(Reuters) -Chinese e-commerce platform Pinduoduo Inc on Friday reported better-than-expected quarterly revenue, as more people shopped online due to a resurgence in COVID-19 cases in parts of the country.
U.S.-listed shares of the Shanghai-based company rose by nearly 10% at one point in pre-market trade ahead of Wall Street’s opening bell.
However, the firm warned that its growth rate might slow due to adjustments to its business strategy that are underway.
“We have been going through an adjustment of our development strategy to focus more on technology and agriculture in order to pursue long-term, high-quality growth,” said Chen Lei, chairman and chief executive of Pinduoduo, on a call with analysts.
“It will take time to bear fruit… in the process, our growth rate might be affected.”
As China fights its worst coronavirus outbreak since March, its uncompromising “zero-COVID” policy has placed hundreds of millions of people under strict lockdown.
Government enforced control measures continued to disrupt logistics in China in April, hurting e-commerce sellers’ ability to deliver purchases.
“While the situation seemed to have stabilised in April, we believe Pinduoduo’s gross merchandise value growth recovery will be subject to China’s COVID-19 control policies,” said a research report by investment bank China Renaissance earlier this month.
Pinduoduo’s business model allowing buyers to benefit from greater discounts when they purchase products in groups has helped it to attract consumers with less disposable income, especially in lower-tier cities, and challenge rivals including Alibaba and JD.com.
Total revenue rose 7% to 23.79 billion yuan ($3.55 billion) in the first quarter, compared with estimates of 20.61 billion yuan, according to IBES data from Refinitiv.
The company‘s net income attributable to ordinary shareholders was 2.6 billion yuan during the quarter ended March 31, compared with a loss of 2.91 billion yuan a year ago.
On an adjusted basis, the interactive e-commerce platform earned 2.95 yuan per share, compared to Wall Street estimates of 1.68 yuan per share, according to Refinitiv IBES data.
($1 = 6.7060 Chinese yuan renminbi)
(Reporting by Tiyashi Datta in Bengaluru; Sophie Yu in Beijing; Editing by Kirsten Donovan)
