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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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?

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

With that, I conclude my prepared remarks.

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.

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

(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.

(foreign language)

[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.

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.

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.

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.

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.

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.

Our next question comes from Yang Bai with CICC.

(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?

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?

(foreign language)

[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.

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.

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.

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.

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.

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.

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.

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

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?

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)

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.

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.

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.

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.

Our last question comes from Kenneth Fong with Credit Suisse.

(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?

(foreign language)

[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.

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.

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.

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.

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

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.

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.

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.

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

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.

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

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