- Total Revenue: RMB97.1 billion, up 86% year-over-year.
- Revenue from Online Marketing Services: RMB49.1 billion, up 29% year-over-year.
- Revenue from Transaction Services: RMB47.9 billion, up 234% year-over-year.
- Total Cost of Revenues: RMB33.7 billion, up 80% year-over-year.
- Total Operating Expenses (GAAP): RMB30.8 billion, up 48% year-over-year.
- Non-GAAP Operating Expenses as a Percentage of Total Revenue: 29%, down from 36% year-over-year.
- Non-GAAP Sales and Marketing Expenses: RMB25.4 billion, up 54% year-over-year.
- Non-GAAP General and Administrative Expenses: RMB594 million, up from RMB370 million year-over-year.
- Non-GAAP Research and Development Expenses: RMB2.4 billion, up 15% year-over-year.
- Operating Profit (GAAP): RMB32.6 billion, up from RMB12.7 billion year-over-year.
- Non-GAAP Operating Profit: RMB35 billion, up from RMB14.6 billion year-over-year.
- Non-GAAP Operating Profit Margin: 36%, up from 28% year-over-year.
- Net Income Attributable to Ordinary Shareholders: RMB32 billion, up from RMB13.1 billion year-over-year.
- Diluted Earnings per ADS (GAAP): RMB23.14, up from RMB9.64 year-over-year.
- Non-GAAP Net Income Attributable to Ordinary Shareholders: RMB34.4 billion, up from RMB15.3 billion year-over-year.
- Non-GAAP Diluted Earnings per ADS: RMB23.24, up from RMB10.47 year-over-year.
- Net Cash Generated from Operating Activities: RMB43.8 billion, up from RMB23.4 billion year-over-year.
- Cash, Cash Equivalents, and Short-term Investments: RMB284.9 billion as of June 30, 2024.
Release Date: August 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenues reached RMB97 billion, representing an 86% year-on-year increase.
- Significant growth in revenues from transaction services, up 234% from the same quarter last year.
- Continued focus on high-quality development strategy, leading to improved consumer experience and services.
- Strong support for high-quality merchants, including significant transaction fee reductions.
- Investment in agricultural initiatives and digital capabilities to support small- and medium-sized businesses.
Negative Points
- Intensifying competition and uncertainties in the global environment are expected to impact profitability.
- Management anticipates a gradual downward trend in profitability due to increased investments.
- High revenue growth is not sustainable, with a noted slowdown in top-line growth.
- Increased operating expenses, up 48% year-over-year, driven by fulfillment and payment processing fees.
- Significant uncertainty in the global business due to external factors and intense competition.
Q & A Highlights
Q: We have seen Duo Duo's profit growth remain robust this quarter. Could management share how you assess the profit plan in the future? Also, does management have any plan for share buyback or dividend payout?
A: (Lei Chen, Chairman and Co-CEO) Profit growth in the past few quarters should not be used as long-term guidance. Our business is facing intense competition and shifting external factors, which will bring fluctuations and slow down top-line growth. We are entering a new phase of high-quality development and will invest substantially in the platform's long-term health. Short-term profits will be affected, and we do not see a need for share repurchases or dividends in the foreseeable future.
Q: Management emphasized a lot on the merchant ecosystem and the merchant-supporting policies. Could you please elaborate on how you see the merchant ecosystem and why it will become the focus of the platform in the next stage?
A: (Jiazhen Zhao, Co-CEO) Our platform is a mutually dependent community of merchants, consumers, and our operations teams. Merchants are key partners in serving consumers. Increased competition brings new demands, and we must ensure strict oversight of product quality and fairness for high-quality merchants. We will support merchants with product and technology innovation capabilities and reduce transaction fees significantly. We are committed to long-term investments to create a healthy, sustainable platform ecosystem.
Q: The growth of your global business remains strong, but some external data suggests a slowdown. Is the company trying to manage some risks proactively?
A: (Lei Chen, Chairman and Co-CEO) Our global business is evolving, and we are exploring new opportunities in over 70 markets. We prioritize compliance and have invested significantly in building a safe shopping environment. The external environment is changing rapidly, and competition is intensifying, leading to disruptions. We remain committed to our vision and will focus on improving supply chain, customer services, and compliance to achieve high-quality development globally.
Q: The overall competitive environment is quite intense. Has it impacted the company's growth, and how will the company adjust its investment priorities?
A: (Jiazhen Zhao, Co-CEO) Competition has been intensifying, which is natural in the e-commerce sector. Our revenue growth may slow down, as seen in the second quarter. We need to focus on our core strengths and continue on our path to high-quality development. A robust supply chain is essential, and we will support high-quality merchants and manufacturers through digitalization and innovation. We are committed to long-term investments to optimize and upgrade the supply chain.
Q: Could you provide more details on the company's financial performance for the second quarter?
A: (Jun Liu, VP of Finance) Total revenues increased 86% year over year to RMB97.1 billion, driven by online marketing and transaction services. Operating expenses increased 48% to RMB30.8 billion. Non-GAAP operating profit was RMB35 billion, with a margin of 36%. Net income attributable to ordinary shareholders was RMB32 billion. We will reinvest firmly to support a healthy ecosystem, and profitability may fluctuate in the short term but will trend lower in the long run.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
