By CHENG Lu

Pinduoduo’s Q3 revenue was up 65 percent year over year at 35.5 billion yuan (US$5 billion). Operating profit increased nearly fivefold from the same period last year to 10.4 billion yuan.

Shares jumped 16 percent before opening on Monday. The market is evidently impressed given the general malaise of China’s big tech, which has been reckoning with slowing consumer spending. Alibaba and JD.com’s revenues were down by 7 percent and 13 percent last quarter. Douyin is still trying to carve out an e-commerce market share.

The increase in sales was mainly driven by ad revenue and fees, which were up by 58 percent and 102 percent respectively. Merchandise sales, on the other hand, fell by 31 percent.

Pinduoduo did not include GMV in the quarterly report. When asked about the breakdown between fees and merchandise sales during the earnings call, Vice President LIU Jun didn’t address the question, saying that “as consumer activities and engagement grow, we think the merchants are actually coming to our platform for growth and opportunities.”

Pinduoduo spent 40 percent more on marketing and 11 percent more on R&D last quarter. Wages and other administrative costs ballooned 171 percent. Total operating expenses increased by 38 percent to 17.7 billion yuan. In the rest of the industry, cost-cutting is the name of the game and has been all year. Alibaba, for example, trimmed marketing expenses by 22 percent last quarter.

CEO CHEN Lei said, “We need to step up our investment in technology and innovation to further improve the overall supply chain efficiency.”

The company posted 10.4 billion yuan of operating profit, almost five times more than Q3 last year. Liu said it was partly due to bookkeeping, and may be a one-off.

Temu, Pinduoduo’s North American site was launched in September. Pinduoduo hopes to replicate its domestic success by flooding the US market with cheap goods, and has been following the same strategy as at home, i.e. discounts, free shipping, and advertising. The platform now boasts 1.5 million yuan of daily GMV.

Chen said in the earnings call that the overseas business has yet to show on overall financials. He cautioned about “many differences across different markets” and urged patience.

Pinduoduo has enough cash to fund its overseas endeavor. It reported 138 billion yuan in cash and short-term investments as of Q3.