Full Text | Pinduoduo Q4 Earnings Conference Transcript: Future Profit Margin Fluctuations Will Be the Norm

Pinduoduo releases its latest financial report, with annual revenue of 431.8 billion yuan, a year-over-year increase of 10%, while net profit declined year-over-year. This is also the first financial report after Pinduoduo implemented the co-chairman system. At the shareholder meeting in December last year, Pinduoduo announced an upgrade to its corporate governance structure, with Zhao Jiazhen and Chen Lei jointly serving as Group Co-Chairmen and Co-CEOs.

See more: Pinduoduo releases 2025 financial report: annual revenue of 431.8 billion yuan

After the financial report was released, Pinduoduo’s Co-Chairman and Co-CEO Chen Lei, Co-Chairman and Co-CEO Zhao Jiazhen, and other executives attended the subsequent earnings conference call, where they explained key points of the report and answered analyst questions.

**　　Below are the main contents of the analyst Q&A session during this conference call:　　**

**　　Citibank analyst Alicia Yap:** Good evening, management. Thank you for taking my questions. I have two questions. First, our company made some organizational adjustments at the shareholder meeting at the end of last year, and we see that the company is currently operating in over ninety markets, facing quite complex new regulatory challenges. I’d like to ask how management plans to keep the team agile and execute effectively in such an environment.

Second, we’ve observed that e-commerce platform growth has slowed in recent quarters, and the advertising revenue growth for Pinduoduo has also decelerated over the past two quarters. Could management share their views on the current Chinese e-commerce market and where the next phase of industry growth might come from?

**　　Zhao Jiazhen:** I’ll answer the first question. Over the past few years, our global business has indeed made breakthrough progress, now covering nearly a hundred markets and reaching a certain scale. During this process, we feel that our company’s governance and internal talent development have lagged behind business growth, and we are somewhat stretched in many areas.

At the same time, rapid changes in international geopolitical situations, along with swift shifts in trade policies and regulations worldwide, have also posed new demands on our company. Therefore, we see both the opportunity and necessity to carry out systematic, structural organizational, cultural, and corporate governance reforms.

Of course, this will be a process. The system of co-chairmen announced at the shareholder meeting last December, along with the new leadership team we appointed, marks the beginning of such systemic change.

In the coming period, we will devote greater effort, financial, and material resources to upgrading and rebuilding our supply chain, aiming for a comprehensive enhancement of our operational model.

**　　Chen Lei:** I’ll answer your second question. As you mentioned, in recent quarters, we’ve seen intensified competition and a slowdown in growth within the e-commerce industry. Recognizing this new phase, we have proposed to heavily invest in supply chains, understanding that e-commerce platforms should not be just simple transaction venues but should create more value for all participants in the supply chain.

Investing heavily in supply chains involves multiple aspects. Recently, we launched projects like Duoduo Specialty Products and Health Series, which are international initiatives focused on empowering supply chains. I’d like to highlight two specific initiatives: first, free delivery to villages, a pilot project launched in Q4 last year. Its goal is to address high logistics costs and low merchant willingness to ship to remote administrative villages. We aim to include more remote rural areas into our inclusive zones. Currently, Pinduoduo has established county-level transfer warehouses across the country, with the platform covering the second-leg delivery costs to villages.

Under this new model, merchants only need to send products to the transfer warehouse, which then handles transportation from the warehouse to the village delivery points. This extends the segmented transportation and transfer model to the last mile in villages, improving shopping experiences in remote areas and helping merchants tap into new markets.

The second initiative is the New Quality Supply Platform. It targets high-quality merchants willing to improve product quality and service, helping them upgrade throughout the entire lifecycle—from R&D, manufacturing, to sales—through industry insights and supply chain collaboration, reshaping the supply chain system.

The platform can do many things, such as product R&D. In traditional models, new product development often involves luck, but within our current ecosystem, key information about products is consolidated by our merchant recruitment team and quickly relayed to merchants. Supported by traffic, this helps test new products and enables targeted iteration, improving R&D efficiency and output.

These are two concrete examples of our supply chain upgrades. Facing industry slowdown and intensified competition, we proactively allocate resources to building high-quality supply chains. Our investments in foundational capabilities like new quality supply and village delivery will be key drivers for sustainable, healthy growth over the next decade.

**　　UBS analyst Kenneth Fong:** Thank you for accepting my questions. I have two. First, regarding the company’s global business, which has experienced some turbulence recently. Since last year, some major markets have faced regulatory investigations, and significant changes in trade policies relevant to our business have occurred. Could management share their views on the current external environment? Where will the focus of our global expansion be in this environment?

Second, about profit margins. The company’s margins have fluctuated over recent quarters. Could management discuss how launching different business models has impacted our margins and how we should think about the company’s long-term profit margin levels?

**　　Chen Lei:** I’ll answer your first question. Recently, we have indeed received inquiries from regulatory agencies. As our global business has grown rapidly, we now operate at scale in many countries, and the natural concerns and worries about strict policies are understandable.

However, we believe that current regulatory actions lay a good foundation for our next growth phase and will also guide our mode of iteration amid the rapidly changing international political and policy environment.

Since our globalization began, we have always adhered to a long-term focus, rooted in our deep supply chain capabilities, committed to sustainable development in each market, and creating real value for consumers.

As our business scales and regulatory environments change quickly across regions, we recognize that compliance is a bottom line. As an international company, we aim to meet local needs, stay true to our original mission, and contribute to society. We have invested heavily in internal compliance.

At the same time, we see significant changes in trade policies, tax regulations, and product compliance requirements across countries and regions, often with conflicting or even contradictory demands, which inevitably increase our pressures and uncertainties.

We are actively learning, adapting to changes, and continuously improving our compliance operations to create sustainable social value. Since last year, we’ve seen many market trade policy changes. Our team has iterated our business models quickly based on local regulatory and market conditions, maintaining reliable consumer service, thanks to our longstanding supply chain capabilities.

Going forward, our global expansion will likely focus on investment, as each step directly impacts the shopping experience. This will remain a key area of focus for us.

**　　Zhao Jiazhen:** I’ll answer your second question. First, I want to clarify that the company continues to invest in this strategy. The external environment and regional landscape are changing rapidly. To meet evolving consumer needs, we are working closely with platform merchants, exploring and launching new business models suited to the new environment.

Any new model requires initial resource investment for full rollout. Whether exploring new business models or strategically investing in supply chains, these are long-term foundational efforts. The mismatch in investment and returns will inevitably affect our short-term performance.

We have repeatedly emphasized that we prioritize long-term value over short-term financial metrics. As we continue to invest heavily, profit margins will likely fluctuate across quarters—this is normal.

In recent months, our major strategic initiatives announced at the shareholder meeting are beginning to materialize, and our business and organizational transformations are underway. We advise everyone not to focus too much on quarterly profit margins but to pay more attention to the high-quality development of our platform ecosystem. Only with a healthy ecosystem and strong supply chain can we achieve sustainable long-term growth.

**　　Bank of America analyst Joyce Ju:** Thank you for the opportunity to ask. My first question relates to profit margins. Last year, the company launched numerous initiatives supporting the ecosystem, including support programs. Management also mentioned heavy investments in supply chains. Could you share how you plan the return cycles for these investments and what long-term impacts they might have on our business performance?

My second question concerns recent retail growth momentum. The first two months of this year have seen very strong online retail growth. Could management share their outlook on consumer market trends? For categories with rapid growth, does the company have targeted strategies to better seize these opportunities?

**　　Zhao Jiazhen:** I’ll answer your question. About a year ago, we further realized the importance of a sustainable platform ecosystem. We launched initiatives like 100 billion yuan in fee reductions and 1 trillion yuan in support programs, investing real funds to support merchants and industries, creating space for supply chain upgrades.

Our management team believes that as the platform grows into a socially influential public entity, we should consider broader public interests and the long-term health of the industry and ecosystem.

The strategic focus on core businesses and supply chain upgrades, clarified at the last shareholder meeting, is an extension and intensification of this approach. Over years of development, the ecosystem has matured, and merchants have diversified demands. From a simple transaction platform to a comprehensive business partner, merchants now require support in R&D, manufacturing, and sales, beyond just traffic.

This requires us to refine operations, tailor solutions to different industries, and build more competitive supply chains. Such investments involve countless merchants across the industry and cannot be achieved overnight. We are prepared for long-term, patient investment. We are pleased to see some results already, such as merchants using the support from our new quality supply project to expand R&D teams and upgrade products, leveraging platform digitalization to differentiate their offerings.

These long-term, structural investments won’t immediately show in short-term financial results but are crucial for the long-term sustainable growth of our platform and e-commerce ecosystem. We will steadily implement these investments, reinvesting in the ecosystem, reducing merchant costs, improving supply chain quality, and enhancing consumer experience. Through the core supply chain, we aim to rebuild the platform and drive ecosystem value leapfrogging.

Regarding your second question, we are very pleased to see the continuous improvement of the consumer market. However, under intense competition, we also recognize challenges. The future performance of e-commerce platforms will increasingly depend on how much incremental value they can generate for the entire supply chain, rather than just traffic acquisition and distribution.

Therefore, at this critical moment, we have made firm decisions to deeply invest in supply chains and various product categories. Our merchant development teams will work closely with sellers, providing industry-specific solutions based on insights, to help merchants achieve high-quality transformation and development.

We believe these investments are essential for advancing e-commerce supply chains to the next stage of high-quality growth. We will continue this long-term effort. Thank you. (End)