[caption id="attachment_88792" align="aligncenter" width="720"] Source: Company reports/Coresight Research[/caption]   1Q19 Results Pinduoduo reported revenues of ¥4.5 billion for the first quarter, ended March 31, 2019, beating the consensus estimate of ¥4.1 billion and up 228% year over year. Revenue growth was primarily driven by online marketing services as merchants increased marketing spend on the platforms. 1Q19 revenues were broken down as follows:

• Online marketing services were ¥3.9 billion, up 256% year over year.
• Transaction services were ¥596.8 million, up 116% year over year.

In the quarter, the gross margin grew 380 basis points to 80.8% year over year while the operating margin worsened to (46.7)% from (18.3)% in the same quarter a year ago. Non-GAAP diluted loss per share was ¥1.64, beating the consensus estimate of ¥1.73 loss per share. Operating expenses in the quarter amounted to ¥5.8 billion, up 339% year over year:

• Sales and marketing expenses were ¥4.9 billion, up 302% year over year due to higher spending on advertising, promotions and branding campaigns.
• General and administrative expenses were ¥236.1 million, up 720% year over year due to increased expenses in headcount and share-based compensation.
• Research and development expenses were ¥667.1 million, up 816% year over year due to increased spending on recruitment of R&D personnel and R&D-related cloud services.

Performance of key operations metrics:

• GMV for the 12 months ended March 31, 2019 was ¥557.4 billion, up 181% year over year.
• Active buyers for the 12 months ended March 31, 2019 were 443.3 million, up 50% year over year.
• Annual spending per active buyer for the 12 months ended March 31, 2019 was ¥1,257.3, up 87% year over year.
• Average monthly active users in the quarter were 289.7 million, up 74% year over year.

Outlook The company did not provide guidance for 2Q19. The consensus estimates for revenues and non-GAAP diluted EPS in 2Q19 are ¥5.5 billion and a loss of ¥1.05 per share, according to Bloomberg.