Social e-commerce company Pinduoduo (NASDAQ: PDD) generated total revenue of RMB 6.5 billion (USD 923.8 million), an increase of 44% year-on-year (YoY), beating market expectations of RMB 5.2 billion (USD 735.1 million), the firm announced in its first-quarter 2020 financial results on Friday.
Pinduoduo’s stock rose by 14.5% in Friday trading following the announcement, reaching a new peak of USD 68.70, more than double its share price in mid-March.
The social e-commerce pioneer has embraced opportunities presented by the COVID-19 outbreak, and as demand for e-commerce services surged, annual active buyers on Pinduoduo reached 628.1 million, up 42% YoY. In March, the company shipped 50 million orders daily on average.
Revenues from Pinduoduo’s transaction services segment increased 76% YoY, outpacing the 39% YoY growth in Pinduoduo’s marketing services business for the first time since the company’s IPO in July 2018. The company revealed to investors that advertisers’ spending began to recover in March.
On the earnings call, Pinduoduo’s CEO Colin Huang highlighted the growing importance of e-commerce for vital necessities in addition to discretionary purchases as a result of the COVID-19 outbreak.
Huang also outlined the shifts in e-commerce caused by the pandemic, first emphasizing the potential of Pinduoduo’s livestreaming initiative. In addition to products, the company aims to sell experiences through livestreaming, citing its livestreams with seven major museums since Pinduoduo added the function in November of 2019.
The company believes the engaging and interactive nature of selling via livestream will lower people’s aversion to buying more high-end items, and crucially increase Pinduoduo’s spending per buyer.
Pinduoduo has long been trying to shed the reputation as a platform predominantly dealing in fast-moving consumer goods and other relatively inexpensive items. The company’s annual spending per active buyer for the year ended March 31, 2020, increased 47% YoY to RMB 1,842.4 (USD 260.2), aided by increased purchase frequency on the platform.
Pinduoduo is the second-largest e-commerce company in China by market cap, with 5.1 million merchants on its platform and booked gross merchandise value (GMV) of RMB 1.1 billion (USD 163.4 billion) in the year ended March 31, 2020.