BEIJING, August 31 (TMTPost)— PDD Holdings Inc., China’s leading e-commerce platform that changed from the name Pinduoduo in February, surprised the Wall Street with another strong sales and earnings, highlighting the attraction of low-price strategy and promotions amid macroeconomic headwinds.

Credit：Visual China

PDD beat the market expectation at the top and bottom line in the quarter ended June 30. Revenue that quarter rose a better-than-expected 66% year-over-year (YoY) to RMB52.28 billion (US$7.2 billion), versus the analysts’ forecast of RMB43.28 billion. The growth of revenue, stronger than a yearly increase 58% in the previous quarter, was the fastest among the major U.S.-listed Chinese internet companies. Alibaba, China’s No.1 e-commerce company, posted a 14% YoY increase in revenue in the second quarter, and JD.com had a growth of 7.6% the same period. Net income in the second quarter increased 47% YoY to RMB13.1 billion, much better than the estimated RMB8.6 billion.

PDD said the sales were primarily driven by an increase in revenues from online marketing services and transaction services. Revenue from online marketing services and others jumped 50% YoY to RMB37.93 billion in the June quarter, and transaction services generated RMB14.35 billion, up 131% from a year earlier. “In Q2, we seized the opportunities of favorable consumption trends and invested firmly and responsibly,” said Liu Jun, Vice President (VP) of Finance at PDD. “Looking ahead, we will continue to invest with determination and patience to execute our high-quality development strategy.”

PDD observed a continued improvement in consumer sentiment in the past quarter, resulting in increasing consumer demand across multiple product categories, the Chairman and Co-Chief Executive Officer (Co-CEO) Chen Lei told analysts at an earnings conference right after the financial report. Chen noted various promotional initiatives also propped up the demand in the second quarter, such as the promotions and discount coupons offered in 618 shopping festival.

Chen stressed the recent quarterly performance justified strategy of high-quality development, on which PDD mainly focused from the beginning of this year. Chen believes the highlight in the second quarter resulted from two factors: one is the positive industry trends; another is early positive feedback towards PDD’s high-quality development strategy. PPD saw a continued improvement in market trends and also increasing consumers’ willingness to purchase, which are inseparable from various pro-consumption support measures, Chen said. He took 618 as an instance. In that event, PDD ramped up promotions and invested billions in coupons to give back to consumers, accordingly helped stimulate demand for all merchandise categories. Calling the high-quality development a long-term strategy, Chen said PDD does not prioritize growth over a single quarter, and expects the platform would achieve sustainable and high-quality development if it better serves consumer needs with improved services and better savings, while building its robust ecosystem.

As to the increasing promotion competition and competitors that pursue low pricing, PDD Co-CEO Zhao Jiazhen commented healthy competition with the consumer-centric goals can benefit the industry, including not only consumers but also the platforms. He said the key to adapt to the rapid changes of the e-commerce industry is not to focus on what competitors are doing, but to stay focused on consumer demand, improve the platform’s skills and deal with competition. Therefore, PPD will channel competitive pressure into new motivation to strengthen its core competencies and focus on implementing the high-quality development strategy.

Asking a question about the latest progress of Temu and its overall strategy, Liu Jun said PDD does not focus on any financial metrics since the online marketplace overseas is at a learning stage currently. The Temu team now focuses on understanding and embracing different cultural preferences, social environments, and consumer demand in different markets with the aim of creating more unique value, Liu said. PDD will carefully evaluate the investment opportunity and make responsible capital allocation decisions, as it continues to understand and explore the consumer demand in different markets, according to the executive.