Discount e-commerce giant PDD beats quarterly revenue estimates as Temu shines

Discount e-commerce giant PDD Holdings beat estimates for fourth-quarter revenue, driven by robust user growth and sales at its global platform Temu.

PDD on Wednesday reported revenue of 88.88 billion yuan (US$12.35 billion) for the three months to December 31, compared with an average analyst estimate of 79.23 billion yuan.

The last quarter’s year-on-year revenue growth of 123 per cent follows a 94 per cent increase in the third quarter, with both comparable periods in 2022 impacted by China’s strict pandemic controls.

PDD has been gaining market share with highly competitive pricing on its Pinduoduo platform in China and overseas with Temu as cost-conscious customers continue to spend conservatively amid economic headwinds.

Temu, which sells US$4 home decor items and US$10 T-shirts in the US and other major European, Middle Eastern and Asian markets, has also benefited from marketing promotions to pull customers from rivals such as Dollar Tree and other bricks-and-mortar retailers.

Temu, which launched in September 2022, is now operating in 51 global markets. However, its expansion has been costly, with PDD’s sales and marketing expenses growing 50 per cent on the year to 26.64 billion yuan.

PDD overtook Alibaba Group Holding in December last year to become the most valuable Chinese e-commerce company by market capitalisation. Alibaba owns the Post.

The US-listed shares of PDD were up about 13 per cent at US$145 in pre-market trading on Wednesday.