China's Pinduoduo posts first quarterly profit

·2-min read
FILE PHOTO: Illustration photo of the Pinduoduo logo

(Reuters) -Chinese e-commerce platform Pinduoduo Inc reported its first ever quarterly profit on Tuesday as shoppers stayed online despite the easing of pandemic lockdowns but the company warned it could be a one-off.

Pinduoduo, which has the biggest e-commerce user base in China, said its profitability going forward was likely to be affected both by intensifying competition and investment in an agricultural sector initiative it launched on Tuesday.

Since being founded in 2015, the Nasdaq-listed company has become a competitive player in China's booming e-commerce space through an approach that melds social media with online shopping to offer attractive discounts.

In the three months to June 30, it reported net income attributable to ordinary shareholders of 2.41 billion yuan ($372 million) compared with a net loss of 899.3 million yuan a year ago and revenue of 23.05 billion yuan.

Pinduoduo shares jumped 14% when the market opened.

Pinduoduo's profitability has helped comfort investors at a time of heightened scrutiny by China of domestic tech firms on concerns over data privacy and anti-competitive behaviour. Its shares have more than halved in value since February.

"We do not expect profitability to continue," Tony Ma, vice president of finance, told analysts on an earnings call. "We do not think this quarter's profitability should be an indicator, or reference for our future investment in user mind-share and agri-focused infrastructure."

Chairman and Chief Executive Chen Lei said he expected the competition in China's e-commerce sector which was already "extremely dynamic and vibrant" to intensify.

"We are seeing more platforms entering the e-commerce space, so competition is increasing, and will continue to increase," Chen said.

The company said it was launching an initiative worth 10 billion yuan to address needs in the agricultural sector and rural areas and profits from the second quarter and future quarters would be allocated to the initiative, "until the total 10 billion yuan commitment is fulfilled".

($1 = 6.4766 Chinese yuan renminbi)

(Reporting by Sophie Yu in Beijing; Chavi Mehta in Bengaluru; Editing by Ramakrishnan M. and David Clarke)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting