Pinduoduo swings to a net profit of $372m in the second quarter of 2021

Chinese social commerce giant Pinduoduo swung to a quarterly profit in the second quarter of 2021 as the company stands to benefit from the easing of pandemic-induced restrictions, pushing shoppers online.

Photo credit: CFP

The company reported net profits to the tune of 2.41 billion yuan (US$372.1 million) in Q2 2021, compared with a net loss of 899.3 million yuan (US$138.8 million) in the same quarter a year ago. Meanwhile, its revenue rose 89% to 23.05 billion yuan (US$3.56 billion).

Pinduoduo’s strong growth in revenue was mainly driven by its online marketing services, whose revenue climbed up by 64% to 18.1 billion yuan (US$2.79 billion) during the quarter.

“We have seen merchants spending more and exploring new ways to engage with users, and our users browsing more and discovering more items of interest,” said Tony Ma, vice president of finance at Pinduoduo. He added that the spike in interest from merchants was partly due to improvements in the company’s advertising products and analytics tools.

The group-buying social commerce firm also saw a 164% growth its transaction services revenues this quarter to hit 3 billion yuan (US$463.2 million), fueled by fulfilment and other related services it provides through Duo Duo Grocery.

See also: The Pinduoduo model takes hold in India

Supported by a strong engagement of user base, monthly active users on the platform increased to 738.5 million in the second quarter, up 30% compared to the same quarter in 2020.

However, Pinduoduo said it allocated an additional 13% of its income for its non-GAAP sales and marketing expenses this quarter, as the company invested in user engagement through promotions and coupons.

See also: Explaining Pinduoduo, and whether the model can work in Southeast Asia

The firm also launched a dedicated “10 Billion Agriculture Initiative” to address the critical needs in the agricultural sector and rural areas. It will pour all its profits from the second quarter, and any potential profits in future quarters, into the initiative until the total 10 billion yuan (US$1.5 billion) commitment is fulfilled.

Currency converted from Chinese yuan to US dollar: US$1 = 6.48 yuan.