Pinduoduo shares jump 10% after Q2 2022 earnings release

Pinduoduo Inc (NASDAQ: PDD) is up 10% after announcing its Q2 2022 unaudited financial results. The company announced revenue of $4.69 million, representing a YoY increase of 36%. The rise was principally brought on by higher revenues from online transactions and marketing services, offset by lower product sales.

Pinduoduo benefiting from consumer sentiment

CEO Lei Chen said:

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We saw a recovery in consumer sentiment in the second quarter especially during the 618-shopping festival, a reflection of the resilience of overall consumption. We remain committed to building a platform that serves as a force for good.

Online marketing services revenue was $3.758 billion representing a 39% increase from a year ago. On the other hand, Pinduoduo reported transaction services revenue of $928.1 million, representing a 107% YoY increase, and merchandise sales of $7.6 million, representing a 97% drop from Q2 2021.

The total cost of revenue increased 1% YoY to around $1.188 billion. In addition, the company announced total operating expenses of $2.206 billion, with sales and marketing expenses increasing $1.693 billion a 9% YoY, while general administrative expenses were $123.3 million, representing a 90% increase from last year.

VP Finance Jun Liu said:

The postponement of certain projects and lower business-related expenses during the first half of the quarter affected overall expenses in short term. Looking ahead, we stay dedicated to investing in areas such as agriculture and R&D to better serve our consumers.

Pinduoduo recorded 268% increase in net income attributed to shareholders

Operating profit was $1.2985 billion representing 335%, with non-GAAP operating profit of $1.573 billion. Net income attributed to shareholders was $1.328 billion, representing a YoY increase of 268%. Basic earnings per ADS were $1.05, while diluted earnings per ADS were $0.93. Non-GAAP diluted earnings were $1.13 per ADS.

Net cash flow from operating activities was $2.892 billion, attributed to changes in working capital and an increase in net income. At the end of the quarter, the company had cash, cash equivalents, and investments of $17.8 billion as of Jun 30, 2022.