Produced | Tiger Sniff Business Group

Author | Li Ling

This is a perfect financial report that is unexpected and reasonable.

On the evening of May 22, Pinduoduo (NASDAQ: PDD) released its first quarter earnings report for 2020. This quarter, Pinduoduo’s revenue was 6.541 billion yuan, an increase of 44% from the same period in 2019; the net loss under non-GAAP reached 3.17 billion yuan, an increase of 130% from the net loss of 1.379 billion yuan in the same period of 2019; GMV It reached 1157.2 billion yuan, a year-on-year increase of 108%.

Unexpectedly, in 2019, the overall growth rate slowed down and stabilized. Active users experienced strong growth in the first quarter. As of March 31, 2020, Pinduoduo ’s annual number of active buyers increased to 628 million, an increase of 42.9 million in a single quarter.

That is to say, Pinduoduo still got nearly 43 million new users during the period when the epidemic was most affected . At the same time, the average monthly active users of Pinduoduo App reached 487 million, an increase of 198 million compared with the same period in 2019, an increase of 68.51%.

Compared with the fourth quarter of 2019, in addition to the money-pulling effect of marketing activities such as the “Double 11” “New Year Festival”, national holidays, Christmas and other holidays also drive the pace of consumption. In the first quarter of 2020, most economic activities under the influence of the new crown epidemic stagnate, and the upstream and downstream of e-commerce are also affected.

But The epidemic restricts people ’s transportation, but it does not restrain people ’s consumption of products that are in strong demand or just needed. Being trapped at home just creates conditions for online shopping.

Pinduoduo gets new active users in this situation, and the average user spending has increased by 47% compared with the same period in 2019, which is enough to show that the previous users obtained through social channels have gradually internalized to become pinyin. Dodo’s own traffic .

Of course, only from the performance of this financial report, it is difficult to see the current development trend of Pinduoduo. After all, The favorable conditions created by the epidemic situation control for e-commerceThe pieces will gradually fade away. However, the live streaming model that emerged during the epidemic has undoubtedly become the elixir of e-commerce. Recruiting anchors for MCN institutions and cooperating with the government on agricultural products live broadcast … The intention of Pinduoduo to broadcast lively does not need to be covered up.

Growth and hidden concerns

At the earnings report, there were questions about the driving force of GMV growth. David Liu, vice president of Pinduoduo, responded that “consumers’ desire for consumption has not been affected by the epidemic, coupled with the stimulation of some marketing subsidies in Pinduoduo. Since February, the platform has placed 50 million orders per day. ” p>

The inconvenience in life caused by the epidemic control has unexpectedly boosted online consumption. But beyond the uncontrollable factors, the growth of pinduoduo is inevitable for the staged development.

First of all, the growth of new users proves the traffic conversion effect of Pinduoduo, that is, After leaving the social platform, Pinduoduo can still have an independent and stable growth momentum, throwing away the “stuck in the neck by WeChat” Fatal flaw.

Compared with Alibaba multi-platform, Pinduoduo currently has only one independent app. Under this premise, Pinduoduo took less than 5 years to gain over 600 million active buyers, followed by Ali. The comparison of specific user data is as follows:

By the end of 2019, Alibaba ’s annual active buyers were 711 million, and by the end of March 2010, Alibaba ’s active buyers were 726 million, with a new quarterly active user of 0.15 billion, a 2.1% increase from the previous quarter.

By the end of 2019, the number of active buyers in Pinduo for many years was 585 million. By the end of March 2010, the number of active buyers in Pinduo was 628 million. There were 43 million new active users in a single quarter, an increase of 7.4% from the previous month.

At the moment when the traffic dividend peaks, Pinduoduo is still growing at a rare high speed, which is its advantage that cannot be ignored . On the other hand, Alibaba’s user growth is weak, which is a portrayal of Pinduoduo’s subsequent development to a certain extent. The profitability of Alibaba ’s digital economy is unmatched for a long time.

According to the first quarter financial report, Ping Duoduo’s losses have expanded again. In the first quarter of 2020, the net loss attributable to ordinary shareholders under Pinduoduo ’s non-GAAP was 3.17 billion yuan, an increase of 1 from the net loss of 1.379 billion yuan in the same period last year30%.

In the previous quarter, Pinduoduo ’s operating loss and net loss both fell.

In the fourth quarter of 2019, Pinduoduo’s operating loss was 2.135 billion yuan, a year-on-year decrease of 19.2%, and a decrease of 23.5% from the previous month. The net loss attributable to shareholders of ordinary shares was 1.752 billion yuan, a year-on-year decrease of 27.7% and a month-on-month decrease of 25%. The year-on-year and month-on-month losses of the two losses were significantly narrowed.

Unfortunately, this good momentum only lasted for one quarter. There are two explanations for the expansion of losses this time: The first is support for platform merchants during the epidemic. “Pinduoduo continues to reduce the marketing costs of merchants on the platform on the basis of maintaining 0 commissions, and gives a large amount of free traffic resources to the medical supplies that users need most.” Under a background, its revenue only increased by 44%. Secondly, Pinduoduo’s investment in direct subsidies for technology, products and commodities continues to increase. This includes higher broadband costs caused by live broadcasts, as well as more than tens of billions of subsidies for branded goods.

It is worth noting that Pinduoduo has always had a low input-output ratio of subsidies. Tiger Sniff analyst Ding Ping previously analyzed that the strong data behind Pinduoduo cannot be separated from its tens of billions of subsidies policy launched in 2019. With a revenue of 30.142 billion yuan, the cost performance is relatively low.

Pictures from: Tiger Sniffing Research

In this quarter, its input-output ratio reached a record low.

In the first quarter of 2019, Pinduoduo ’s marketing and promotion fees were 4.889 billion yuan and revenue was 4.545 billion yuan;

In the second quarter of 2019, Pinduoduo ’s marketing and promotion fees were 6.104 billion yuan and revenue was 7.29 billion yuan;

In the third quarter of 2019, Pinduoduo marketing and promotion fees 69.RMB 0.9 billion with revenue of RMB 7.514 billion;

In the fourth quarter of 2019, Pinduoduo ’s marketing and promotion costs were 6.104 billion yuan and revenue was 10.793 billion yuan;

In the first quarter of 2020, Pinduoduo ’s revenue was 6.541 billion yuan, and marketing expenses were 7.297 billion yuan. The actual revenue still cannot fill the pit of marketing costs .

Next live broadcast

A striking figure in this financial report is that by the end of March, the average annual expenditure of active buyers of Pinduoduo reached 1842.4 yuan, an increase of 47% over the same period last year.

This increase is not prominent in Pinduoduo ’s financial report, but the low-cost stereotype of Pinduoduo naturally attracts users. After all, rich people are not willing to spend two dollars to buy a dollar. The increase in average spending is contrary to the logic of the increase in new users, which has improved in this particular period, indicating that users of Pinduoduo have increased consumption on the platform and increased willingness to spend.

It ’s also worth noting that Pingduoduo is trying to use live broadcasting as a lever to leverage the next stage of growth.

The epidemic blurs the online and offline boundaries of the retail industry. Whether it is a normal product in life, or a high-end high-net-worth product like jewelry and a house, you can get almost the same experience as offline purchases. In the live broadcast room of Pinduoduo, the orchard is just behind the farmers, and the fruit just picked seems to be within reach. The live broadcast room is not only a sales platform, but also a channel for merchants and users to establish mutual trust.

In fact, From the initial social fission to game-like participation, Pinduoduo ’s product logic emphasizes trust. Luo Yonghao and his followers, who are neither professional nor distracted, are difficult to survive in this seemingly simple, practical and efficient live broadcast room.

In 2019, Pinduoduo ’s agricultural product sales increased by 16%, and SKUs reached 1,030. This quarter, the live broadcast of Pinduoduo’s cooperation with businesses and local governments has made online sales of agricultural products more efficient. As of May 14, Pinduoduo’s “City and County Mayor’s Live Room” has accumulatively boosted the sales of agricultural products to more than 850 million catties, and directly reached more than 350,000 farmers.

At the financial report , Pinduoduo stated that in the first quarter, the cost of Pinduoduo live broadcast exceeded 40 million yuan. Compared to billions of market expenses, the cost of live broadcasting is not expensive. But compared to tens of billions of subsidiesThe strategy is long-term and high-profile, and the attitude of Pinduoduo to the live broadcast seems ambiguous.

Pinduoduo said this time, In order to ensure that consumers have a good consumption experience, they will further subsidize users. Subsidies will undoubtedly be a long-term strategy for Pinduoduo. But so far, Pinduoduo has not admitted to the outside world that he is doing live broadcast business.

The first live broadcast of Pinduoduo was at the end of November 2019. More than two months later, the livestream of Duoduo went live quickly. According to Pinduoduo’s external caliber, live broadcast is only one of the channels for e-commerce to sell goods, emphasizing that live broadcast is only one of the promotional activities, which is essentially different from the live broadcast platform. However, DuoDuo Live not only can freely insert products, but also has a reward income function, which is almost the same as the current mainstream live broadcast platform.

But soon, the live broadcast business status will be announced. At the financial report, Ping Duoduo CEO Huang Zheng said “it will further invest in consumer participation and interaction, which is the future goal.”

March 30th, the first batch of MCN live broadcasts opened. After officially launching in March, Duoduo Live opened its application for settlement. And what the official said “improving the brand value of the organization and building a content ecology” is not surprising, that is, establishing a network celebrity or KOL system can not only increase user participation and activity, but also bring goods back. Can be appreciated.

Compared with Pinduoduo ’s results in the fourth quarter of 2019—revenue doubled and losses narrowed. The revenue and profit figures for the first quarter of 2020 are not good. But as long as the 10 billion subsidies continue and the growth continues, Pinduoduo can still reap the love of users and the market.

Less than 5 years after its establishment, Pinduoduo has won a place on the mobile Internet. The next stage is undoubtedly to determine the outcome of live broadcast e-commerce. Perhaps as Huang Zheng said in his shareholder letter on April 20, new species and new organisms will be born and thrive.