PDD - Earnings Call - Q4 2024

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by, and welcome to the PDD Holdings Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session, at which time, if you wish to ask a question, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today. Sir, please go ahead.

Thank you, Operator. Hello everyone, and thank you for joining us today. PDD Holdings' earnings release was distributed earlier and is available on our website at investor.pddholdings.com, as well as through Globe Newswire services. Before we begin, I would like to refer you to our safe harbor statement in the earnings press release, which applies to this call, as we will make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures. Joining us today on the call are Mr. Chen Lei, our Chairman and Co-Chief Executive Officer; Mr. Zhao Jiazhen, our Co-Executive Director and Co-Chief Executive Officer; as well as Ms. Liu Jun, our VP of Finance. Lei and Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus.

Jun will then walk us through our financial results for the fourth quarter and fiscal year ended December 31, 2024. During the Q&A session, Lei and Jiazhen will answer questions in Chinese and will help translate. Please note that English translation is for reference only. In case of any discrepancy, statements in the original language should prevail. Now, it's my pleasure to introduce our Chairman and Co-Chief Executive Officer, Chen Lei. Lei, please go ahead.

Lei Chen (Chairman and Co-CEO)

Hello everyone. Thank you for joining our earnings call for the fourth quarter and the fiscal year of 2024. 2024 is a pivotal year for advancing our high-quality development strategy. To drive the sustainable growth of our platform and supply chain ecosystem, we extended our high-quality development vision for the platform to a supply chain through a series of initiatives such as fee reductions, merchant support policies, and trust and safety updates. We systematically implemented proactive measures in platform operations, merchant services, supply chain, and logistic innovations, leading our platforms into a new phase of high-quality-driven growth. We delivered stable results over the past quarter. Our Q4 revenue reached RMB 110.6 billion, up 24% year-on-year, and full year 2024 revenue totaled RMB 393.8 billion, growing 59% year-on-year, which represents a moderation in revenue growth.

As mentioned in previous quarters, our significant ecosystem investments have always fast-changed external environments and intensified the competition landscape with impact short-term financials. However, our commitment to ecosystem investments remains unwavering, and we are confident that these efforts will deliver sustainable long-term returns. In the second half of 2024, we accelerated our high-quality development strategy through several major initiatives, including a 10 billion fee reduction program, logistics support measures to promote e-commerce services in remote regions, and a high-quality merchant support program. We are pleased to see that these initiatives have started to bear fruit. Among these, the 10 billion fee reduction program has enabled over 10 million merchants to enhance operational efficiency and reduce costs, while the promotion service fee rebate program has begun to deliver significant savings to eligible merchants.

Our logistics support measures tailored for remote regions drove double-digit order volume growth and extended free shipping to nearly 100 million consumers in these regions. The first phase of high-quality merchant support program supported a large number of high-quality merchants and brands across 1,000 agricultural regions and industrial zones in their transition towards high-quality development. At the same time, we also established the Merchant Rights Protection Committee to formalize communication channels with merchants. We have rolled out upgrades to the after-sale service system and introduced a range of improvements and governance measures to address issues such as order dispute resolutions. These initiatives aim to enhance the overall business environment for merchants and build a platform ecosystem that benefits all participants. The platform is rooted in agriculture. We remain committed to supporting the agriculture industry through sustained investments in agricultural technology, supply chain innovation, and training for next-generation farmers.

Over the past year, our long-term initiatives such as Pinduoduo Smart Agriculture Competition, Global Agriculture Innovation Challenge, Pinduoduo Academy Growing Competition, and the Agriculture Research Fund have delivered encouraging results. For example, the six finalist teams in the fourth Pinduoduo Smart Agriculture Competition achieved breakthroughs in yield, efficiency, and energy consumption through digitally optimized new farmland, with the innovations now being applied in real-world settings. In terms of our global business, our mission to provide global consumers with high-quality products remains unchanged. Guided by this vision, we will continue to focus on supply chain efficiency, service innovation, and ecosystem development, while observing high compliance standards. Our goal is to build a trusted global platform and shopping environment that serves consumers worldwide. Looking ahead, high-quality development will remain at the core of our strategy in 2025.

We will continue to focus on the healthy and sustainable development of merchants and supply chain, and certainly advance the high-quality development strategy. One step at a time, we will work on strengthening merchant rights protection, stepping up support for high-quality merchants, and broadening quality supply on the platforms. In addition, through supply chain investments, we aim to accelerate the supply of high-quality products to remote regions, and in doing so, enhance the product offerings for consumers in less accessible areas and foster a win-win ecosystem for consumers, merchants, and the communities we serve. Together, we will drive the sustainable development of our platform and the broader e-commerce ecosystem. I will hand it over to our Co-CEO, Zhao Jiazhen, to share more about our development plans in 2025.

Jiazhen Zhao (Executive Director and Co-CEO)

谢谢陈雷。大家好，我是张嘉珍。感谢大家参加2024年四季度及全年业绩的发布会。

Thank you, Lei. Hello everyone. This is Zhao Jiazhen. Thank you for joining our fourth quarter and full year 2024 earnings call.

在过去一年，我们聚焦高质量发展战略，在平台生态和产业纵深上持续发力，全力构建用户、商家、产业以及社会各方的供应生态。得益于高质量发展的持续推进，以及宏观经济的稳中有进，我们四季度及全年的业绩保持稳健。

Over the past year, we remain focused on advancing our high-quality development strategy, driving ecosystem upgrades and supply chain transformation to foster a mutually beneficial environment for consumers, merchants, industries, and society. Supported by sustained progress of our high-quality development strategy and a steady macroeconomic recovery, we delivered stable performance in Q4 and throughout 2024.

在去年以来，我们先后落地了一系列百亿减免的举措，并通过全链路扶持的方式培育出了一批新资供给。不仅为商家创新探索出了新模式，也为产业升级注入了新活力。此外，我们的电商吸进计划也大幅提升了全国各地商品吸进的效率和质量，为偏远地区的广大用户送去了更丰富的商品选择。

Since last year, we have rolled out a series of initiatives under the 10 billion fee reduction program and cultivated a wave of quality supply through comprehensive end-to-end merchant support. Our initiatives have not only empowered merchants with innovative business models but also drove supply chain upgrades. In addition, our logistics support measures have significantly improved the efficiency and quality of new supplies to the western regions, providing consumers in these regions with a more diverse selection of high-quality products.

在四季度，我们的新制商家扶持计划继续深入全国各地的农产区产业带，先后走进鹿湾婚纱、惠东女鞋、青浦母婴、佛山开心果等产地，对当地商家进行产品营销运营及供应链的全链路的支持，培育了一批具有商品技术创新能力的新制商家、新制品牌，并通过新制商家的投研效应，带动产业带突破同质化竞争的发展顾及，逐步完成转型升级。

In Q4, our high-quality merchant support program expanded its reach across agricultural and industrial zones in China. This included areas known for specialties such as Lu'an bridal wear, Huidong women's footwear, Qingpu maternal infant products, and Foshan pistachios. By providing comprehensive support throughout the value chain, covering product development, marketing, operations, and supply chain management, we have nurtured a new generation of merchants and brands with strong innovation capabilities. These trailblazers are leading their industries beyond homogeneous competition towards sustained high-value growth.

举例来说，广东省惠东县曾是国内女鞋产业的领头羊。但因市场变化，产业一度陷入了停摆的边缘。去年冬天，当地商家依托平台的数据分析能力，研发了女性用户更加青睐的嫁妆款凉鞋，并对传统的女鞋供应链进行了改造。一家中型制鞋厂的单日出货量就能达到1.5万双，成功走出了一条新资供给的转型之路，也挽救了数十万产业工人的岗位。

For example, Huidong County in Guangdong Province, once a leading production hub for the Chinese women's footwear industry, was nearly brought to a standstill due to market shifts. Last winter, local merchants utilized our platform's data analytics to create free-lying sandals tailored for female consumers. Through the transformation of traditional supply chains, a mid-size factory managed to reach a daily output of 15,000 pairs. This not only saved tens of thousands of jobs but also charted a path for quality supply chain-driven transformation.

为了加大新资供给的上行力度，平台的各类流量引擎也不断为之倾斜。百亿补贴频道相继推出了百亿消费券、超级加倍补等新玩法，助力新资商家加快迈进品牌化道路。去年双十一期间，平台多次上线超级加倍补，对新资供给进行了超额补贴，仅前两轮的订单量就累计超过了6,100万单。

To amplify this momentum, we strategically allocated platform traffic resources. For example, the 10 billion program has rolled out new campaigns like 10 billion consumption vouchers and super double savings, accelerating branding building for quality merchants. During last year's Double Eleven Shopping Festival, we launched multiple rounds of super double savings, offering excessive support to quality supplies. In just the first two rounds, the order volume exceeded 61 million.

从消费侧来看，我们对生态建设的投入，也为广大消费者的美好生活提供了更丰富、更实惠的优质供给，进一步提升了消费者的满意度、信赖度，也进一步激活了广大消费者的新需求。来自农产区产业带的生鲜、轻食、美妆、母婴等新资产品、新资品牌，不断地涌进城市及县域市场，成为不同消费人群的生活新时尚，满足了更加多元细分的消费需求。春节期间，受益于电商吸进的推动，各类年货产品开始大规模涌入西部，其中多类热门年货产品在西部地区的订单量显著增长。

From the consumer side, our ecosystem investment has enriched their lives by delivering a broader range of affordable high-quality products. These products span across categories like fresh produce, snacks, beauty, and baby care, further boosting consumer satisfaction and trust, while also activating new consumer needs. These offerings have gained traction in both urban and rural markets, becoming daily essentials for diverse groups and catering to increasingly segmented demand. During the Chinese New Year, our logistics support measures for remote regions drove a surge in orders for seasonal specialties, with western regions witnessing remarkable growth in several trending categories.

目前，我们长期坚持的高质量发展战略正在稳步地迈入收获期。平台生态效用不断释放，持续为供需两侧带来普惠，这也更加坚定了我们投入平台生态建设的决心。

Our long-term investments in high-quality development are now bearing fruit. The platform ecosystem continues to create value for both supply and demand sides. These tangible outcomes reinforce our resolve to deepen investments in ecosystem development.

今年1月初，我们成立了商家权益保护委员会，由我担任委员会主任，统筹平台各项团队，全面研究商家需求，收集商家反馈意见，优化商家经营体验和服务机制，进一步完善平台的生态建设。

In January 2025, we established the Merchant Rights Protection Committee, which I chair. The committee coordinates efforts across our platform. Our goal is to fully understand merchant needs, systematically collect feedback, optimize their experiences, and refine service frameworks. All critical steps towards fortifying our platform ecosystem.

在委员会成立后，我们先后推出异常订单预警、低价风险预警等多项会商新举措，并在促进商家净成交方面推出了升级版服务，给予商家更精细化的数据支持，持续助力商家提高投产比。

Following its launch, we introduced the pro-merchant initiatives such as abnormal order alerts and low-price risk warnings, alongside upgraded services to boost net merchant transaction efficiency. These efforts are complemented by granular data analytics tools designed to optimize merchants' return on investment.

在最近，委员会还与商家建立了常态化交流机制，并召开了首次商家座谈会。经过与各个行业商家的充分交流，委员会推出了违规经营预警功能等四大升级举措，持续加码商家权益的保护。

Recently, the committee has formalized a regular communication mechanism with merchants and held an inaugural merchant roundtable. Following extensive consultation with businesses across sectors, we unveiled four major upgrades, including a non-compliance alert system to intensify protections for merchants' rights.

2025年，如陈雷所说，我们将继续贯彻高质量发展战略，积极履行平台的主体责任，发挥平台的数字化优势，持续加大对供需两侧的投入，加速推进新资供给持续吸进，进一步盘活东西部之间的经济活力，全力构建商家、产业、消费者以及社会多方的共赢生态。

As Chen Lei emphasized, 2025 will see us redouble efforts to advance our high-quality development strategy. We will leverage our digital capabilities and amplify investments across both supply and demand chains. At the same time, we will accelerate the delivery of high-quality products to the western regions. This will help revitalize economic vitality across regions and build an ecosystem where merchants, industries, consumers, and society thrive collectively.

接下来，我把时间交给刘俊，由他为大家介绍我们2024年四季度和全年的财务表现。

I will now hand over to Jun. She will provide you with an update on our Q4 and full-year financial performance.

Jun Liu (VP of Finance)

Thank you, Jiazhen. Hello, everyone. Now, let me walk you through our financial performance and fourth quarter and fiscal year ended December 31, 2024. In terms of income statement, in Q4, our total revenues increased 24% year over year to RMB 110.6 billion and 59% year over year to RMB 393.8 billion for full-year 2024. This was mainly driven by an increase in revenues from both online marketing services and transaction services. Revenues from online marketing services and others were RMB 57 billion this quarter, up 17% compared to the same period of 2023. Our transaction services revenue this quarter were RMB 53.6 billion, up 33% after the same period of 2023. 我们继续看到支出和支出。 Our total cost of revenues increased 36% from RMB 35.1 billion in Q4 2023 to RMB 47.8 billion this quarter.

For full-year, our total cost of revenues increased 68% to RMB 153.9 billion, mainly due to increased fulfillment fees and payment processing fees. On a GAAP basis, total operating expenses this quarter increased 19% to RMB 37.2 billion, from RMB 31.4 billion in the same quarter of 2023. On a non-GAAP basis, our total operating expenses increased to RMB 35.1 billion this quarter, from RMB 29.3 billion in Q4 2023. During the fourth quarter, we continued to invest in the platform ecosystem through a range of initiatives, including fee reductions, merchant support policies, and trust and safety updates. Our total non-GAAP operating expenses as a percentage of total revenues was 32% in Q4, compared to 33% same quarter 2023. For full-year 2024, total non-GAAP operating expenses were RMB 122 billion, up from RMB 90.3 billion in 2023.

Looking into specific expense items, our non-GAAP sales and marketing expenses this quarter were RMB 31.1 billion, up 19% versus the same quarter of 2023. During Q4, we continued to give back to consumers through promotional campaigns while keeping up our investment in marketing to strengthen our platform's visibility. On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenues this quarter were 28% versus 30% for the same quarter in 2023. For the full year, non-GAAP sales and marketing expenses increased from RMB 79.8 billion to RMB 109.1 billion in 2024. Our non-GAAP general and administrative expenses were RMB 998 million in Q4 versus RMB 674 million in the same quarter of 2023. Our annual non-GAAP general and administrative expenses were RMB 2.8 billion in 2024 versus RMB 1.8 billion last year.

Our research and development expenses were RMB 3 billion in the fourth quarter on a non-GAAP basis and RMB 3.8 billion on a GAAP basis. We are committed to advancing the core technology capabilities of our platforms, and we continue to increase our investment in R&D, laying a solid foundation for our high-quality development strategy and driving ecosystem upgrades and supply chain transformation. On a GAAP basis, operating profit for the quarter was RMB 25.6 billion versus RMB 22.4 billion in the same quarter of 2023. Non-GAAP operating profit was RMB 28 billion versus RMB 24.6 billion in the same quarter of 2023. Non-GAAP operating profit margin was 25% this quarter, compared with 28% for the same quarter of 2023. For the full year, non-GAAP operating profit increased from RMB 65.8 billion to RMB 118.3 billion in 2024.

Net income attributable to ordinary shareholders was RMB 27.4 billion for the quarter and RMB 112.4 billion for the full year. In the fourth quarter, basic earnings per ADS was RMB 19.76, and diluted earnings per ADS was RMB 18.53 versus basic earnings per ADS of RMB 17 and diluted earnings per ADS of RMB 15.83 in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders was RMB 29.9 billion for the quarter and RMB 122.3 billion for the full year. In the fourth quarter, non-GAAP diluted earnings per ADS was RMB 20.15 versus RMB 17.32 in the same quarter of 2023. This quarter, we delivered stable financial results supported by the resolute execution of our high-quality development strategy. Looking ahead, we will continue to prioritize investments in the platform ecosystem as the cornerstone of our long-term value creation strategy. That completes the income statement.

Now, let me move on to cash flow. Our net cash flow generated from operating activities was RMB 29.5 billion in Q4 and RMB 121.9 billion for the full year of 2024, compared with RMB 36.9 billion in the same quarter of 2023 and RMB 94.2 billion in 2023. As of December 31, 2024, the company had RMB 331.6 billion in cash, cash equivalents, and short-term investments. Thank you. This concludes my prepared remarks.

Thank you, Jun. Next, we'll move on to the Q&A session. Today's Q&A session, Lei, Jiazhen, and Jun will take questions from analysts on the line. We could take a maximum of two questions from each analyst. Lei and Jiazhen will answer questions in Chinese and will help translate. Operator will open for questions.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. Participants are requested to restrict the number of questions to two at each time. Your first question comes from Joyce Ju from Bank of America. Please go ahead.

Joyce Ju (Senior Equity Analyst)

雷，嘉珍君，晚上好。感谢接受我的提问。我有两个问题。第一个是我们观察到，多多在过去的两个季度连续投入和落地了，多个重磅的平台生态建设，还有商家扶持这边的举措嘛。刚刚我们也听到管理层提到，未来公司还会持续的加大这方面的投入。我的问题就是在平台生态建设上面，公司其实长期的目标和愿景是什么样？生态建设对平台的整体发展，我们应该觉得会带来什么样的影响？然后我的第二个问题跟上面那个也相关，就是除了上面提到的在供给侧呀，商家生态方面的投入，管理层能不能也谈一谈在消费者侧，近期公司做了哪些努力，特别是在四季度的传统电商旺季当中，公司做了哪些新的尝试？未来我们在消费端的战略重点是什么？ I will translate my question. First, we noticed that over the past two quarters, the company has taken several major initiatives in platform ecosystem development and merchant support. As management just mentioned, the company plans to further increase investment in these areas. How should we think about the long-term goals for platform ecosystem development and how this will drive the platform's further growth? My second question is, on top of supply side and merchant ecosystem investments, could management also share what has been done on the consumer side recently? For example, what new initiatives were launched during the past fourth quarter e-commerce seed season, and what will be the strategic priorities for consumer side in the future? Thank you.

Lei Chen (Chairman and Co-CEO)

呃，Joyce，你好。我是陈磊。那我先来回答一下你的第一个关于这个平台生态的问题。

Hi Joyce, this is Chen Lei. Let me take your question regarding our platform ecosystem.

那么自去年的二季度以来呢，我们沿着平台生态高质量发展这条主线，那么围绕着商家的权利权益呢，我们推出了一系列的举措。那么通过啊，百亿减免、高质商家扶持计划的一系列的措施呢，啊，有效的降低了商家的成本，啊，并且呢，我们利用平台的数字化技术和资源，那么助力产业带商家在产品和技术上创新，那从而呢，扩展更大的、更广阔的市场。

Since the second quarter of 2024, in line with the overall direction of high-quality development of our platform ecosystem, we have rolled out a series of initiatives, that's centered around the protection of merchants' rights. For example, measures such as the 10 billion fee reduction program and the high-quality merchant support program have been effective in lowering the operational cost for merchants. By leveraging our platform's digital technologies and resources, we are also enabling manufacturers to invest in their product innovation and also technology, while at the same time broadening their marketing access.

那么这一系列的举措呢，将平台长期的生态建设呢，那么进一步的深化自的供给侧，那从而实现呢，供给侧的深度的变革。那么这也是我们高质量发展战略的重心所在。

These initiatives are deepening our long-term efforts in building a stronger ecosystem, and also extend that into the supply side, driving meaningful supply chain upgrades, which is central to our strategy of pursuing high-quality development.

那么当前呢，我们看到在一些产业链中呢，的确存在着一定的同质化竞争的情况。那么长期的同质化供给呢，会导致商家的利润被不断的压缩，那么创新的动能以及投入的力度呢，也会受到极大的抑制。

We are noticing that in certain industries, some merchants are facing homogeneous competition, which squeezes profits for businesses and also undermines innovation and investments.

而我们呢，作为连接产业带商家和消费者的重要桥梁，从一系列对新制供给扶持政策入手，通过实打实的费用减免，那么为商家的运营呢，降本增效。我们持续的为商家进行产品的创新和服务升级提供动力。那么通过做这一切呢，引领平台迈入以自升级的新阶段。

We as the platform connecting manufacturers, merchants, and consumers, have launched a series of policies to support high-quality suppliers. By cutting fees and streamlining operations, we are encouraging merchants to invest more in their products and services. This is leading our platform onto a new stage of quality-driven growth.

那么随着供给侧的转型升级，我相信呢，越来越多的新制商家呢，呃，以及呢，更多的高质量的产品会不断的涌现。那么这能够为消费者提供更丰富的产品选择，那么为他们提供更高质量的产品，更优质的购物体验，从而将实在的好处呢，会汇汇汇集到我们的这个需求侧，那从而打造多方长期共赢的健康平台生态。那么以上呢，是我对平台生态投入的一些看法，谢谢。

As the supply chain evolves and modernizes, more high-quality merchants and products have been emerging. This gives consumers greater variety, higher quality, and a smoother shopping experience, bringing real benefits to consumers and creating a healthy ecosystem that benefits all stakeholders in the long run. This is our thoughts, on the platform ecosystem investments.

Jiazhen Zhao (Executive Director and Co-CEO)

哎，你好，我是赵嘉珍。由我来回答一下你的第二个问题啊。

Hello, this is Zhao Jiazhen. Let me take a second question.

那我们在这个供给侧和商家生态上呢，所做的努力，其实与消费消费端呢，是相辅相成的。在消费侧呢，我们坚持站位消费者，为消费者带去多实惠和好服务的这个初心呢，一直没有改变。

Our initiatives on the supply side and merchant ecosystem complement our consumer-centric strategy. We remain dedicated to serving consumers, providing more value and better services, which has been fundamental to us.

在四季度的大促中呢，我们升级了超级加倍补，在百亿补贴的日常价的基础上叠加双重优惠，为消费者呢提供切实优惠的同时，也成为了这个品牌增长的新引擎。参与活动的这个品牌及商品的报名数量均再创新高，累计的订单量呢，也实现了突破。比如在这个双12的活动中，百亿补贴也再度升级了百亿消费券的活动，为消费者提供大面额的消费券，持续让利消费者。

During the promotion campaigns in the fourth quarter, we upgraded our super double savings initiative by layering additional savings on top of the discounted price from our 10 billion program. This not only provided substantial savings to consumers, but also served as a new growth engine for brands. Both the number of participating brands and products in the campaigns reached record highs, with total order volume achieving a significant milestone. For the double top promotion, we further enhanced the program by launching 10 billion consumption vouchers, reinforcing our focus on consumer benefits.

那与此同时呢，我们在供给侧所投入的百亿资源包，重点扶持新制商家，推动电商吸进，也引领了平台上的这个新的消费趋势。例如在这个今年的年货节期间，平台通过流量现金双补贴的方式，也加速了全国的年货特产涌入西部地区。

At the same time, our RMB 10 billion supply chain investments have prioritized empowering quality merchants and driven our logistics for merchants in remote regions, sparking fresh trends. For example, during the Chinese New Year shopping festival this year, the platform accelerated the flow of Chinese New Year specialties into Western regions by offering both traffic support and promotion programs.

那我们也看到啊，通过我们在供给侧和消费端的持续投入，新制供给的加速涌现，也为消费者提供了更多的优质的消费选择，形成了一个正向的循环。接下来呢，我们依依旧会在这个消费端坚持长期高质量的投入，实现互惠共赢的平台生态，谢谢。

By investing in both support and demand, we have seen a surge of quality supplies, enriching consumer choices with premium options and fostering a virtuous cycle. Moving forward, we will continue to focus on a long-term high-quality investment on the consumer side to build a mutually beneficial platform ecosystem. Thank you.

Operator (participant)

Thank you.

Thank you.

Thank you.

Operator, let's move to the next analyst on the line.

Your next question comes from Alicia Yap from Citigroup. Please go ahead.

Alicia Yap (Equity Research Analyst)

[Foreign Language]. I will translate myself. So I have two questions. The first one is, the competitions in the domestic e-commerce market has been intensifying for some time. Could management share some insights into any recent developments in the competitive landscape and whether there will be any adjustment to the company's development strategies in the future? The second question is regarding our global business. We noticed that recently the global business may face some changes in macro conditions and policy. Could management share more about these external changes that might impact the company's business and what measure the company plans to take in response? Thank you.

Jiazhen Zhao (Executive Director and Co-CEO)

哎，你好，我是赵嘉珍。呃，由我来回答一下你关于这个竞争的问题哈。

Hello, this is Zhao Jiazhen. Let me take this question regarding competition.

那关于这个国内电商行业的竞争态势呢，啊，我们在过去也多次的强调，竞争呢是电商行业的常态，也是推断推动这个行业不断进步的重要动力。那各大品牌呢，也都在积极的调整自身的战略和服务，从而能够更精准的捕捉消费者需求的变化。那我认为啊，这种趋势是行业健康发展的体现。

We have consistently emphasized that competition is not only inherent to the e-commerce industry but also a critical driver of its continuous advancement. Our major platforms are actively refining their strategies and services to better respond to shifting consumer preferences, a dynamic that underscores the sector's robust and healthy evolution.

那随着行业的和技术的不断演进呢，各平台也都在探索这个新的业务模式和技术应用，以提升用户体验和运营效率。那我们也在密切的关注这些变化。在高质量发展战略的引领下呢，我们也会持续的优化平台生态以及服务，更好的满足消费者的需求。

As industry and technology continue to evolve, e-commerce platforms are actively exploring innovative business models and technological applications to elevate user experiences and operational efficiency. We're closely monitoring this development and continuously optimizing our platform ecosystem and services to better meet consumer demands under our quality-driven strategy.

那从战略重心上来说呢，啊，我们在消费侧、供给侧和平台生态上的多方面的投入已经收获了不错的成效。这也说明通过实际的成果，明确了高质量发展是切实可行的发展方向。那多年以来，我们在消费者心中树立的这个良好的品牌认知和口碑，这是我们的核心优势。

Our strategic investments across the consumer side, supply side, and platform ecosystem have delivered tangible results, demonstrating the viability of high-quality development as a sustainable growth pathway. Over the years, we have cultivated a trusted brand reputation and deep consumer loyalty, which remains our core strength.

那与此同时呢，呃，我们也切实的意识到，在当前的电商环境里，供应侧的深度的变革已经到了迫切的阶段。那我们当下为了商家和行业的健康发展所做的投入，从长期来看，通过商家权益的保护、商家服务和满意度的提升、薪资供给的丰富，也会进一步的促进消费者购物体验的优化，从而呢推动平台生态的健康发展。

At the same time, we recognize the imperative for profound supply side transformation in the e-commerce industry. Our current investments in merchant welfare and industrial sustainability will over time improve consumer experience by safeguarding merchant rights, enhancing service quality and satisfaction, and diversifying quality supply. This, in turn, will drive the healthy growth of the platform ecosystem.

我们将继续巩固这些优势，坚持做有意义的投资和长期高质量的投入，并通过这些能力为消费者提供更多的优质产品和放心的购物体验，谢谢。

We will continue to strengthen our advantage by making meaningful long-term high-quality investments. By doing so, we aim to deliver an expanding range of premium products and a seamless trustworthy shopping experience for consumers. Thank you.

Lei Chen (Chairman and Co-CEO)

呃，Alicia 你好，那我是陈磊，我回答一下就是有关这个全球化业务的问题。

Hi Alicia, this is Chen Lei. Let me answer your question about the global business.

那么在全球化业务上呢，呃，正如我们过去几个季度所沟通的，外部环境呢的确在发生加速的变化，竞争呢依旧激烈。那么一些呢与我们业务相关的宏观政策呢也可能出现变动。那面对这种情况呢，我们首先是会严格的遵守法律和法规，做到合规经营。那么在这个基础上呢，我们也在积极主动的与各个市场的相关方进行沟通，不断优化我们的服务，并且提供合规水平。那然而呢，这些外部变化的叠加呢，不可避免的会为我们的全球化业务带来一些挑战。

For our global business, as we discussed in recent quarters, changes in the external environment have been accelerating, and competition remains fierce. In addition, there may be changes in macro policies that are related to our operations. In response to this, first and foremost, we will strictly comply with the laws and regulations to ensure full compliance in our operations. On that basis, we are also proactively communicating with external parties across the markets to continuously refine our services and compliance standards. However, these external changes taken together will inevitably bring some challenges to our global business.

那么面对的快速变化的外部环境，那么呢，我们为全世界各地的消费者连接优质好物的目标和初心是始终不会改变的。我们会始终保持对自身业务的专注。那么在高质量发展合规运营的前提下呢，持续的在供给侧、服务水平以及平台生态这几个方面做长期的投入。那么从而呢，不断的巩固我们长期以来积累的供应链和运营能力，从而加深核心优势。

Despite the changes in the external environment, we remain very committed to delivering high-quality products to the global consumers. This will not change. We will stay focused on our business, investing in supply chain improvements, service quality, and platform ecosystems while ensuring high-quality growth and upholding compliance standards. By doing so, we strive to further deepen our core strength in supply chain efficiency and operations capabilities that we have accumulated over the years.

那么此外呢，我们也会持续的在业务模式上做一些新的尝试，通过因地制宜的供应链创新，那么不断的加深我们在各个市场的深度，那么拓展新品类、新服务。那么我们的目标呢，是打造一个长期来看更稳固、更可持续的平台基础设施。

Furthermore, we will continue to explore new business models, experiment with innovative localized supply chain solutions, deepen our market presence, introduce new product categories and services, and to build a more robust and sustainable platform infrastructure for the long run.

那我们对于高质量可持续发展的追求呢，在全球化的业务中呢，同样的适用。那么在低价好物的基础上呢，我们希望能够满足全球消费者对平台提出的更高的要求。那么正如同前几个季度我们一直在强调的，那么在供给侧和平台生态上呢，我们坚持的是扶持与治理并举的方式，扶持创新能力强的优质商家，同时呢，对于违反平台规则、损害消费者权益的商家执行坚决的治理。那么这些举措呢，已经逐步的取得了积极的反馈，我们也会长期的耐心的执行。

Our commitment to high-quality sustainable development applies equally to our global business. Beyond offering high-quality products at affordable prices, we aim to meet global consumers' rising expectations of us. As highlighted in previous quarters, we implemented merchant support policies and trust and safety updates across the supply chain and platform ecosystem, empowering innovative high-quality merchants. At the same time, we firmly regulate merchants who violate platform rules and harm consumer interests. These efforts have started to yield positive results, and we are committed to executing them for the long term.

那么与此同时，我们作为一个已经具备了一定规模的电商平台，我们也注意到呢，所服务的全球消费者对于企业社会责任方面的关关注。我们也在积极的寻找机会，在电商服务的基础之上呢，希望能通过自己的技术能力和平台资源，为我们所服务的社区创造更多的价值。

At the same time, as a growing e-commerce platform, we are aware of the rising attention our global consumers are paying to corporate responsibility, social responsibility. We are actively seeking opportunities to utilize our technological capabilities and platform resources to create greater value for the communities we serve.

在全球市场的企业社会责任方面，我们已经有一些在做的尝试。那么未来呢，我们也会有不少新的想法。那么团队会脚下实地的在这方面做研究。在成为负责任的全球企业公民方面呢，我们会踏出坚定的一步。那么对此呢，我们能做的事情还有很多，团队呢也感到非常的期待。

We have launched several initiatives in global corporate social responsibility and have a few new ideas for the future. Our team is dedicated to exploring this area and taking concrete steps towards becoming a responsible corporate citizen on a global scale. There's much more we can do, and our team is very excited about the opportunities ahead.

那么希望呢，通过长期的投入，持之以恒做对的事情，我们希望呢能够这样来不断的巩固自己的核心优势，与商家与全球消费者建立起长期的信任。那么以上呢是我对全球化业务的一些思考，谢谢。

Through the long-term investments and consistently doing the right things, we hope to strengthen our core competitive advantages and build long-lasting trustworthy relationships with merchants and global consumers. This is my thinking on the global business.

Alicia Yap (Equity Research Analyst)

谢谢。

Operator, I think we have time for one more analyst.

Operator (participant)

Thank you. Your next question comes from Kenneth Wong from UBS. Please go ahead.

Kenneth Wong (Director of Wealth Management Compliance)

[Foreign Language]. Thank you management for taking my questions. We noticed that the company's revenue growth has slowed in the recent quarters and profit has been fluctuating. How should we think about the revenue and profit trend in the near term? My second question is, in the past two quarters, management has talked about taking on more social and platform responsibility, and this topic has also been mentioned by management today. Can management share more about what company hopes to achieve with platform responsibility in the long run and how to balance that with its duties to shareholders? Thank you.

Jun Liu (VP of Finance)

Hello Kenneth, this is Jane. Let me take your first question regarding growth and profits. Regarding this quarter's financial performance, as mentioned earlier in the prepared remarks, external uncertainties and intense competition have impacted our short-term revenue growth. At the same time, our increased investments in merchant support and platform ecosystem development may create fluctuations in profitability. We expected fluctuations in revenue growth and profits when we began this investment as part of building a high-quality platform ecosystem and achieving sustainable growth. Short-term ups and downs will not shake our confidence in long-term goals. We believe that through sustained investment and optimization we can recreate a healthy e-commerce ecosystem. Currently, our efforts have already received positive feedback from merchants, and supply-side optimizations are driving new consumption trends on the consumer side, which has started to foster a virtuous cycle.

Going forward, we will keep focusing on our high-quality development strategy, investing regularly and patiently to ensure long-term sustainable development. Thank you.

Jiazhen Zhao (Executive Director and Co-CEO)

你好，Kenneth，我是赵嘉正。呃，由我来回答一下你的第二个问题哈。

Hello Kenneth, this is Zhao Jiazhen. Let me take your second question.

嗯，在过去的几个季度呢，我们有提到啊，简单的以短期的这个回报来评价公司的表现已经不太适合公司目前的发展阶段了。

Over the past few quarters, we have noted that assessing the company's performance solely through the short-term financial performance or capital returns does not fit where we are at our development stage.

那作为一家新时代的全球化公司，啊，我们将积极的引导创新，适应新环境，啊，并且呢，在我们业务的所在地区肩负起更多的社会责任。那这个是管理层深思熟虑之后做出的决定。这个从长远来看与股东责任也是一致的。

As a global company in the new era, we're embracing innovation, adapting to change, and taking on more social responsibility in the regions where we operate. This aligns with our long-term accountability to shareholders and reflects thoughtful leadership decisions.

那比如近期我们对于新智商家重点扶持在这个产品营销运营以及供应链等全链路提供支持，也培养了一批具备产品技术创新能力的新智商家，为很多自主创业的商家打通了链路，也助推了产业带的这个优化升级。

For example, our recent focus on supporting quality merchants has provided comprehensive support across product development, marketing operations, and supply chain. We have fostered a group of quality merchants with product and tech capabilities, empowering independent entrepreneurs to streamline their operations while driving the transformation of the supply chain.

那此外呢，我们的电商吸金政策也带动了西部地区的订单，实现了双位数的增长，并且为偏远地区的经济的消费者实现了全面包邮的电商普惠。在为商家扩大基本盘的同时，也惠及了各地的消费者。

Additionally, our logistics support measures tailored for remote regions have spurred double-digit order growth in Western China and extended nationwide free shipping to nearly 100 million consumers in remote areas. This strategy unlocks new opportunities for merchants to grow their orders in Western China, not only expanding business opportunities for merchants but also benefiting consumers across different regions.

而在农业方面呢，秉持着长期扎根农业的决心，我们长期对农研科技、农货供应链、新农商培训等领域坚定的投入，也与我们的当下对于新智商家的扶持是一脉相承的。在促进农业现代化、助力供应链提质增效的同时，也帮助农民增收，创造当地的就业。

In agriculture, we remain committed to supporting the agricultural industry through sustained investments in agricultural technology, supply chain innovation, and training for next-generation farmers. This effort aligns with our current support for quality merchants, promoting agricultural modernization, improving supply chain efficiency while at the same time boosting farmer incomes and generating local employment.

从行业整体上来说，电商行业正在逐步的向注重品质、服务、体验以及创新的方向转变，这也对这个电商的平台提出了更高的标准。我们当前对于商家权益的重视、新智商家的扶持以及供应链的深度变革的投入，不仅是响应政策的号召，也是顺应时代对于电商平台更高的要求。并且从长远来看，构建商家、消费者以及社会多方共赢的电商电商生态，也会为这个公司的可持续发展奠定基础，实现长期的回报，谢谢。

Overall, the e-commerce industry is shifting towards quality, service, experience, and innovation, rising high standards for platforms. Our focus on merchant rights, support for quality merchants, and supply chain reforms are both cost-driven and tailored to the growing demands on e-commerce platforms. In the long run, building an inclusive ecosystem that creates value for all participants will set us up for sustainable growth and long-term returns. Thank you.

Okay, thank you Zhao Jiazhen, and thank you all for joining us today. We look forward to speaking with you next quarter, and thank you and have a great day.

Operator (participant)

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.