerous promotional events. In 2021, we worked with various regions to create a series of agri-focused shopping festivals that introduce consumers across China to different regional specialties. We also collaborated with key partners, such as CCTV, to launch live streaming events to promote China's agricultural heritage. This event not only enhanced user awareness and appreciation of local specialties, enabled farmers to directly talk to consumers, understand consumers' preference better, which helped them in brand building and production upgrades for quality agricultural produce.

為了增強其有效性，我們推出了許多促銷活動。 2021年，我們與不同地區合作打造了一系列以農業為重點的購物節，向中國各地的消費者介紹不同地區的特色產品。我們也與中央電視台等重要合作夥伴合作，舉辦直播活動，宣傳中國的農業文化遺產。這項活動不僅提升了用戶對當地特色產品的認知與欣賞，也讓農民能夠與消費者零距離對話，更了解消費者的喜好，有助於農戶進行優質農產品的品牌建立與生產升級。

For instance, we initiated an orange festival to promote high-quality orange specialties from 7 major orange-produced areas across the country, bringing regional orange varieties to consumers nationwide. Benefiting from rising order volume on our platform, local orange farmers and agri merchants in Hunan province witnessed a large increase in sales. This increase in sales not only improved farmers' living standards, but also gave them confidence to invest into the future. Many of the [reinvested in the process] into developing better products, including sorting machines and packaging design.

例如，我們舉辦橘子節，推廣全國7個橘子主產區的優質橘子特產，將當地橘子品種帶給全國消費者。受惠於平台訂單量的上升，湖南當地橙農、農商的銷售量大幅增加。銷售額的成長不僅提高了農民的生活水平，也增強了他們對未來投資的信心。許多[再投資於該過程]用於開發更好的產品，包括分選機和包裝設計。

Moving upstream, we are advancing adoption of agricultural technology to help growers improve their productivity. A full practical and affordable technology came out of the inaugural Smart Agriculture Competition last year, including automated crop monitoring, program dynamic adjustment for changing climate conditions and irrigation. We have several teams to commercialize these technology solutions.

向上游發展，我們正在推進農業技術的採用，以幫助種植者提高生產力。去年首屆智慧農業比賽誕生了一套完整實用且價格合理的技術，包括自動作物監測、針對不斷變化的氣候條件的程序動態調整和灌溉。我們有幾個團隊致力於將這些技術解決方案商業化。

Today, these solutions have been applied in major strawberry-growing regions across China, such as Liaoning, Anhui and Yunnan provinces. They have helped traditional growers more than double their management capacity. Such progress is inspiring and valuable for the entire industry. We regularly organized knowledge-sharing sessions to encourage the adoption of technology in this sector.

目前，這些解決方案已在遼寧、安徽、雲南等全國草莓主產區應用。他們幫助傳統種植者的管理能力提高了一倍以上。這樣的進步對於整個產業來說都是鼓舞人心、有價值的。我們定期組織知識共享會議，以鼓勵該領域採用技術。

Earlier this month, we jointly hosted a sharing section with FAO China on harnessing smart agriculture to boost food production and security. Representatives from FAO, China Agricultural University, Chinese Academy of Agricultural Sciences, Pinduoduo and the finalists of the Smart Agriculture Competition presented their insights at a webinar. We are honored to work closely with world-class partners in agri food sector, such as China Agricultural University, Zhejiang University, UN FAO, Singapore A*STAR and the Wageningen University. And we look forward to collaborating with more like-minded organizations and individuals in the future.

本月初，我們與糧農組織駐華辦事處聯合舉辦了利用智慧農業提高糧食生產和安全的分享會。糧農組織、中國農業大學、中國農業科學院、拼多多以及智慧農業大賽決賽入圍者的代表在網路研討會上介紹了他們的見解。我們很榮幸能與中國農業大學、浙江大學、聯合國糧農組織、新加坡A*STAR和瓦赫寧根大學等農業食品領域的世界一流合作夥伴密切合作。我們期待未來與更多志同道合的組織和個人合作。

Another important prong of Pinduoduo's agricultural strategy focuses on encouraging and enabling more young and tech-savvy talent into the agriculture sector. We are glad to see more and more young agricultural entrepreneurs choosing to start their businesses with Pinduoduo. As at end October 2021, over 126,000 young farming professionals, born after 1995, have joined the Pinduoduo platform, up from 85,700 in 2020 and 29,700 in 2019. Most of these young entrepreneurs are well educated. They are digital natives, who grew up with mobile technology. Therefore, they are used to buying things online and use innovations like live streaming.

拼多多農業策略的另一個重要面向是鼓勵和支持更多年輕且精通科技的人才進入農業領域。我們很高興看到越來越多的青年農業創業家選擇在拼多多創業。截至2021年10月底，已有超過12.6萬名1995年後出生的年輕農業專業人士加入了拼多多平台，高於2020年的8.57萬名和2019年的2.97萬名。他們是伴隨著行動技術成長的數位原住民。因此，他們習慣於在線購物並使用直播等創新技術。

At the same time, many of them are motivated by desire to contribute to the rural communities. To upskill them, we have offered a dedicated training program on necessary know-how to operate their e-commerce businesses. We will devote more resources to support them as we believe it will play a key role in facilitating agricultural modernization and rural vitalization.

同時，他們中的許多人也渴望為農村社區做出貢獻。為了提高他們的技能，我們提供了專門的培訓計劃，教授他們經營電子商務業務所需的知識。我們將投入更多資源支持，相信這將對促進農業現代化、鄉村振興發揮重要作用。

Looking back on our effort in agriculture, we are happy with the positive impact that we have generated. But we have only scratched the surface in the field of technology advancement and digital inclusion in agriculture. Therefore, we are stepping up our investment in this sector as a long-term commitment. The focus of our long-term vision may not always translate into near-term results, but we will be patient as we do our part to contribute to agricultural modernization.

回顧我們在農業領域的努力，我們對所產生的正面影響感到高興。但我們在農業技術進步和數位包容領域僅觸及了表面。因此，我們正在加大對該領域的投資，作為長期承諾。我們的長期願景的重點可能並不總是轉化為短期成果，但我們將耐心地為農業現代化盡自己的一份力量。

As mentioned last year, I'm personally overseeing our 10 Billion Agriculture Initiative, which aims to facilitate advancement of agritech, promote digital inclusion and provide agritech talent with greater motivation and sense of achievement. Profits from this quarter will continue to be allocated to this initiative.

正如去年提到的，我親自負責監督我們的“百億農業計劃”，該計劃旨在促進農業科技的發展，促進數位包容，並為農業科技人才提供更大的動力和成就感。本季的利潤將繼續分配給此計劃。

Lastly, as a platform that serves over 868 million consumers, we are also shouldering more social responsibility. In July, we rapidly responded to help with flood relief efforts in Henan, making donations and launching a portal to support emergency relief distribution. In October, we did the same to carry out emergency disaster relief and post-disaster construction work in Shaanxi.

最後，作為服務超過8.68億消費者的平台，我們也肩負更多的社會責任。 7月份，我們迅速響應河南省抗洪救災的號召，捐款捐物，並開通救援物資發放入口網站。 10月份，我們也在陝西進行緊急救災和災後復原重建工作。

In December, we contributed towards relief efforts in Xi'an and worked with the local government to maintain necessary provisions as a result of COVID-19 outbreak. To support the rural communities, we launched Duo Duo Reading Month. Today, we have donated carefully selected storybooks to rural communities around the country with an organized reading program. We hope that this effort will broaden the horizon of the use and contribute to a better future to the community. As we step into another year, we remain laser focused on our goals, and we'll continue to do our best to serve all our stakeholders. And I would like to thank you all in advance for your continued support.

12月，我們為西安的救災工作做出了貢獻，並與當地政府合作，為新冠肺炎疫情的爆發保留了必要的物資。為了支持農村社區，我們發起了「多讀書月」。今天，我們透過有組織的讀書計劃向全國各地的農村社區捐贈了精心挑選的故事書。我們希望這項努力能拓寬使用視野並為社會創造更美好的未來做出貢獻。隨著我們進入新的一年，我們仍然專注於我們的目標，我們將繼續盡最大努力為所有利害關係人提供服務。我想先感謝大家一直以來的支持。

And now let me pass the time to Jun. Jun has been with us since 2017 and has been recently promoted to VP of Finance as part of our plan to bloom more young generation leaders. And Jun, please?

現在，讓我將時間交給 Jun。還有 Jun，可以嗎？

Thank you, Lei. Hello, everyone. Nice meeting you here. Let me first walk you through our operating results for the fourth quarter and fiscal year ended December 31, 2021.

謝謝你，雷。大家好。很高興在這裡見到你。首先，讓我向您介紹我們截至 2021 年 12 月 31 日的第四季和財政年度的經營業績。

Our annual active buyers for the 12 months ending December 31, 2021, was 868.7 million. This is an increase of 80.3 million from end 2020 or 1.4 million from the 12 months ending September 30, 2021. In Q4, we observed a quarter-over-quarter decline of the MAUs. Average MAU in Q4 was 733.4 million. This is 13.5 million increase from the same quarter in 2020 or an 8.1 million decline from Q3 2021. At our current scale, we are approaching the (inaudible) and do not see it as a meaningful driver of future growth. To us, it is more important to focus on meeting our existing users involvement needs and to serve them in the best way that we can.

截至 2021 年 12 月 31 日的 12 個月，我們的年度活躍買家為 8.687 億。這比 2020 年底增加了 8,030 萬，比截至 2021 年 9 月 30 日的 12 個月增加了 140 萬。第四季的平均每月活躍用戶為 7.334 億。這比 2020 年同期增加了 1,350 萬，比 2021 年第三季減少了 810 萬。對我們來說，更重要的是專注於滿足現有用戶的參與需求，並盡我們所能以最好的方式為他們服務。

Our GMV for the last 12 months ending December 31, 2021, was RMB 2,441 billion, an increase of 46% compared to 2020. Average annual spending per active buyer for the last 12 months ending December 31, 2021, which is the result of GMV divided by the number of active buyers over the same period, increased 33% year-over-year to RMB 2,810. We're encouraged by their growing trust and are committed to serve them better.

截至 2021 年 12 月 31 日止 12 個月，我們的 GMV 為人民幣 24,410 億元，較 2020 年增長 46%。 截至 2021 年 12 月 31 日止 12 個月的每位人口平均成長 2021 年 12 月 31 日止 12 個月（GMV 買家平均年活躍的金額他們日益增長的信任令我們備受鼓舞，我們致力於為他們提供更好的服務。

Last year, our platform generated a total of 61 billion orders, an increase of 59% from a year ago. There has been a significant increase in agricultural orders on our platform, in line with the step-up forecast and resources on the factor as average order value for agricultural products is lower. This resulted in a decrease in AOV over the same period. Our AOV came down 8% to RMB 40 in 2021 as compared to RMB 44 in 2020, where average number of orders per active buyer was 70 in 2021, an increase of 45% from 2020. We are glad to see that our investment in agriculture is addressing our users' real needs. We plan to deepen our efforts in agriculture.

去年我們平台共產生訂單610億份，比一年前增加了59%。我們平台上的農業訂單大幅增加，符合階梯式預測和資源因素，因為農產品的平均訂單價值較低。這導致同期平均客流量 (AOV) 下降。 2021年，我們的平均訂單價值 (AOV) 為40元，較2020年的44元下降8%，其中2021年每位活躍買家的平均訂單量為70個，較2020年增長45%。我們計劃深化在農業領域的努力。

Next, I will go through our financial performance in the quarter ended December 31, 2021. In terms of P&L, our total revenue in the quarter was RMB 27.2 billion, up 3% from RMB 26.5 billion in the same quarter of 2020. This was mainly driven by the increase in revenues from online marketing services and revenue from transaction services, offset by a decrease in revenue from 1P trials. Excluding revenue from our 1P trials, our total revenue was RMB 27.1 billion in Q4 2021, up 28% from RMB 21.2 billion in the same quarter of 2020. Revenue from online marketing services and others were RMB 22.4 billion this quarter, up 90% compared to the same period of 2020. This was primarily due to increased merchant activities, a testament of our platform's capability to help them reach their target customers effectively and efficiently.

接下來，我將介紹我們在截至2021年12月31日的這個季度的財務表現。不計1P試驗收入，我們2021年第四季的總收入為人民幣271億元，較2020年同期的人民幣212億元增長28%。

Our transaction services revenue this quarter were RMB 4.7 billion, up 108% compared with the same period of 2020. The increase in our transaction services revenues was due to: first, the increase in total transaction processing fees as a result of higher GMV; second, more diversified services that we provide to merchants, such as fulfillment services.

本季度，我們的交易服務收入為人民幣 47 億元，較 2020 年同期增長 108%。第二，我們為商家提供更多樣化的服務，例如履約服務。

Moving on to cost and expenses. Our total cost of revenue decreased from RMB 11.5 billion in Q4 2020 to RMB 6.5 billion this quarter. The decrease came mainly from the reduction of 1P trials and decreased several quarters due to one-off rebates, offset by increased fulfillment fees.

繼續討論成本和費用。我們的總收入成本從 2020 年第四季的 115 億元人民幣下降至本季的 65 億元。下降主要源於1P試驗的減少，以及由於一次性返利導致幾季的下降，但被履行費用的增加所抵消。

Total operating expenses this quarter were RMB 13.8 billion compared with RMB 17.1 billion in the same quarter of 2020. On non-GAAP basis, our total operating expenses as a percentage of revenue, excluding 1P, has been declining from 94% to 76% to 45% for Q4 of 2019, 2020 and 2021, respectively. As we observed slower user and top line growth, we proactively controlled our expenses. This resulted in lower operating expenses in the quarter. As we face more competition from existing and new players, we expect relevant expense items to increase in the future.

本季總營運費用為人民幣 138 億元，而 2020 年同期為人民幣 171 億元。當我們觀察到用戶和營收成長放緩時，我們主動控制了開支。這導致本季的營運費用下降。由於我們面臨來自現有和新參與者的更激烈的競爭，我們預計未來相關費用項目將會增加。

Looking into specific expense items. Our non-GAAP sales and marketing expenses this quarter RMB 10.8 billion, down 25% versus the same quarter of 2020. As we continue to shift away from our previous forecast on sales and marketing, on top of this, as I mentioned, we further controlled our expenses in the face of slower user and revenue growth. As a result, on a non-GAAP basis, our sales and marketing expenses as a percentage of our revenues in this quarter was 40% compared with 84% and 54% for the same quarter in 2019 and in 2020.

查看具體費用項目。本季度，我們的非美國通用會計準則銷售和行銷費用為人民幣 108 億元，較 2020 年同期下降 25%。因此，以非 GAAP 計算，本季我們的銷售和行銷費用佔營收的百分比為 40%，而 2019 年同期和 2020 年同期分別為 84% 和 54%。

Our non-GAAP general and administrative expenses were RMB 195.8 million compared with RMB 153.1 million in the same quarter of 2020. Our non-GAAP research and development expenses were RMB 1.3 billion, a decline of 16% from RMB 1.6 billion in the same quarter of 2020. The decrease in non-GAAP R&D expenses was due to a one-off rebate from one of our service providers. If we take out impact of this rebate, R&D expenses will have risen. We do not expect a rebate to recur. As a result, operating profit for quarter was RMB 6.9 billion on a GAAP basis compared with operating loss of RMB 2 billion in the same quarter of 2020. Non-GAAP operating profit was RMB 8.4 billion compared with operating loss of RMB 1.1 billion in the same quarter of 2020. Net income attributable to ordinary shareholders was RMB 6.6 billion compared with a net loss of RMB 1.4 billion in the same quarter of 2020.

我們的非公認會計準則一般及行政開支為人民幣 1.958 億元，而 2020 年同期為人民幣 1.531 億元。如果我們消除這項退稅的影響，研發費用將會上升。我們不希望再次出現退款。結果，以美國通用會計準則計算，本季營業利潤為人民幣 69 億元，而 2020 年同期營業虧損為人民幣 20 億元。

Basic earnings per ADS was RMB 5.26 and the diluted earnings per ADS was RMB 4.66 compared with basic and diluted net loss per ADS of RMB 1.13 in same quarter of 2020. Non-GAAP net income attributable to ordinary shareholders was RMB 8.4 billion compared with net loss of RMB 184.5 million in the same quarter last year. Non-GAAP diluted earnings per ADS was RMB 5.88 compared with non-GAAP diluted net loss per ADS of RMB 0.15 in the same quarter of 2020.

每股美國存託憑證基本收益為5.26元人民幣，每股美國存託憑證攤薄收益為4.66元人民幣，去年同期每股美國存託憑證基本及攤薄淨虧損均為1.13元人民幣。非美國通用會計準則下，歸屬於普通股股東的淨利為84億元人民幣，去年同期虧損1.4億元。非美國通用會計準則下每股美國存託憑證攤薄收益為 5.88 元人民幣，而 2020 年同期非美國通用會計準則下每股美國存託憑證攤薄淨虧損為 0.15 元人民幣。

To conclude, profitability in the past quarter was mainly attributed to: first, controlled spending in the face of slow growth; and second, reduction of costs and expenses due to one-off rebate. We expect profits to flat rate as we continue to invest in agriculture space, including agricultural technology. As we mentioned in previous quarters, we are also facing more competition. Therefore, we do not expect profitability in Q4 to serve as a benchmark for the following quarters. Similar to previous quarters, profits from this quarter will be allocated to the 10 Billion Agriculture Initiative. That completes the profit and the loss statements for the fourth quarter 2021.

總結來看，本季的獲利能力主要歸功於：第一，在成長放緩的情況下控制開支；二是透過一次性返利減少成本費用。隨著我們繼續在農業領域（包括農業技術）進行投資，我們預計利潤將保持穩定。正如我們在前幾個季度提到的，我們也面臨著更激烈的競爭。因此，我們並不認為第四季的獲利能力能夠成為接下來幾季的基準。與前幾季類似，本季的利潤將分配給100億農業計畫。這樣就完成了 2021 年第四季的損益表。

Our net cash flow provided by operating activities was RMB 16.4 billion compared with RMB 14.9 billion in the same quarter of 2020. As of December 31, 2021, the company had RMB 92.9 billion in cash, cash equivalents and short-term investments.

我們經營活動提供的淨現金流為人民幣164億元，2020年同期為人民幣149億元。

With that, I conclude my prepared remarks.

我的發言到此結束。

Thank you, Jun. Next, we will move on to the Q&A session. For today's Q&A session, Lei and Jun will make questions -- take questions from analysts on the line. (Operator Instructions) Lei will answer questions in Chinese, and I will help translate Lei's remarks for easier reference. Operator, we may now take questions on the line.

謝謝Jun。在今天的問答環節，雷軍將在線上回答分析師的提問。 (操作員指示)雷會用中文回答問題，我會幫忙翻譯雷的講話，以便於參考。接線員，我們現在可以透過電話回答問題。

(Operator Instructions) Our first question is from Thomas Chong with Jefferies.

（操作員指示）我們的第一個問題來自 Jefferies 的 Thomas Chong。

(foreign language) My first question is more about the macro uncertainties that we are facing. How should we think about the impact to the consumers as well as to Pinduoduo? And my second question is about our RMB 10 Billion Agriculture Initiative. Can management comment about the progress so far, the P&L impact, this year's KPI as well as, of course, if there will be a step-up in investment going forward.

（外語）我的第一個問題更多的是關於我們面臨的宏觀不確定性。我們該如何看待這對消費者以及拼多多的影響？我的第二個問題是有關我們的百億元農業計劃。管理層能否評論迄今為止的進展、損益影響、今年的 KPI，以及未來是否會加大投資。

(foreign language)

（外語）

[Interpreted] Thank you, Thomas, for your questions. And let me take your questions. You asked about macro economy. Well, for us, we always look internally and see what areas we can improve through technology. And for us, a big area is agriculture. So there are many aspects and areas in agriculture that one can improve. In production, we can increase yield, reduce the environmental impact and also help farmers get higher and stable income. In terms of consumption, through our efforts, we can provide consumers with fresher and more affordable agriculture produce and reduce waste at the same time.

[口譯]謝謝托馬斯的提問。請容許我回答你們的問題。您問的是宏觀經濟。嗯，對我們來說，我們總是從內部審視，看看哪些領域可以透過科技來改進。對我們來說，農業是一個很大的領域。因此，農業方面有許多方面和領域可以改進。在生產上，我們可以提高產量，減少對環境的影響，同時也幫助農民獲得更高、更穩定的收入。在消費方面，透過我們的努力，為消費者提供更新鮮、更實惠的農產品，同時減少浪費。

In addition, another area of interest for us is in distribution. We can use technology to improve the distribution efficiency of agricultural produce and also strengthen the rural logistics system. In the agriculture sector alone, which is so fundamental and crucial, we see so many opportunities. This reflects that we remain confident about the potential of the industry and the future development. But investments in agriculture take time and the process is gradual. So we have to be very patient in the process.

此外，我們感興趣的另一個領域是分銷。利用科技手段提升農產品流通效率，加強農村物流體系建置。僅在如此基礎和關鍵的農業領域，我們就看到了許多機會。這反映出我們對產業的潛力和未來發展仍然充滿信心。但農業投資需要時間，而且是漸進的過程。因此，我們必須在過程中非常耐心。

And with that, this naturally brings us to your next question on our 10 Billion Agri Initiative. We announced the 10 Billion Agri Initiative in Q2 last year. And for this initiative, profitability or commercial value is not the aim. We hope that this initiative can address the critical needs in the agriculture sector and rural areas. As for where we would put our investments in, I hope this initiative can facilitate the advancement of agritech, promote digital inclusion and also give more motivation and a sense of achievement to agri talent and workers.

因此，這自然而然地引出了您關於我們的 100 億農業計劃的下一個問題。我們去年第二季宣布了「百億農業計畫」。而對於這項倡議來說，獲利能力或商業價值並不是目的。我們希望這項措施能夠解決農業和農村地區的迫切需求。至於我們的投資方向，我希望這項措施能促進農業科技的進步，促進數位包容，並為農業人才和工人提供更多動力和成就感。

We really hope the 10 Billion Agri Initiative can maximize its potential and impact in the advancement of agritech and digital inclusion. Therefore, we are diligently evaluating different proposals and projects and also take into account of our -- and make those evaluations based upon our past experiences in agriculture as well as our technical background.

我們真誠希望百億農業計畫能夠在農業科技和數位包容的進步中最大限度地發揮其潛力和影響力。因此，我們正在認真評估不同的提案和項目，同時也考慮到我們——並根據我們過去在農業方面的經驗以及我們的技術背景做出這些評估。

Here, I can also share some examples of our focus areas. Some examples, some of which I have mentioned, includes that how to improve distribution efficiencies through technology, how to reduce the transportation time as well as reduce the environmental impact with logistic technology and also how to use technology in production to improve the efficiency as well as quality.

在這裡，我還可以分享一些我們重點領域的例子。一些例子，其中一些我已經提到過，包括如何透過技術提高配送效率，如何利用物流技術減少運輸時間以及如何在生產中使用技術來提高效率和品質。

To use technology to enable different lengths along the agriculture value chain is really a long-term project that requires long-term dedication and patience. We are still in the early days of this and hope everybody can have more patient -- can have more patience. As we invest, we also look forward to share with you our progress on the 10 Billion Agri Initiative and hope what I have said addressed -- have addressed your questions.

利用科技實現農業價值鏈不同長度的延伸確實是一個長期項目，需要長期的奉獻和耐心。我們仍處於早期階段，希望每個人都能更有耐心——能夠更有耐心。在我們進行投資的同時，我們也期待與大家分享我們在百億農業計畫方面取得的進展，並希望我所說的能夠解答大家的問題。

Our next question comes from Yang Bai with CICC.

我們的下一個問題來自中金公司的楊白。

(foreign language) My first question is regarding to the future competitive landscape. I noticed that Pinduoduo always focuses more on the value to consumers, instead of pressure from competitors. So from your perspective, what is needed or what kind of improvement should be emphasized for the company to make the cut?

（外語）我的第一個問題是關於未來的競爭格局。我注意到拼多多始終更重視為消費者創造價值，而不是來自競爭對手的壓力。那麼從您的角度來看，公司需要做什麼或應該強調哪些方面的改進才能達到標準呢？

And my second question is regarding to your branding strategy. For the past 6 years, Pinduoduo was very distinguished from other competitors, especially for your value-for-money merchandise. However, when it comes to branding, it seems that the past advantage is kind of becoming the bottleneck. So I'd like to know your future strategy how to efficiently help the brand business in Pinduoduo's platform?

我的第二個問題是關於你們的品牌策略。在過去的6年裡，拼多多與其他競爭對手相比非常有特色，尤其是在性價比方面。然而，當真正落實到品牌建立上時，過去的優勢似乎正成為瓶頸。所以我想知道您未來的策略是如何有效率地幫助拼多多平台上的品牌業務？

(foreign language)

（外語）

[Interpreted] Thank you, Bai Yang, for your questions. I will share my views on those fronts. As for competition, since the day Pinduoduo was established, we are in this highly competitive space. And China e-commerce space is a huge industry, and it has always been highly competitive. We now see more large platforms entering e-commerce, and they provide different options to consumers. As technology continues to upgrade, consumers' needs will also continue to evolve, and we expect more engagement formats will emerge and more platform companies will join e-commerce.

[口譯] 謝謝白楊先生的提問。我將從這些方面分享我的觀點。至於競爭，自拼多多成立以來，我們就處於這個競爭激烈的領域。中國電子商務領域是一個龐大的產業，而且競爭一直非常激烈。我們現在看到越來越多的大型平台進入電子商務，它們為消費者提供不同的選擇。隨著技術的不斷升級，消費者的需求也將不斷發展，我們預計將出現更多的參與形式，更多的平台公司將加入電子商務。

As you have mentioned in your question, internally, we would focus on users and whether we are serving their needs well. So we target to offer users a unique, more savings, more fun shopping experience. This is our company's benefit. Indeed, we do not focus too much on competition. But with that said, I think over the past period of time, in terms of understanding and catching up with the rapidly changing user needs and addressing their needs effectively and efficiently, there is still plenty of room for us to improve. Admittedly, many of our competitors have done a better job in some of these aspects, and we need to learn from them.

正如您在問題中提到的，在內部，我們會關注用戶以及我們是否能很好地滿足他們的需求。因此，我們的目標是為用戶提供獨特、更節省、更有趣的購物體驗。這是我們公司的福利。確實，我們並不太關注競爭。但話雖如此，我認為在過去的一段時間裡，在理解和跟上快速變化的用戶需求，以及有效、高效地滿足他們的需求方面，我們還有很大的進步空間。不可否認，我們的許多競爭對手在某些方面做得更好，我們需要向他們學習。

Especially under intensified competition, we still need to look into ourselves how to do better, improve our services and raise our user satisfaction. I also mentioned a quarter -- a few quarters ago that Pinduoduo cannot always be perfect or be the best. And we will inevitably slowdown as we go through transition in leadership and where we make adjustments. But these are all part of our company's development.

特別是在競爭加劇的情況下，我們仍然需要反思自己，如何做得更好，改善我們的服務，並提高使用者的滿意度。我在幾個季度前也提到過，拼多多不可能總是完美或最好的。隨著領導階層的過渡和調整，我們的發展速度不可避免地會放緩。但這些都是我們公司發展的一部分。

In addition, we have chosen to invest in agriculture, and this is different from a pure Internet technology. In this sector, we need to be more patient with our investment due to its nature. We will continue to invest in agriculture. We see that compared with categories that have been digitized earlier or categories that now have higher online penetration rate, the online penetration rate for agriculture is still very low. And on the existing fulfillment experience, many consumer needs have now been met. This is why we are investing in agriculture without hesitation as well as in core agriculture technology, with the goal to promote agritech and digital inclusion.

另外我們選擇投資農業，這個和單純的網路科技是不一樣的。在這個領域，由於其性質，我們需要對投資更加耐心。我們將繼續對農業進行投資。我們看到，跟比較早實現數位化的品類，或是現在線上滲透率更高的品類相比，農業的線上滲透率還很低。而在現有的履行體驗上，許多消費者的需求已經被滿足。這就是為什麼我們毫不猶豫地投資農業以及核心農業技術，目標是促進農業技術和數位包容。

For our company's mid- to long-term development outlook, my team and I are confident. At the same time, in order for our confidence to translate into actual results, we need dedication and hard work from everybody in our team.

對於公司中長期的發展前景，我和我的團隊充滿信心。同時，為了將我們的信心轉化為實際成果，我們需要團隊中每個人的奉獻和努力。

As for your next question on brand, our platform now has nearly 870 million users, and their needs is continuing to diversify. We hope to satisfy our users' needs and also give them a better shopping experience on our platform. And in this process, brand is definitely one part that we need to work on. However, store opening does not happen overnight. Instead, it takes time. Essentially, I believe that the ultimate goal for brands and for us are the same, that is to serve consumers well. So we will continue to be very patient and down to earth to do our parts within our capability and what we should do.

至於你下一個關於品牌的問題，我們的平台現在有近8.7億用戶，而且他們的需求還在持續多元化中。我們希望滿足用戶的需求並讓他們在我們的平台上獲得更好的購物體驗。而在這個過程中，品牌肯定是我們需要努力的一部分。然而，開店並非一朝一夕的事。相反，這需要時間。從本質上來說，我相信品牌和我們的最終目標是一樣的，就是服務好消費者。因此我們將繼續保持耐心並腳踏實地地做好我們所能做的、應該做的事情。

In this process of cooperation, we see a trend that brands who sees opportunities first would generate higher returns. And this would, in turn, attract more brands to learn more about us and seek collaboration. As for whether more brands would help increase the ARPU or AOV, that is not our core focus. Instead, we focus on user satisfaction. We will stick to our principles of benefit all, people first and more open. And I believe this would have a positive impact on brand users as well as our platform.

在這個合作過程中，我們看到一個趨勢，就是誰能率先看到機會，誰就能獲得更高的回報。這反過來又會吸引更多品牌了解我們並尋求合作。至於更多品牌是否有助於提升ARPU或AOV，這不是我們關注的核心。相反，我們關注的是用戶滿意度。我們將堅持普惠共享、以人為本、更開放的理念。我相信這會對品牌用戶和我們的平台產生正面的影響。

Our next question comes from Joyce Ju with Bank of America.

下一個問題來自美國銀行的 Joyce Ju。

Congrats on the solid quarter. My first question is, first, we have seen continued leverage and decline in sales and marketing expenses this quarter. Is there any specific reason this quarter, which led to the company to further control the sales and marketing spending, or it's simply an improvement on your sales and marketing ROI?

恭喜本季業績穩健。我的第一個問題是，首先，我們看到本季槓桿率持續上升且銷售和行銷費用下降。本季是否有什麼具體原因，導致公司進一步控制銷售和行銷支出，或只是銷售和行銷投資報酬率的提升？

And my second question is, PDD has delivered another quarter of strong profit. Can you share with us how management team are looking at the balance between profitability and growth? Are we seeing a pivot in strategic priority? Also should investors expect future -- how should we expect the future profitability trend? And how much was the onetime rebate that contributed to this quarter's higher profitability? (foreign language)

我的第二個問題是拼多多又一個季度實現了強勁的利潤。您能否與我們分享管理團隊如何看待獲利能力和成長之間的平衡？我們是否看到了戰略重點的轉變？投資人也應該預期未來－我們該如何預期未來的獲利趨勢？一次性回扣對本季獲利能力提高的貢獻有多大？ （外語）

Thank you for your question, Joyce. Well, for sales and marketing expenses, you may see that we are aptly changing our investment direction based on our past quarter's results. And during Q1 and to Q3 last year, our expenses showed a consecutive quarter-on-quarter decreases in terms of absolute dollar amount. And in Q4, our selling and marketing expenses decreased by 23% Y-o-Y, which represented a 42% of revenues. Well, that is our lowest level in our history. We think it is a strategic shift, as Lei just mentioned. We need to focus and invest more in technological development such as agritech.

謝謝你的提問，喬伊斯。嗯，對於銷售和行銷費用，您可能會看到我們根據上一季的業績適當地改變了投資方向。而去年第一季到第三季度，我們的費用以絕對美元金額計算，連續幾季較上季下降。第四季度，我們的銷售和行銷費用年減 23%，佔營收的 42%。嗯，這是我們歷史上的最低水準。我們認為這是一個戰略轉變，正如雷剛才所提到的。我們需要更加關注並投資於農業科技等技術開發。

And meanwhile, with slowing growth rate, we are more cautious, so we have proactively controlled expenses. This is also why we're seeing higher profitability margin in the past quarter. And recent fluctuation in user activities and slowing revenue growth is a reflection that we are not doing well in those in terms of satisfying users' needs. So our team is working hard to explore how to meet user needs better and quicker. And we think this will require continued investment and definitely, the expense will very likely increase in the future.

同時，隨著成長速度放緩，我們更加謹慎，因此我們主動控制費用。這也是為什麼我們看到上個季度的利潤率更高。而近期用戶活躍度的波動和營收成長的放緩，也反映出我們在滿足用戶需求方面做得還不夠好。所以我們的團隊正在努力探索如何更好、更快地滿足使用者需求。我們認為這將需要持續的投資，而且未來的費用很可能會增加。

For second question, which is about profitability, well, I would like to point out that we're not changing our strategy to focus on profitability. This quarter's higher profit was due to one-off rebate, as mentioned before, and controlled spending in the face of slower growth. To further elaborate, first, we are -- as we encounter slow growth and concurrently making adjustments, we are taking a cautious approach and proactively controlling our expenses. On top of this, portion of this quarter's profit was due to cost and expense reduction related to a one-off rebate from our service provider. And this one-off rebate has resulted in lower cost and expenses and higher profitability in the quarter. But if we strip out the one-off rebate, costs and expenses will be higher than the reported number, and profitability in the quarter will also be lower.

對於第二個問題，即關於獲利能力，我想指出的是，我們不會改變我們的策略來專注於獲利能力。如同前面所提到的，本季利潤的成長是由於一次性返利，以及在成長放緩的情況下控制支出。進一步闡述一下，首先，當我們遇到成長放緩並同時進行調整時，我們採取謹慎的態度並主動控制我們的開支。除此之外，本季的部分利潤也歸因於與我們服務提供者的一次性回扣相關的成本和費用的減少。這筆一次性回扣導致本季成本和費用降低，獲利能力提高。但如果我們剔除一次性回扣，成本和費用將高於報告的數字，本季的獲利能力也會降低。

And second, as competition intensifies and user demand becomes more diversified, we do expect continued investment in agriculture and core technology, which will result in higher expense line items, hence, impacting profitability. And in your question, you also emphasized the rebate. Well, I think the one-off rebates, yes, [they're being] one-off nature, it is based on a case-by-case negotiation with our service providers, we do not expect it will recur in the future. And for the amounts, due to confidentiality obligation with the service provider, we could not comment on the specific amounts. But what we can say is that it contributed a meaningful portion of this quarter's profit.

其次，隨著競爭加劇和用戶需求變得更加多樣化，我們預期對農業和核心技術的投資將持續，這將導致費用項目增加，進而影響獲利能力。而且在您的問題中您也強調了回扣。嗯，我認為一次性回扣是的，是一次性的，它基於與我們的服務提供者的逐案談判，我們不希望它將來會再次發生。至於金額，由於對服務提供者的保密義務，我們無法對具體金額發表評論。但我們可以說的是，它為本季的利潤貢獻了相當重要的一部分。

Our last question comes from Kenneth Fong with Credit Suisse.

我們的最後一個問題來自瑞士信貸的 Kenneth Fong。

(foreign language) I have a question on the online market service revenue, which in Q4 recorded a slower growth rate of only 19% compared with the previous quarters. What's the reason behind? Is this mainly due to a slower GMV growth or due to the change in take rate policies? And have we carried out more merchant support measures in the recent quarter that also depressed our take rate? And as an investor, how should we think about the growth outlook for first quarter and in the next few quarters?

(外語)我有一個關於線上市場服務收入的問題，第四季度的線上市場服務收入與前幾季相比成長率較低，只有19%。背後的原因是什麼？這主要是由於 GMV 成長放緩還是由於佣金率政策的變化？我們在最近一個季度是否採取了更多的商家支援措施，也降低了我們的接受率？作為投資者，我們應該如何看待第一季以及未來幾季的成長前景？

(foreign language)

（外語）

[Interpreted] Kenneth, let me take your question and offer some insight on our revenue growth and then Jun will supplement with some insights on take rates. First of all, for us to reach our current scale, investors should not expect continuous and ultra-high growth. As for our future growth, I believe we need a strategic upgrade. And we also went through adjustment last year to focus more agriculture and core technology in order to pursue long-term, high-quality development.

[口譯] Kenneth，讓我回答您的問題並就我們的收入成長提供一些見解，然後 Jun 會補充一些關於接受率的見解。首先，對於我們達到目前的規模，投資人不應該期待持續的超高成長。至於我們未來的成長，我認為我們需要策略升級。去年我們也進行了調整，更加重視農業和核心技術，以追求長期、高品質的發展。

For example, we are looking to how to apply our core technology to improve the efficiency and reduce waste in agriculture so that consumers can get affordable and high-quality produce. And farmers at the same time can increase yield, enjoy improvement in income and benefit from digital inclusion. We believe our focus in agriculture and investment in core technology creates long-term value.

例如，我們正在研究如何應用我們的核心技術來提高農業效率、減少浪費，以便消費者獲得價格實惠的高品質農產品。農民同時可以提高產量、增加收入並從數位包容中受益。我們相信，我們對農業的關注和對核心技術的投資將創造長期價值。

We are fortunate to have nearly 870 million customers, who choose to believing us. To serve our users well, address their constantly changing needs and improve their satisfaction level is our long-term focus. So in the past year, we have seen many different platforms entering e-commerce as well as new e-commerce formats. As I have said, we need to learn from them and also improve our services. It also serves as a good reminder for us to iterate and promote more young talent to our management team and to keep up with the market development.

我們很幸運有近8.7億客戶選擇相信我們。服務好我們的用戶，滿足他們不斷變化的需求，提高他們的滿意度是我們的長期關注。所以在過去的一年裡，我們看到許多不同的平台進入電子商務，也看到新的電子商務形式。正如我所說，我們需要向他們學習並改進我們的服務。這也提醒我們要不斷更新，提拔更多的年輕人才加入我們的管理團隊，跟上市場的發展。

For these adjustments to show results, it takes time. And in the process, our growth rate would -- may be affected. As we develop, you may see that our business cycle and financial reporting cycle do not necessarily correspond smoothly to each other. So we do not recommend investors to use one quarter's of results to predict the next.

這些調整要顯現成效，還需要時間。在此過程中，我們的成長率可能會受到影響。隨著我們的發展，您可能會發現我們的業務週期和財務報告週期不一定能夠順利地相互對應。因此，我們不建議投資者使用一個季度的業績來預測下一個季度的業績。

Now Jun may help supplement with some insights on take rate.

現在 Jun 或許可以幫助補充一些接受率的見解。

Okay. Thank you, Kenneth. As you mentioned about SME, so before I answer your question about the take rate, I would like to talk more about SME. As we started Pinduoduo with our corporate principles of benefit all, people first and more open, in addition, agriculture is our core and many agriculture merchants are SME merchants themselves. So we have always been looking for ways to support SME merchants and the products.

好的。謝謝你，肯尼斯。正如您所提到的 SME，所以在我回答您關於接受率的問題之前，我想多談談 SME。因為拼多多創立之初，我們的企業理念是惠及大眾、以人為本、更加開放，另外我們的核心是農業，很多農業商家本身就是中小企業商家。因此，我們一直在尋找支持中小企業商家和產品的方法。

And for take rate, well, it's not a metric that we focus on. In the past 3 quarters, as you already know that we continue to implement the zero commission policy on agriculture products. We actively extend support to agriculture merchants and SME merchants and offer more exposure and traffic to agriculture products. All of this would affect our take rates that were -- we have done and are still doing. And in the long run, our revenue and monetization depends on how much value we create.

至於接受率，這不是我們關注的指標。過去三個季度，大家也知道，我們持續實施農產品零佣金政策。我們積極向農商及中小企業商家提供支持，為農產品提供更多的曝光和流量。所有這些都會影響我們的收費率——我們已經這樣做了，並且仍然這樣做。從長遠來看，我們的收入和貨幣化取決於我們創造的價值。

As we -- as our user experience and user main share improve, our platform could provide more value to merchants and merchant will find investments on our platform more attractive as a result. But I think if the percentage of our agriculture products increases, the monetization rates unlikely to grow at the same pace as our scale. But to us, serving our user well is our #1 priority. As mentioned before, agriculture is Pinduoduo's core and strategic direction, and we will stick to it.

隨著我們的用戶體驗和用戶主要份額的提高，我們的平台可以為商家提供更多價值，商家也會發現我們平台上的投資更具吸引力。但我認為，如果我們的農產品比例增加，貨幣化率不太可能以與我們的規模相同的速度成長。但對我們來說，服務好用戶是我們的首要任務。如同之前所說，農業是拼多多的核心和戰略方向，我們會堅持下去。

Thank you. I would now like to turn the call back over to Chen Pen for closing remarks.

謝謝。現在我想將電話轉回給陳鵬，請他作最後發言。

All right. Thank you, everybody, for joining us on the conference call today. If you have any further questions, please feel free to reach out to the IR team. Thank you. Have a great day.

好的。感謝大家參加我們今天的電話會議。如果您還有其他問題，請隨時聯絡 IR 團隊。謝謝。祝你有美好的一天。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[本記錄中標記為[已翻譯]的部分由現場翻譯人員朗讀。