Shares of Parent Company Temu climb following revenue surpassing predictions
PDD Holdings, the Chinese e-commerce giant behind the shopping platform Temu, has announced its fourth-quarter financial results, showing a significant increase in revenue and revealing future investment plans.
In the last quarter of 2022, PDD reported revenue of RMB 88.88 billion (USD 12.5 billion), marking a 123% increase from the previous year. This growth was driven by a surge in transaction services, which contributed RMB 94.1 billion (USD 13.2 billion) to PDD's full-year revenue. Online marketing services and others added RMB 153.54 billion (USD 19 billion) to the total, bringing the full-year revenue to RMB 247.64 billion (USD 34.8 billion), a 90% increase from 2021.
However, the costs of revenue for the fourth quarter surged 293% to RMB 35.1 billion (USD 4.9 billion), primarily due to increased fulfillment fees, payment-processing fees, maintenance costs, and call center expenses. Sales and marketing expenses also rose 50% year-over-year to RMB 26.64 billion (USD 3.7 billion).
Despite these costs, PDD is optimistic about its future. The company aims to connect the agriculture industry to shoppers by 2024 and will invest in technology in manufacturing and agriculture. PDD sees tremendous potential in the large number of quality national and local brands in China.
Zhao Jiazhen, executive director and co-CEO of PDD, mentioned growing demand for consumption upgrades in a "rational manner." The company plans to emphasize investments in high-quality consumption, supply, and platform ecosystem to offer more savings and better services.
Temu, PDD's overseas platform, quickly attracted American customers. The platform, which does not own any stores and uses third-party courier services for logistics, has a nearly five-star rating on US app stores. Temu handles shipping, after-sales service, and other logistics aspects once sellers' products are delivered to a designated warehouse in Guangdong province, China.
However, concerns about potential forced labor in Temu's supply chain have caught the attention of American authorities. There were no mentions of Temu during the March 20 earnings call, but the company's focus on offering cheap goods has led to scrutiny.
PDD's stock climbed 3.5% on March 20, reflecting investor confidence in the company's future plans. The article was first published on Nikkei Asia as part of 36Kr's partnership with Nikkei. The person who announced in 2024 that PDD plans to increase its investments in agriculture and manufacturing technology to enhance quality in the connections between agriculture and consumers has not been identified in the available search results.
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