Abstract: Pinduoduo is sprinting into a new era of 800 million users at high speed. Huang Zheng stepped down as chairman to explore the development of the industry in the next decade.
On March 17, Beijing time, Pinduoduo released its 2020 fourth quarter and full year financial reports:
As of the end of 2020, Pinduo has had 788.4 million active buyers for many years, making it the largest e-commerce platform in China for users.
In the fourth quarter, the average monthly active users of Pinduoduo's APP reached 719.9 million, an increase of 76.5 million in a single quarter.
As of the end of 2020, Pinduo's multi-year turnover (GMV) was 1,667.6 billion yuan, a year-on-year increase of 66%.
In the fourth quarter, Pinduoduo's revenue increased by 146% to 26.547 billion yuan, and its annual revenue increased by 97% to 59.919 billion yuan.
Under Non-GAAP, Pinduoduo’s net loss attributable to common shareholders in the fourth quarter was 184.5 million yuan, and the net loss for the whole year was 2.965 billion yuan, both significantly narrower than the same period last year.
On the same day, Pinduoduo Chairman Huang Zheng issued a 2021 letter to shareholders, announcing that the board of directors has approved his resignation as chairman, and the co-founder and current CEO Chen Lei will take over. Huang Zheng said that after resigning as chairman, the stocks under his personal name will continue to be locked for 3 years without selling. I will combine my personal interests and devote myself to research in the fields of food science and life sciences, and focus on the long-term development of Pinduoduo in the future, "to touch the stones on the road in 10 years."
01
The user scale is close to the 800 million mark
The financial report shows that as of the end of 2020, the number of active buyers of Pinduoduo for many years reached 788.4 million, a year-on-year increase of 35% from 585.2 million at the end of the previous year.
As one of the main platforms connecting domestic supply and demand, driven by the new development pattern of “dual cycle”, Pinduoduo will accumulate more than 200 million new active buyers in 2020, of which 57.1 million were added in the fourth quarter.
In terms of user scale, Pinduoduo, which was founded less than 6 years ago, has developed into China's largest e-commerce platform, and has initially achieved its goal of serving China's most users.
In terms of monthly active users, in the fourth quarter of 2020, the average monthly active users of Pinduoduo APP reached 719.9 million, a net increase of 76.5 million in a single quarter. In the second half of last year, Pinduoduo added 151 million monthly active users.
Pinduoduo's rapid growth in user scale and stickiness will continue into 2021. According to a QuestMobile report, during the Spring Festival this year, Pinduoduo's daily active users ranked first in the industry for the first time. During this period, Pinduoduo's per capita daily use time increased by 25.9% year-on-year, which was the fastest growth rate among apps with a daily activity of over 100 million.
In 2020, with the massive increase in users, the average annual consumption of active buyers of Pinduoduo will increase to RMB 2115.2, a year-on-year increase of 23%.
Benefiting from the strong growth of both user scale and average user consumption, in 2020, the transaction volume of Pinduoduo's platform climbed to 1,667.6 billion yuan, a year-on-year increase of 66%.
According to data from the National Bureau of Statistics, in 2020, the national online retail sales will grow 10.9% year-on-year. The above data shows that Pinduoduo's growth rate is still 6 times the industry average based on trillions of GMV.
Under the joint promotion of nearly 800 million users, the new consumer format with "competition" as the core is being transmitted from the Chinese consumer market to the circulation side and the supply side, promoting the transformation of traditional models including agricultural product distribution and brand building. This makes affordable and high-quality goods the mainstream of domestic consumption, effectively meeting the needs of the vast majority of users in China for a better life.
Pinduoduo CEO Chen Lei said: “We saw six years ago that mobile is an inevitable trend. Therefore, we are the only company focusing on mobile experience among the global mainstream consumer Internet companies. The mobile Internet has fundamentally changed people. The way of interaction. This mobile revolution is now destroying the “wall” between the physical world and the digital world."
02
Quarterly revenue increased by 146%, and full-year revenue nearly doubled
According to the financial report, in the fourth quarter of 2020, Pinduoduo achieved revenue of 26.547 billion yuan, a year-on-year increase of 146%. For the whole year, it achieved revenue of 59.919 billion yuan, a year-on-year increase of 97%, nearly doubled. Both figures were significantly higher than market expectations.
Pinduoduo's revenue growth was mainly due to the strong growth of online marketing technology service revenue and the revenue generated by the sales of new products. In the fourth quarter, platform online marketing technology service revenue was 18.922 billion yuan, a year-on-year increase of 95%. For the whole year of 2020, Pinduoduo's online marketing technology service revenue was 47.953.8 billion yuan, a year-on-year increase of 79%. In the fourth quarter, platform merchandise sales revenue was 5.357.8 billion yuan.
In this regard, Pinduoduo founder Huang Zheng stated in a letter to shareholders that the epidemic and other reasons have accelerated the iteration of internal business and management. Pinduoduo started from being a purely asset-light third-party platform to become more important. New businesses sprouted and grew rapidly in Pinduoduo, which gave birth to and exercised a new generation of managers. "It's time to gradually let more posters rise to shape their own Pinduoduo." In Huang Zheng's eyes, Pinduoduo has rapidly grown from a "child who just started elementary school" three years ago to "a teenager entering adolescence." When it went public in 2018, Huang Zheng stated in a letter to shareholders that Pinduoduo is a public institution, and it exists to create value for the largest users. It shouldn't be a tool to show personal abilities, nor should it be too personal. "I hope that today I quit the chairman will help this young independent adult."
In the fourth quarter, Pinduoduo made a new round of heavy investment in warehousing, logistics and the source of agricultural goods. However, driven by strong revenue, the operation of this quarter still basically reached a breakeven. Under non-general accounting standards, the platform’s net loss attributable to ordinary shareholders in the fourth quarter was 184.5 million yuan, compared with 815 million yuan in the same period of the previous year. The net loss attributable to ordinary shareholders for the year was 2.965 billion yuan, compared with 4.265.8 billion yuan in the same period of the previous year.
From the perspective of revenue composition, Pinduoduo still practices the strategy of "0 commission" and "0 platform service annual fee" on the merchant side.
According to the prevailing industry standards, in 2020, the “zero commission” policy alone will help businesses save more than 80 billion yuan in capital costs.
Relying on the increasingly prosperous ecosystem, Pinduoduo's cash flow maintained steady growth in the fourth quarter. The operating cash flow of the platform in the quarter was 14.946 billion yuan, and the operating cash flow for the whole year was 28.196.6 billion yuan.
As of the end of 2020, Pinduoduo held cash and cash equivalents and short-term investments of 87 billion yuan, compared with 41.1 billion yuan at the end of 2019.
03
Dedicated to basic theory to explore scientific research "no man's land"
In 2020, under the new development pattern of "dual cycle", Pinduoduo has successively launched a series of measures such as fighting the epidemic to help farmers, helping foreign trade companies to switch to domestic sales, and deepening cooperation with major manufacturing regions in China. In addition, the platform also stimulates domestic demand and boosts consumption by directly investing in merchants and users, so that users can purchase various branded products with extremely high cost performance.
In addition, as China’s largest agricultural product uplink platform, Pinduoduo has continued to deepen the “first kilometer” of agriculture, and has conducted in-depth cooperation with many top domestic and foreign scientific research institutions and academicians and experts and other scientific research teams, in scientific planting, agricultural Internet of things, unmanned greenhouses , Smart agriculture and other fields continue to invest, hoping to help farmers increase income and help agricultural upgrading.
In 2020, Pinduoduo invested 6.891 billion yuan in research and development expenses, an increase of 78% over the previous year. Platform R&D accounted for 11.6% of revenue.
With continuous investment in agricultural science and technology, agricultural products and agricultural and sideline products have become the fastest growing category on the platform. In 2020, Pinduoduo's agricultural (sideline) products' turnover was 270 billion yuan, which doubled year-on-year, accounting for 16.2% of the annual turnover, much higher than the industry's average of about 3%.
Up to now, more than 12 million agricultural producers have used Pinduoduo to connect with consumers across the country, including millions of registered registered households. At the historic moment when this year's poverty alleviation battle won a full victory, Pinduoduo, as a representative of Internet companies, was awarded the highest standard of "National Poverty Alleviation Advanced Collective".
In the letter to shareholders, Huang Zheng set his sights on ten years later. He believes that the competition in the industry is becoming increasingly fierce and even alienated. The traditional scale and efficiency-oriented competition has its inevitable problems. It is necessary to take action on lower and fundamental issues and find answers based on core technology and its basic theories. .
Huang Zheng believes that to ensure Pinduoduo's high-speed and high-quality development 10 years from now, it is time for some explorations. As the founder, Huang Zheng hopes to combine his own interests and step out of "touching the stones on the road in 10 years."
In his letter to shareholders, he gave an example and looked forward to the scientific research field he will devote to long-term after resigning as chairman. For example, through the method of controlling the cultivation process of agricultural products, exploring the reliable and effective control of the potentially harmful heavy metal content of potatoes, sweet potatoes, tomatoes, etc., and at the same time, the controllable standardization of its possible and beneficial trace elements.
"I can't become a scientist, but I may have the opportunity to become an assistant to the future (great) scientist. That is also a very happy thing." Huang Zheng said.