Pinduoduo recently released its financial report for the fourth quarter and full year of 2022. Against the background that the overall e-commerce market is in a downturn, Pinduoduo delivered a rather "bright" performance growth report. Pinduoduo’s Q4 revenue was 39.8 billion yuan, a year-on-year increase of 46%, and its full-year revenue in 2022 will be 130.6 billion yuan, a year-on-year increase of 39%.
Pinduoduo's revenue growth in the fourth quarter was higher than the full year, and we can draw a simple conclusion: domestic consumer demand is gradually picking up.
Specifically, in the fourth quarter, Pinduoduo’s advertising revenue was 30.965 billion, an increase of 38% year-on-year, and commission income was 8.797 billion, an increase of 86% year-on-year. In terms of operating expenses, Pinduoduo’s market investment was 17.732 billion, a year-on-year increase of 56%, management expenses were 1.641 billion, a year-on-year increase of 291%, and its R&D investment was 2.407 billion, a year-on-year increase of 19%.
From the perspective of operating costs, Pinduoduo's R&D investment scale is higher than its management expenses, which is also in line with its platform characteristics. Of course, judging from its market investment, Pinduoduo is still adhering to its entrepreneurial mentality and is still aggressive in the market. The increase in market launch is also related to the internationalization of Pinduoduo. TEMU is expanding in overseas markets, and its launch is also following up.
For the whole year of 2022, Pinduoduo's advertising revenue exceeded 100 billion yuan for the first time, reaching 102.722 billion yuan, a year-on-year increase of 42%, and commission income was 276.3 yuan, a year-on-year increase of 95%. Advertising revenue will account for 78% of total revenue in 2022, up one percentage point from 2021.
Compared with the financial reports of other e-commerce platforms, Pinduoduo's financial structure can be said to be quite simple and straightforward. This also reflects the focus of Pinduoduo's strategy and operational practice. In short, Pinduoduo is better at concentrating superior forces and making a hole.
This strategic focus and operational focus is also reflected in the continuity of Pinduoduo’s financial reports—that is, Pinduoduo’s financial reports are not good at telling new stories, and some are consistent R&D investment and agricultural focus. It can also be said that, judging from a series of financial reports disclosed after listing, Pinduoduo has been repeating its agricultural story, and now, emphasizing R&D investment is becoming its "new tradition".
(In the "Third Duoduo Agricultural Research Science and Technology Competition" initiated by Pinduoduo, four teams are currently competing in the final stage.)
In the fourth quarter of 2022, Pinduoduo's research and development expenses will be 2.407 billion yuan, a year-on-year increase of 19%. In fact, since the third quarter of 2021, Pinduoduo's single-season R&D investment has exceeded 2 billion yuan for six consecutive quarters. In 2022, Pinduoduo's total R&D investment will increase by 15% year-on-year to 10.387 billion yuan, exceeding 10 billion yuan for the first time, and setting a record high.
Pinduoduo's previous investment in research and development is: 3.87 billion in 2019, 6.89 billion in 2020, and 8.99 billion in 2021. Emphasizing R&D investment is one of the themes of Pinduoduo’s financial reports now and in the future.
Beginning in 2021, Pinduoduo has shifted from a "marketing-focused" strategy to a "research and development-focused" strategy, and has also begun to continuously increase investment in technological innovation. Reflected in Pinduoduo's financial report, the performance of "research and development" is still there. In 2022, Pinduoduo's R&D investment will account for 8% of its total revenue. At the same time, Pinduoduo's annual net profit in 2022 will be 31.538 billion. Take 1/3 of the profits for research and development.
Compared with the growth rate of revenue and the continuous increase in R & D, we can see that Pinduoduo is "young and mature"-it has both the vitality and growth of start-up companies, and the persistence of long-termism of mature companies.
Why does Pinduoduo care so much about R&D investment?
We can take a look at the speech of Liu Jun, vice president of finance of Pinduoduo at the financial analysis meeting. Liu Jun said, "Every investment of the company will be carefully considered, and if this investment can bring long-term high-quality development to the company, it will not hesitate to invest" - the word "no hesitation" is appropriate This summed up Pinduoduo's past strategies in a concise manner: the determination of the strategy and the persistence of execution.
(Pinduoduo's "Nongyun Action" promotes flowers, green plants, fruits and other industries to "fight to the cloud" faster.)
Liu Jun also said, "In the future, we will further invest in key areas, improve the company's R&D capabilities and efficiency, provide support for agriculture and manufacturing through technological means, and provide consumers with better services."
In the view of Pinduoduo's management - at this stage, profit is not the primary consideration for Pinduoduo.
Emphasizing R&D and investing in R&D is the background of technology companies, and it is also becoming a new background of Pinduoduo. If it is said that focusing on agriculture is the tradition of Pinduoduo, then emphasizing research and development is a new tradition of Pinduoduo. In fact, these two traditions of Pinduoduo are also converging - more of Pinduoduo's R&D investment is directed towards optimizing the agricultural supply chain and the agricultural supply side.
For example, Pinduoduo's "Agricultural Cloud Action", through a series of "Agricultural Cloud Actions", guides agricultural production areas to accelerate "digital and real integration", enhances the support ability of cutting-edge technologies in agricultural transformation and upgrading, and creates "agricultural technology transformation" City Field Inspection". In addition, Pinduoduo is also increasing support for new farmers, so that more local customs and specialties will continue to leave the village and enter the city.
For another example, in the fourth quarter of 2022, Pinduoduo will launch global and high-level agricultural events such as the "Third Global Agricultural Maker Competition" and "The Third Duoduo Agricultural Research and Technology Competition". The topic of these competitions is the "stuck neck" facing agricultural development. Pinduoduo hopes that through these competitions, young researchers will be encouraged to go into greenhouses in the mountains and forests, write papers in the fields, and finally settle their research results on rural revitalization.
In view of Pinduoduo's continuous investment in agricultural technology inclusiveness, in the fourth quarter of last year, the Food and Agriculture Organization of the United Nations also awarded Pinduoduo the "2022 Innovation Award". Pinduoduo was the only global winner of this award last year. This award is a recognition of Pinduoduo's investment in agricultural research and development, and it also shows that agriculture is indeed worth investing in.
Agriculture is not only the foundation of Pinduoduo, but also the promised land in the future. The continuous investment in agricultural research and development is not only a motivation to consolidate the market and strengthen the moat out of competitive considerations in a practical sense, but also a strategic consideration to face the future and invest in the future.
(The "Duo Duo New Craftsmanship" special team hopes to help Chaozhou Ceramics transform and upgrade to digital.)
According to data released by the China Internet Network Information Center, the number of Internet users in my country will be 989 million in 2020, 1.032 billion in 2021, and 1.067 billion in 2022. From the perspective of the number of netizens, the growth of China's mobile Internet users has begun to slow down, and the Internet industry is also transforming from a demographic dividend to a talent dividend. Under such a background, the impact on e-commerce platforms is also quite realistic-the e-commerce market platforms are diversified, several platforms coexist, and market competition has shifted from seizing incremental markets to stock competition.
The focus of strategy and operation is precisely the most scarce quality when the current e-commerce market enters stock competition. In a sense, there is no decisive battle for e-commerce. The real contest may not be to stare too much at competitors, but to focus on itself strategically and operationally, returning to customers and fundamentals.
At Pinduoduo's analyst meeting, when answering the company's long-term strategy, Chairman and CEO Chen Lei said, "Strengthening technological capabilities and improving the efficiency of the supply chain in agriculture and manufacturing are all clear long-term strategies for Pinduoduo." In addition to clarifying the core business of agriculture, which has been focusing on investment before, manufacturing is undoubtedly the next step for Pinduoduo to focus on.
"Compared to focusing on competitors, we actually pay more attention to our own development and iteration. We will remain patient and create long-term value." Chen Lei's words are the best commentary on "repeating the agricultural story and embracing the new tradition of research and development".