GlobeNewswire Inc | May 26, 2021 06:34AM EDT

May 26, 2021

SHANGHAI, China, May 26, 2021 (GLOBE NEWSWIRE) -- Pinduoduo Inc. (Pinduoduo or the Company) (NASDAQ: PDD), Chinas largest agriculture and interactive commerce platform, today announced its unaudited financial results for the first quarter ended March 31, 2021.

First Quarter 2021 Highlights

-- Total revenues in the quarter were RMB22,167.1 million (US$13,383.4 million), an increase of 239% from RMB6,541.1 million in the same quarter of 2020. -- Average monthly active users2in the quarter was 724.6 million, an increase of 49% from 487.4 million in the same quarter of 2020. -- Active buyers3in the twelve-month period ended March 31, 2021 was 823.8 million, an increase of 31% from 628.1 million in the twelve-month period ended March 31, 2020. -- Operating loss in the quarter was RMB4,147.0 million (US$633.0 million), compared with operating loss of RMB4,397.2 million in the same quarter of 2020. Non-GAAP4operating loss in the quarter was RMB3,174.1 million (US$484.5 million), compared with operating loss of RMB3,587.9 million in the same quarter of 2020. -- Net loss attributable to ordinary shareholders in the quarter was RMB2,905.4 million (US$ 443.5 million), compared with RMB4,119.3 million in the same quarter of 2020. Non-GAAP net loss attributable to ordinary shareholders in the quarter was RMB1,890.3 million (US$288.5 million), compared with RMB3,169.6 million in the same quarter of 2020.

Our growing scale gives us both greater capacity and responsibility to live up to our mission to benefit all, said Mr. Lei Chen, Chairman and Chief Executive Officer of Pinduoduo. We envision Pinduoduo as a platform that not only facilitates the trading of goods and services but also serves as a conduit for turning ideas into solutions to everyday problems.

We remain laser-focused on serving our users and anticipating what they need, and doing so in a way that is respectful of the community and environment, added Mr. David Liu, Vice President of Strategy. We will continue to engage our users, merchants and partners in improving all aspects of our services.

We continued to deliver strong results in the first quarter and remain disciplined, said Mr. Tony Ma, Vice President of Finance. Our total revenues, excluding contribution from merchandise sales, for the first quarter 2021 increased 161% from the prior year, while our non-GAAP operating and net losses narrowed at the same time.

First Quarter 2021 Unaudited Financial Results

Total revenues were RMB22,167.1 million (US$3,383.4 million), an increase of 239% from RMB6,541.1 million in the same quarter of 2020. The increase was primarily due to an increase in revenues from online marketing services and contribution from merchandise sales.

-- Revenues from online marketing services and others were RMB14,111.5 million (US$2,153.8 million), an increase of 157% from RMB5,492.3 million in the same quarter of 2020. -- Revenues from transaction services were RMB2,931.5 million (US$447.4 million), an increase of 180% from RMB1,048.8 million in the same quarter of 2020. -- Revenues from merchandise sales were RMB5,124.1 million (US$782.1 million), an increase of RMB5,124.1 million from nil in the same quarter of 2020.

Total costs of revenues were RMB10,746.1 million (US$1,640.2 million), an increase of 487% from RMB1,830.2 million in the same quarter of 2020. The increase was mainly due to costs attributable to merchandise sales, higher cost of payment processing fees, cloud services fees, and delivery and storage fees.

Total operating expenses were RMB15,568.0 million (US$2,376.1 million), compared with RMB9,108.0 million in the same quarter of 2020.

-- Sales and marketing expenses were RMB12,997.4 million (US$1,983.8 million), an increase of 78% from RMB7,296.6 million in the same quarter of 2020, mainly due to an increase in advertising expenses and promotion and coupon expenses. -- General and administrative expenses were RMB351.9 million (US$53.7 million), an increase of 4% from RMB338.3 million in the same quarter of 2020. -- Research and development expenses were RMB2,218.7 million (US$338.6 million), an increase of 51% from RMB1,473.2 million in the same quarter of 2020. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel and an increase in R&D-related cloud services expenses.

Operating loss was RMB4,147.0 million (US$633.0 million), compared with operating loss of RMB4,397.2 million in the same quarter of 2020. Non-GAAP operating loss was RMB3,174.1 million (US$484.5 million), compared with operating loss of RMB3,587.9 million in the same quarter of 2020.

Net loss attributable to ordinary shareholders was RMB2,905.4 million (US$443.5 million), compared with RMB4,119.3 million in the same quarter of 2020. Non-GAAP net loss attributable to ordinary shareholders was RMB1,890.3 million (US$288.5 million), compared with RMB3,169.6 million in the same quarter of 2020.

Basic and diluted net loss per ADS were RMB2.33 (US$0.36), compared with RMB3.54 in the same quarter of 2020. Non-GAAP basic and diluted net loss per ADS were RMB1.52 (US$0.23), compared with RMB2.73 in the same quarter of 2020.

Net cash flow used in operating activities was RMB3,724.5 million (US$568.5 million), compared with RMB567.1 million in the same quarter of 2020, primarily due to an increase in restricted cash outflow due to seasonality, offset by increase in online marketing services revenues.

Cash, cash equivalents and short-term investments were RMB83.4 billion (US$12.7 billion) as of March 31, 2021, compared with RMB87.0 billion as of December 31, 2020.

Recent Development

As of April 30, 2021, US$756.4 million of the 0% convertible bonds due in 2024 have been converted into newly issued ADSs.

Conference Call

The Company will host a conference call to discuss the earnings at 7:30 AM U.S. Eastern Time on Wednesday, May 26, 2021 (7:30 PM Beijing/Hong Kong Time on Wednesday, May 26, 2021).

The conference call will be webcast live at https://investor.pinduoduo.com/investor-events. The webcast will be available for replay at the same website following the conclusion of the call.

__________________________1 This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made atRMB6.5518 to US$1.00, the noon buying rate in effect onMarch 31, 2021as set forth in the H.10 Statistical Release of the Federal Reserve Board.2 Monthly active users refers to the number of user accounts that visited thePinduoduomobile app during a given month, which does not include those that accessed the platform through social networks and access points.3 Active buyers in a given period refers to the number of user accounts that placed one or more orders (i)on thePinduoduomobile app, and (ii)through social networks and access points in that period, regardless of whether the products and services are actually sold, delivered or returned.4 The Companys non-GAAP financial measures exclude share-based compensation expenses, fair value change of long-term investments, and interest expenses related to the convertible bonds amortization to face value and gain on extinguishment. See Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures set forth at the end of this press release.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses non-GAAP measures, such as non-GAAP operating loss and non-GAAP net loss attributable to ordinary shareholders, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Companys non-GAAP financial measures exclude share-based compensation expenses, fair value change of long-term investments, and interest expenses related to the convertible bonds amortization to face value and gain on extinguishment.

The Company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, fair value change of long-term investments, and interest expenses related to the convertible bonds amortization to face value and gain on extinguishment, which are non-cash charges. The Company also believes that the non-GAAP financial measures could provide further information about the Companys results of operations, and enhance the overall understanding of the Companys past performance and future prospects.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. The Companys non-GAAP financial measures do not reflect all items of income and expenses that affect the Companys operations and do not represent the residual cash flow available for discretionary expenditures. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages you to review the Companys financial information in its entirety and not rely on a single financial measure.

For more information on the non-GAAP financial measures, please see the table captioned Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures set forth at the end of this press release.

Safe Harbor Statements

This announcement contains forward-looking statements. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, aims, future, intends, plans, believes, estimates, confident, potential, continue or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as Pinduoduos strategic and operational plans, contain forward-looking statements. Pinduoduo may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the SEC), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to fourth parties. Statements that are not historical facts, including but not limited to statements about Pinduoduos beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Pinduoduos growth strategies; its future business development, results of operations and financial condition; its ability to understand buyer needs and provide products and services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchants and fourth-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with merchants; trends and competition in Chinas e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of Chinas e-commerce market; PRC governmental policies and regulations relating to Pinduoduos industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Pinduoduos filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Pinduoduo undertakes no obligation to update any forward-looking statement, except as required under applicable law.

About Pinduoduo Inc.

Pinduoduo is a mobile-only marketplace that connects millions of agricultural producers with consumers across China. Pinduoduo aims to bring more businesses and people into the digital economy so that local communities can benefit from the increased productivity and convenience through new market opportunities.

For more information on Pinduoduo news and industry trends, please visit the content hub at https://stories.pinduoduo-global.com/.

PINDUODUO INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (?RMB?) and U.S. dollars (?US$?)) As of December March 31, 2021 31, 2020 RMB RMB US$ (Unaudited) ASSETS Current assets Cash and cash equivalents 22,421,189 17,012,978 2,596,688Restricted cash 52,422,447 47,297,740 7,219,045Receivables from online payment 729,548 699,203 106,719platformsShort-term investments 64,551,094 66,342,813 10,125,891Amounts due from related parties 4,240,069 4,131,179 630,541Prepayments and other current assets 5,159,531 4,152,823 633,845Total current assets 149,523,878 139,636,736 21,312,729 Non-current assets Property, equipment and software, net 202,853 227,917 34,787Intangible asset 1,276,751 1,169,499 178,500Right-of-use assets 629,827 651,701 99,469Other non-current assets 7,275,305 11,733,999 1,790,958Total non-current assets 9,384,736 13,783,116 2,103,714 Total Assets 158,908,614 153,419,852 23,416,443

PINDUODUO INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (?RMB?) and U.S. dollars (?US$?)) As of December March 31, 2021 31, 2020 RMB RMB US$ (Unaudited) LIABILITIES AND SHAREHOLDERS? EQUITY Current liabilities Amounts due to related parties 3,385,863 4,885,267 745,637 Customer advances and deferred 2,423,190 1,786,246 272,634 revenuesPayable to merchants 53,833,981 49,360,986 7,533,958 Accrued expenses and other 11,193,372 10,609,374 1,619,307 liabilitiesMerchant deposits 10,926,319 11,589,459 1,768,897 Short-term borrowings 1,866,316 634,995 96,919 Lease liabilities 253,036 271,940 41,506 Total current liabilities 83,882,077 79,138,267 12,078,858 Non-current liabilities Convertible bonds 14,432,792 11,502,472 1,755,620 Lease liabilities 414,939 418,330 63,850 Other non-current liabilities 2,918 2,467 377 Total non-current liabilities 14,850,649 11,923,269 1,819,847 Total Liabilities 98,732,726 91,061,536 13,898,705 Shareholders? equity Ordinary shares 159 161 25 Additional paid-in capital 86,698,660 91,270,473 13,930,595 Accumulated other comprehensive (1,047,728 ) (531,699 ) (81,153 )lossAccumulated deficits (25,475,203 ) (28,380,619 ) (4,331,729 )Total Shareholders? Equity 60,175,888 62,358,316 9,517,738 Total Liabilities and 158,908,614 153,419,852 23,416,443 Shareholders? Equity

PINDUODUO INC.CONDENSED CONSOLIDATED STATEMENTS OF LOSS(Amounts in thousands of RMB and US$) For the three months ended March 31, 2020 2021 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited)Revenues 6,541,059 22,167,099 3,383,359 Costs of revenues (1,830,247 ) (10,746,050 ) (1,640,168 )Gross profit 4,710,812 11,421,049 1,743,191 Sales and marketing (7,296,621 ) (12,997,407 ) (1,983,792 )expensesGeneral and administrative (338,274 ) (351,855 ) (53,704 )expensesResearch and development (1,473,150 ) (2,218,743 ) (338,646 )expensesTotal operating expenses (9,108,045 ) (15,568,005 ) (2,376,142 ) Operating loss (4,397,233 ) (4,146,956 ) (632,951 ) Interest and investment 460,282 970,477 148,124 income, netInterest expenses (150,634 ) (335,456 ) (51,201 )Foreign exchange loss (19,273 ) (10,374 ) (1,583 )Other (loss)/income, net (12,391 ) 470,384 71,795 Loss before income tax andshare of results of equity (4,119,249 ) (3,051,925 ) (465,816 )investeesShare of results of equity (80 ) 146,509 22,362 investeesIncome tax expenses - - - Net loss (4,119,329 ) (2,905,416 ) (443,454 )

PINDUODUO INC.CONDENSED CONSOLIDATED STATEMENTS OF LOSS(Amounts in thousands of RMB and US$, except for per share data) For the three months ended March 31, 2020 2021 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Net loss (4,119,329 ) (2,905,416 ) (443,454 )Net loss attributable to (4,119,329 ) (2,905,416 ) (443,454 )ordinary shareholders Loss per ordinary share:-Basic (0.89 ) (0.58 ) (0.09 )-Diluted (0.89 ) (0.58 ) (0.09 ) Loss per ADS (4 ordinary shares equals 1 ADS):-Basic (3.54 ) (2.33 ) (0.36 )-Diluted (3.54 ) (2.33 ) (0.36 ) Weighted average number ofoutstanding ordinary shares (in thousands):-Basic 4,650,112 4,983,530 4,983,530 -Diluted 4,650,112 4,983,530 4,983,530

PINDUODUO INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$) For the three months ended March 31, 2020 2021 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited)Revenues - Online marketing services and 5,492,270 14,111,486 2,153,833others- Transaction services 1,048,789 2,931,475 447,430- Merchandise sales - 5,124,138 782,096Total 6,541,059 22,167,099 3,383,359

PINDUODUO INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$) For the three months ended March 31, 2020 2021 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited)Share-based compensation costs included in:Costs of revenues 8,447 4,364 666Sales and marketing expenses 231,799 299,483 45,710General and administrative 220,188 191,170 29,178expensesResearch and development expenses 348,939 477,792 72,926Total 809,373 972,809 148,480

PINDUODUO INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands of RMB and US$) For the three months ended March 31, 2020 2021 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited)Net cash flow used in (567,070 ) (3,724,547 ) (568,477 )operating activitiesNet cash flow used in (1,584,192 ) (5,621,047 ) (857,939 )investing activitiesNet cash flow provided by/(used in) financing 1,205,472 (1,238,874 ) (189,089 )activitiesEffect of exchange ratechanges on cash, cash 99,058 51,550 7,868 equivalents and restrictedcash Decrease in cash, cashequivalents and restricted (846,732 ) (10,532,918 ) (1,607,637 )cashCash, cash equivalents andrestricted cash at 33,345,857 74,843,636 11,423,370 beginning of period Cash, cash equivalents andrestricted cash at end of 32,499,125 64,310,718 9,815,733 period

PINDUODUO INC.RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAPMEASURES(Amounts in thousands of RMB and US$, except for per share data) For the three months ended March 31, 2020 2021 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited)Operating Loss (4,397,233 ) (4,146,956 ) (632,951 )Add: Share-based compensation 809,373 972,809 148,480 Non-GAAP operating loss (3,587,860 ) (3,174,147 ) (484,471 ) Net loss attributable to ordinary (4,119,329 ) (2,905,416 ) (443,454 )shareholdersAdd: Share-based compensation 809,373 972,809 148,480 Add: Interest expense related toconvertible bonds? amortization to 140,312 318,611 48,630 face value and gain onextinguishment, netLess: Fair value change of - (276,336 ) (42,177 )long-term investmentsNon-GAAP net loss attributable to (3,169,644 ) (1,890,332 ) (288,521 )ordinary shareholders Weighted-average number of ordinaryshares outstanding ? basic and diluted (in thousands) 4,650,112 4,983,530 4,983,530 Basic and diluted loss per ordinary (0.89 ) (0.58 ) (0.09 )shareAdd: Non-GAAP adjustments to loss 0.21 0.20 0.03 per ordinary shareNon-GAAP basic and diluted loss per (0.68 ) (0.38 ) (0.06 )ordinary shareNon-GAAP basic and diluted loss per (2.73 ) (1.52 ) (0.23 )ADS

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