Pinduoduo Announces First Quarter 2020 Unaudited Financial Results
SHANGHAI, CHINA, May 22, 2020 (GLOBE NEWSWIRE) – Pinduoduo Inc. ("Pinduoduo"
or the "Company") (NASDAQ: PDD), an innovative and fast growing technology platform andone of the leading Chinese e-commerce players, today announced its unaudited financial results
for the first quarter ended March 31, 2020.
First Quarter 2020 Highlights
GMV 1 in the twelve-month period ended March 31, 2020 was RMB1,157.2 billion(US$2 163.4 billion), an increase of 108% from RMB557.4 billion in the twelve-month
period ended March 31, 2019.
Total revenues in the quarter were RMB6,541.1 million (US$923.8 million), an increaseof 44% from RMB4,545.2 million in the same quarter of 2019.
Average monthly active users3 in the quarter were 487.4 million, an increase of 68% from289.7 million in the same quarter of 2019.
Active buyers4 in the twelve-month period ended March 31, 2020 were 628.1 million, an
increase of 42% from 443.3 million in the twelve-month period ended March 31, 2019.
Annual spending per active buyer5 in the twelve-month period ended March 31, 2020
was RMB1,842.4 (US$260.2), an increase of 47% from RMB1,257.3 in the twelve-month
period ended March 31, 2019.
"Despite the unprecedented challenges in the first quarter, Pinduoduo has grown and now serves
more than 600 million active buyers. We’re encouraged to see our next generation of leaders
stepping up and shouldering the responsibilities of serving our users,” said Mr. Zheng Huang,
Chairman and Chief Executive Officer of Pinduoduo. “We remain committed to our users,
merchants and ecosystem partners during this difficult period. In the first quarter, we adopted
numerous measures to support them, including providing free traffic to farmers and small
businesses, and stabilizing the prices of medical and other daily necessities that were in high
“GMV” refers to the total value of all orders for products and services placed on the Pinduoduo mobile platform, regardless of whether the
products and services are actually sold, delivered or returned. Buyers on the platform are not charged for shipping fees in addition to the listed
price of merchandise. Hence, merchants may embed the shipping fees in the listed price. If embedded, then the shipping fees are included in
GMV. As a prudential matter aimed at eliminating any influence on Pinduoduo’s GMV of irregular transactions, the Company excludes fromits calculation of GMV transactions in certain product categories over certain amounts and transactions by buyers in certain product categories
over a certain amount per day.
2
This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for theconvenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.0808 to US$1.00, the noonbuying rate in effect on March 31, 2020 as set forth in the H.10 Statistical Release of the Federal Reserve Board.
3“Monthly active users” refers to the number of user accounts that visited the Pinduoduo mobile app during a given month, which does notinclude those that accessed the platform through social networks and access points.
4“Active buyers” in a given period refers to the number of user accounts that placed one or more orders (i) on the Pinduoduo mobile app,and (ii) through social networks and access points in that period, regardless of whether the products and services are actually sold, delivered or
returned.
5 “Annual spending per active buyer” in a given period refers to the quotient of total GMV in that period divided by the number of active
buyers in the same period.
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1demand.”“Despite the outbreak and seasonality, we were able to ship on average 50 million daily ordersin March to meet our users’ needs. We are pleased to see more users giving us the vote of trust
and making purchases on our platform,” added Mr. David Liu, Vice President of Strategy. “Asa result, the number of our active buyers in the last twelve-month period has a net increase of 43
million on a quarter-on-quarter basis. As the economy worldwide regains its foothold, we areseeing opportunities for investments and partnerships such as our recent investment in GOME
Retail Holdings. Our strong balance sheet allows us to act quickly on such opportunities which
we believe would help us better serve our users.”
First Quarter 2020 Unaudited Financial Results
Total revenues were RMB6,541.1 million (US$923.8 million), an increase of 44% from
RMB4,545.2 million in the same quarter of 2019. The increase was primarily due to an increase
in revenues from online marketing services.
Revenues from online marketing services were RMB5,492.3 million (US$775.7 million),
an increase of 39% from RMB3,948.4 million in the same quarter of 2019.
Revenues from transaction services were RMB1,048.8 million (US$148.1 million), an
increase of 76% from RMB596.8 million in the same quarter of 2019.
Total costs of revenues were RMB1,830.2 million (US$258.5 million), an increase of 110%from RMB873.3 million in the same quarter of 2019. The increase was mainly due to higher
costs for cloud services, call center and merchant support services.
Total operating expenses were RMB9,108.0 million (US$1,286.3 million), compared with
RMB5,792.4 million in the same quarter of 2019.
Sales and marketing expenses were RMB7,296.6 million (US$1,030.5 million), an
increase of 49% from RMB4,889.3 million in the same quarter of 2019, mainly due to anincrease in advertising expenses and promotion and coupon expenses.
General and administrative expenses were RMB338.3 million (US$47.8 million), an
increase of 43% from RMB236.1 million in the same quarter of 2019, primarily due to anincrease in headcount.
Research and development expenses were RMB1,473.2 million (US$208.0 million), an
increase of 121% from RMB667.1 million in the same quarter of 2019. The increase wasprimarily due to an increase in headcount and the recruitment of more experienced R&D
personnel and an increase in R&D-related cloud services expenses.

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Operating loss was RMB4,397.2 million (US$621.0 million), compared with operating loss of
RMB2,120.5 million in the same quarter of 2019. Non-GAAP operating loss6 was RMB3,587.9
million (US$506.7 million), compared with operating loss of RMB1,621.9 million in the samequarter of 2019.
Net loss attributable to ordinary shareholders was RMB4,119.3 million (US$581.8 million),compared with RMB1,877.7 million in the same quarter of 2019. Non-GAAP net loss
attributable to ordinary shareholders was RMB3,169.6 million (US$447.6 million),compared with RMB1,379.1 million in the same quarter of 2019.
Basic and diluted net loss per ADS were RMB3.54 (US$0.50), compared with RMB1.64 in
the same quarter of 2019. Non-GAAP basic and diluted net loss per ADS were RMB2.73(US$0.39), compared with RMB1.20 in the same quarter of 2019.
Net cash used in operating activities was RMB567.1 million (US$80.1 million), compared with
RMB1,543.3 million in the same quarter of 2019, primarily due to an increase in online
marketing services revenues.
Cash, cash equivalents, restricted cash and short-term investments were RMB69.5 billion(US$9.8 billion) as of March 31, 2020, compared with RMB68.6 billion as of December 31,
2019.

The Company’s non-GAAP financial measures exclude share-based compensation expenses and interest expenses related to the convertible
bonds’ amortization to face value. See “Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures” set forthat the end of this press release.
63Conference Call
The Company will host a conference call to discuss the earnings at 7:30 AM U.S. Eastern Time
on Friday, May 22, 2020 (7:30 PM Beijing/Hong Kong Time on Friday, May 22, 2020).
Due to the outbreak of COVID-19, operator assisted conference calls are not available at the
moment. All participants must pre-register to join this conference call using the Participant
Registration link below:
http://apac.directeventreg.com/registration/event/5338186
Once registered, an email will be sent with details for this conference call including dial-in
numbers, direct event passcode, and Registrant ID. To join the conference call, simply dial thenumber in the calendar invite you receive after preregistering, enter the passcode followed byyour PIN, and you will join the conference call instantly.
A telephone replay of the call will be available after the conclusion of the conference call until
9:59 AM ET on May 30, 2020.
Dial-in numbers for the replay are as follows:
International
U.S.
Passcode:+61-2-8199-0299+1-646-254-3697
5338186

A live and archived webcast of the conference call will be available on the Investor Relations
section of Pinduoduo’s website at http://investor.pinduoduo.com/
Use of Non-GAAP Financial Measures
In evaluating the business, the Company considers and uses non-GAAP measures, such as nonGAAP operating loss and non-GAAP net loss attributable to ordinary shareholders, as
supplemental measures to review and assess operating performance. The presentation of these
non-GAAP financial measures is not intended to be considered in isolation or as a substitute forthe financial information prepared and presented in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”). The Company’s non-GAAP
financial measures exclude share-based compensation expenses and interest expenses related tothe convertible bonds’ amortization to face value.
The Company presents these non-GAAP financial measures because they are used bymanagement to evaluate operating performance and formulate business plans. The Company
believes that the non-GAAP financial measures help identify underlying trends in its businessby excluding the impact of share-based compensation expenses and interest expenses related tothe convertible bonds’ amortization to face value, which is a non-cash charge. The Company
also believes that the non-GAAP financial measures could provide further information about theCompany’s results of operations, and enhance the overall understanding of the Company’s past
performance and future prospects.
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The non-GAAP financial measures are not defined under U.S. GAAP and are not presented inaccordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical
tools. The Company’s non-GAAP financial measures do not reflect all items of income andexpenses that affect the Company’s operations and do not represent the residual cash flow
available for discretionary expenditures. Further, these non-GAAP measures may differ from the
non-GAAP information used by other companies, including peer companies, and therefore theircomparability may be limited. The Company compensates for these limitations by reconcilingthe non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of whichshould be considered when evaluating performance. The Company encourages you to review the
Company’s financial information in its entirety and not rely on a single financial measure.
For more information on the non-GAAP financial measures, please see the table captioned“Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures”
set forth at the end of this press release.
Safe Harbor Statements
This announcement contains forward-looking statements. These statements are made under the“safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as “will,” “expects,”“anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,”“potential,” “continue” or other similar expressions. Among other things, the business outlook
and quotations from management in this announcement, as well as Pinduoduo’s strategic andoperational plans, contain forward-looking statements. Pinduoduo may also make written or oral
forward-looking statements in its periodic reports to the U.S. Securities and Exchange
Commission (the “SEC”), in its annual report to shareholders, in press releases and other writtenmaterials and in oral statements made by its officers, directors or employees to fourth parties.
Statements that are not historical facts, including but not limited to statements about Pinduoduo’s
beliefs and expectations, are forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause actual results to differ
materially from those contained in any forward-looking statement, including but not limited to
the following: Pinduoduo’s growth strategies; its future business development, results ofoperations and financial condition; its ability to understand buyer needs and provide products
and services to attract and retain buyers; its ability to maintain and enhance the recognition andreputation of its brand; its ability to rely on merchants and fourth-party logistics service providers
to provide delivery services to buyers; its ability to maintain and improve quality control policies
and measures; its ability to establish and maintain relationships with merchants; trends andcompetition in China’s e-commerce market; changes in its revenues and certain cost or expense
items; the expected growth of China’s e-commerce market; PRC governmental policies andregulations relating to Pinduoduo’s industry, and general economic and business conditions
globally and in China and assumptions underlying or related to any of the foregoing. Further
information regarding these and other risks is included in Pinduoduo’s filings with the SEC. All
information provided in this press release and in the attachments is as of the date of this press
release, and Pinduoduo undertakes no obligation to update any forward-looking statement,
except as required under applicable law.

5

About Pinduoduo Inc.
Pinduoduo is an innovative and fast growing technology platform that provides buyers withvalue-for-money merchandise and a fun and interactive shopping experience. The Pinduoduo
mobile platform offers a comprehensive selection of attractively priced merchandise, featuring
a dynamic social shopping experience that leverages social networks effectively.
For more information, please visit http://investor.pinduoduo.com/
For investor and media inquiries, please contact:
investor@pinduoduo.com
internationalmedia@pinduoduo.com

6

PINDUODUO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
As of
December31, 2019
RMB

March 31, 2020
RMB

US$
(Unaudited)

ASSETS
Current Assets
Cash and cash equivalents
Restricted cash
Receivables from online payment platforms
Short-term investments
Amounts due from related parties
Prepayments and other current assets
Total current assets

5,768,186
27,577,671
1,050,974
35,288,827
2,365,528
950,277
73,001,463

5,526,736
26,972,389
679,52237,048,472
1,948,392
914,60373,090,114

780,524
3,809,229
95,967
5,232,244
275,166
129,167
10,322,297

Non-current assets
Property, equipment and software, net
Intangible asset
Right-of-use assets
Other non-current assets
Total non-current assets

41,273
1,994,292
517,188503,120
3,055,873

41,353
1,866,532
486,894
691,994
3,086,773

5,840
263,605
68,76397,728435,936

Total Assets

76,057,336

76,176,887

10,758,233

7

PINDUODUO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))

As of
December31, 2019
RMB

March 31, 2020
RMB

US$
(Unaudited)

LIABILITIES ANDSHAREHOLDERS’ EQUITYCurrent Liabilities
Amounts due to related parties
Customer advances and deferred revenue
Payable to merchants
Accrued expenses and other liabilities
Merchant deposits
Short-term borrowings
Lease liabilities
Total current liabilities

1,502,892
605,970
29,926,488
4,877,062
7,840,912
898,748
115,734
45,767,806

2,635,849
619,769
28,713,943
5,791,227
8,639,172
2,114,541
118,281
48,632,782

372,253
87,5284,055,183
817,880
1,220,084
298,630
16,704
6,868,262

Convertible bonds
Lease liabilities
Other non-current liabilities
Total non-current liabilities

5,206,682
428,593
7,389
5,642,664

5,430,487
397,127
7,050
5,834,664

766,931
56,085996
824,012

Total Liabilities

51,410,470

54,467,446

7,692,274

148
41,493,949

148
42,303,322

21
5,974,370

1,448,230(18,295,461)
24,646,866

1,820,761(22,414,790)
21,709,441

257,141(3,165,573)
3,065,959

76,057,336

76,176,887

10,758,233

Shareholders’ equity
Ordinary shares
Additional paid-in capital
Accumulated other comprehensive
incomeAccumulated deficits
Total shareholders’ equity
Total liabilities and shareholders’equity8

PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(Amounts in thousands of RMB and US$)

2019
RMB
(Unaudited)

For the three months ended March 31,
2020
RMB(Unaudited)

US$(Unaudited)

Revenues
Online marketing services
Transaction services
Total Revenues

3,948,414
596,790
4,545,204

5,492,270
1,048,789
6,541,059

775,657
148,117923,774

Costs of revenues
Costs of online marketplace services
Total costs of revenues(873,314)(873,314)(1,830,247)(1,830,247)(258,480)(258,480)

Gross profit

3,671,890

4,710,812

665,294

Sales and marketing expenses
General and administrative expenses
Research and development expenses
Total operating expenses(4,889,255)(236,075)(667,081)(5,792,411)(7,296,621)(338,274)(1,473,150)(9,108,045)(1,030,480)(47,773)(208,049)(1,286,302)

Operating loss

(2,120,521)(4,397,233)(621,008)

Interest and investment income, net
Interest expenses
Foreign exchange loss
Other loss, net
Loss before income tax and share of results of equity investees
Share of results of equity investees
Income tax expenses
Net loss

252,102(1,886)(7,403)(1,877,708)(1,877,708)

460,282(150,634)(19,273)(12,391)(4,119,249)(80)(4,119,329)

65,004(21,274)(2,722)(1,750)(581,750)(11)(581,761)

9

PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(Amounts in thousands of RMB and US$, except for per share data)

For the three months ended March 31,
2019

2020

RMB
(Unaudited)
Net loss
Net loss attributable to ordinary shareholders

RMB(Unaudited)

US$(Unaudited)(1,877,708)(1,877,708)(4,119,329)(4,119,329)(581,761)(581,761)

Loss per ordinary share:-Basic-Diluted(0.41)(0.41)(0.89)(0.89)(0.13)(0.13)

Loss per ADS (4 ordinary shares equals 1 ADS ):-Basic-Diluted(1.64)(1.64)(3.54)(3.54)(0.50)(0.50)

4,559,017
4,559,017

4,650,112
4,650,112

4,650,112
4,650,112

Weighted average number of outstanding ordinary shares (in thousands):-Basic-Diluted

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PINDUODUO INC.
NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$)For the three months ended March 31,
2019

2020

RMB
(Unaudited)
Share-based compensation costs included in:
Costs of revenues
Sales and marketing expenses
General and administrative expenses
Research and development expenses
Total

4,281
196,121
169,003129,227
498,632

11

US$(Unaudited)

RMB(Unaudited)
8,447
231,799
220,188348,939809,373

1,193
32,73631,09649,280114,305

PINDUODUO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands of RMB and US$)For the three months ended March 31,
2019
RMB

2020
US$

RMB

(Unaudited)(1,543,251)
457,473
7,993,828(228,497)(Unaudited)(567,070)(1,584,192)
1,205,472
99,058(Unaudited)(80,086)(223,731)
170,245
13,990

Increase/(decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period

6,679,553
30,539,686(846,732)
33,345,857(119,582)
4,709,335

Cash, cash equivalents and restricted cash at end of period

37,219,239

32,499,125

4,589,753

Net cash flow used in operating activities
Net cash flow generated from/(used in) investing activities
Net cash flow generated from financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash

12

PINDUODUO INC.
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES(Amounts in thousands of RMB and US$, except for per share data))

For the three months ended March 31,
2019

2020

RMB
(Unaudited)(2,120,521)
498,632(1,621,889)

RMB(Unaudited)(4,397,233)
809,373(3,587,860)

US$(Unaudited)(621,008)
114,305(506,703)

Net loss attributable to ordinary shareholders
Add: Share-based compensation
Add: Interest expense related to convertible bonds’ amortization to face value
Non-GAAP net loss attributable to ordinary shareholders(1,877,708)
498,632(1,379,076)(4,119,329)
809,373
140,312(3,169,644)(581,761)
114,305
19,816(447,640)

Weighted-average number of ordinary shares outstanding – basic and diluted(in thousands)
Non-GAAP basic and diluted loss per share
Non-GAAP basic and diluted loss per ADS

4,559,017(0.30)(1.20)

4,650,112(0.68)(2.73)

4,650,112(0.10)(0.39)

Operating Loss
Add: Share-based compensation
Non-GAAP operating loss

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