Pinduoduo Announces First Quarter 2019 Unaudited Financial ResultsMay 20, 2019SHANGHAI, China, May 20, 2019 (GLOBE NEWSWIRE) - Pinduoduo Inc. (“Pinduoduo“ or the “Company“) (NASDAQ: PDD), an innovative and fastgrowing “new e-commerce” platform and one of the leading Chinese e-commerce players, today announced its unaudited financial results for the firstquarter ended March 31, 2019.First Quarter 2019 HighlightsGMV1in the twelve-month period ended March 31, 2019 was RMB557.4 billion (US$2 83.1 billion), an increase of 181%from RMB198.7 billion in the twelve-month period ended March 31, 2018.Total revenues in the quarter were RMB4,545.2 million (US$677.3 million), an increase of 228% from RMB1,384.6 millionin the same quarter of 2018.Average monthly active users3 in the quarter were 289.7 million, an increase of 74% from 166.2 million in the samequarter of 2018.Active buyers4 in the twelve-month period ended March 31, 2019 were 443.3 million, an increase of 50% from 294.9million in the twelve-month period ended March 31, 2018.Annual spending per active buyer5 in the twelve-month period ended March 31, 2019 was RMB1,257.3(US$187.3), anincrease of 87% from RMB673.9 in the twelve-month period ended March 31, 2018.“We kicked off 2019 with a strong quarter thanks to the continued support of our users,” said Mr. Zheng Huang, Chairman and Chief Executive Officerof Pinduoduo. “GMV in the last twelve months increased to RMB557.4 billion, driven by the rapid growth in our annual active buyer base and annualspending per active buyer. These metrics reflect our success in increasing user engagement and improving user experience. We will continue to investstrategically in our users and merchants in 2019 and drive greater engagement with more practical functions and fun features.”“In the first quarter of 2019, our revenue increased by 228% year-over-year to RMB4,545.2 million,” added Mr. Huang. “This was driven primarily by anincrease in our online marketing services revenues. The increase in marketing spend by our merchants is an endorsement of the value that ourplatform offers. As our users shopping experience improves on our platform, they transact more frequently and confidently, which translates to greaterexposure and return on investments for our merchants. We are still very early in monetizing our platform and will continue to be mindful of balancingmonetization and growth.”First Quarter 2019 Unaudited Financial ResultsTotal revenues were RMB4,545.2 million (US$677.3 million), an increase of 228% from RMB1,384.6 million in the same quarter of 2018. Theincrease was primarily due to an increase in revenues from online marketing services.Revenues from online marketing services were RMB3,948.4 million (US$588.3 million), an increase of 256% fromRMB1,108.1 million in the same quarter of 2018.Revenues from transaction services were RMB596.8 million (US$88.9 million), an increase of 116% from RMB276.5million in the same quarter of 2018.Total costs of revenues were RMB873.3 million (US$130.1 million), an increase of 174% from RMB318.7 million in the same quarter of 2018. Theincrease was mainly due to higher costs for cloud services, call center and merchant support services, partially offset by a payment rebate ofRMB339.2 million from Tencent.Total operating expenses were RMB5,792.4 million (US$863.1 million), compared with RMB1,319.0 million in the same quarter of 2018.Sales and marketing expenses were RMB4,889.3 million (US$728.5 million), an increase of 302% from RMB1,217.5million in the same quarter of 2018, mainly due to an increase in online and offline advertisement and promotions andbranding campaigns.General and administrative expenses were RMB236.1 million (US$35.2 million), a significant increase from RMB28.8million in the same quarter of 2018, primarily due to an increase in headcount and share-based compensation expenses.Research and development expenses were RMB667.1 million (US$99.4 million), an increase of 816% from RMB72.8million in the same quarter of 2018. The increase was primarily due to an increase in headcount and the recruitment ofmore experienced R its future business development, results of operations and financial condition; its ability to understand buyer needs and provide productsand services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchantsand third-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies andmeasures; its ability to establish and maintain relationships with merchants; trends and competition in Chinas e-commerce market; changes in itsrevenues and certain cost or expense items; the expected growth of Chinas e-commerce market; PRC governmental policies and regulations relatingto Pinduoduos industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of theforegoing. Further information regarding these and other risks is included in Pinduoduos filings with the SEC. All information provided in this pressrelease and in the attachments is as of the date of this press release, and Pinduoduo undertakes no obligation to update any forward-lookingstatement, except as required under applicable law.About Pinduoduo Inc.Pinduoduo is an innovative and fast growing “new e-commerce” platform that provides buyers with value-for-money merchandise and fun andinteractive shopping experiences. The Pinduoduo mobile platform offers a comprehensive selection of attractively priced merchandise, featuring adynamic social shopping experience that leverages social networks as an effective and efficient tool for buyer acquisition and engagement.For more information, please visit investor.pinduoduo/For investor and media inquiries, please contact:Pinduoduo Inc.investorpinduoduointernationalmediapinduoduoChristensenIn ChinaMr. Christian ArnellPhone: +86-10-5900-1548E-mail: carnellchristensenirIn U.S.Ms. Linda BergkampPhone: +1-480-614-3004Email: lbergkampchristensenirPINDUODUO INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)As of December31,2018 March 31, 2019 RMB RMB US$ (Audited) (Unaudited) ASSETS Current Assets Cash and cash equivalents 14,160,322 22,501,691 3,352,857 Restricted cash 16,379,364 14,717,548 2,192,983 Receivables from online payment platforms 247,586 317,20947,266 Short-term investments 7,630,689 6,919,548 1,031,045 Amounts due from related parties 1,019,033 1,081,936 161,213 Prepayments and other current assets 953,989 1,268,842 189,064 Total current assets 40,390,983 46,806,774 6,974,428 Non-current assets Property and equipment, net 29,075 36,089 5,377 Intangible asset 2,579,338 2,381,247 354,817 Right-of-use assets9 - 218,836 32,608 Other non-current assets 182,667 340,819 50,784 Total non-current assets 2,791,080 2,976,991 443,586 Total Assets 43,182,063 49,783,765 7,418,014 PINDUODUO INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)As ofDecember31,2018 March 31, 2019RMB RMB US$(Audited) (Unaudited)LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Amounts due to related parties 478,113 921,418 137,296 Customer advances 191,482 243,048 36,215 Payable to merchants 17,275,934 15,657,163 2,332,990 Accrued expenses and other liabilities 2,225,667 2,779,172 414,110 Merchant deposits 4,188,273 4,908,578 731,401 Lease liabilities10 - 73,037 10,883 Total current liabilities 24,359,469 24,582,416 3,662,895 Lease liabilities10 - 163,785 24,405 Other non-current liabilities - 8,435 1,257 Total non-current liabilities - 172,220 25,662 Total Liabilities 24,359,469 24,754,636 3,688,557 Shareholders equity Ordinary Shares 142 148 23 Additional paid-in capital 29,114,527 37,606,981 5,603,615 Accumulated other comprehensive income 1,035,783 627,566 93,510 Accumulated deficits (11,327,858) (13,205,566) (1,967,691) Total shareholders equity 18,822,594 25,029,129 3,729,457 Total liabilities and shareholders equity 43,182,063 49,783,765 7,418,014 PINDUODUO INC.CONDENSED CONSOLIDATED STATEMENTS OF LOSS(Amounts in thousands of RMB and US$)For the three months ended March 31,2018 2019 RMB RMB US$(Unaudited) (Unaudited) (Unaudited)Revenues Online marketplace services 1,384,604 4,545,204 677,256 Total Revenues 1,384,604 4,545,204 677,256 Costs of revenues Costs of online marketplace services (318,700) (873,314) (130,128) Total costs of revenues (318,700) (873,314) (130,128) Gross profit 1,065,904 3,671,890 547,128 Sales and marketing expenses (1,217,458) (4,889,255) (728,521) General and administrative expenses (28,761) (236,075) (35,176) Research and development expenses (72,818) (667,081) (99,398) Total operating expenses (1,319,037) (5,792,411) (863,095) Operating loss (253,133) (2,120,521) (315,967) Interest income 50,163 252,102 37,564 Foreign exchange loss (2,136) (1,886) (281) Other income /(loss), net 4,085 (7,403) (1,103) Loss before income tax (201,021) (1,877,708) (279,787) Income tax expenses - - - Net loss (201,021) (1,877,708) (279,787) PINDUODUO INC.CONDENSED CONSOLIDATED STATEMENTS OF LOSS(Amounts in thousands of RMB and US$, except for per share data)For the three months ended March 31,2018 2019 RMB RMB US$(Unaudited) (Unaudited) (Unaudited)Net loss (201,021) (1,877,708) (279,787) Deemed distribution to certain holders of convertible preferred shares (80,496) - - Net loss attributable to ordinary shareholders (281,517) (1,877,708) (279,787) Deficits per share for Class A and Class B ordinary shares: -Basic (0.16) (0.41) (0.06) -Diluted (0.16) (0.41) (0.06) Deficits per ADS (4 ordinary shares equals 1 ADS ): -Basic (0.64) (1.64) (0.24) -Diluted (0.64) (1.64) (0.24) Weighted average number of Class A and Class B ordinary shares outstanding: -Basic 1,758,770 4,559,017 4,559,017 -Diluted 1,758,770 4,559,017 4,559,017 PINDUODUO INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$)For the three months ended March 31, 2018 2019 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Revenues Online marketplace services - Online marketing services 1,108,100 3,948,414 588,332 - Transaction services 276,504 596,790 88,924 Total 1,384,604 4,545,204 677,256 PINDUODUO INC.NOTES TO FINANCIAL INFORMATION(Amounts in thousands of RMB and US$)For the three months ended March 31, 2018 2019 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Share-based compensation costsincluded in: Costs of revenues 300 4,281 638 Sales and marketing expenses 1,202 196,121 29,223 General and administrative expenses 5,027 169,003 25,182 Research and development 7,081 129,227 19,255 Total 13,610 498,632 74,298 PINDUODUO INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands of RMB and US$)For the three months ended March 31,2018 2019 RMB RMB US$(Unaudited) (Unaudited) (Unaudited)Net cash used in operating activities (683,527) (1,543,251) (229,952) Net cash (used in)/provided by investing activities (801,556) 457,473 68,166 Net cash provided by financing activities 5,824,568 7,993,828 1,191,118 Effect of exchange rate changes on cash, cash equivalents and restricted cash (75,799) (228,497) (34,047) Increase in cash, cash equivalents and restricted cash 4,263,686 6,679,553 995,285 Cash, cash equivalents and restricted cash at beginning of period11 12,429,001 30,539,686 4,550,555 Cash, cash equivalents and restricted cash at end of period11 16,692,687 37,219,239 5,545,840 PINDUODUO INC.RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES(Amounts in thousands of RMB and US$, except for per share data)For the three months ended March 31, 2018 2019 RMB RMB US$ (Unaudited) (Unaudited) (Unaudited) Operating Loss (253,133) (2,120,521) (315,967) Add: Share-based compensation 13,610 498,632 74,298 Non- GAAP operating loss (239,523) (1,621,889) (241,669) Net loss attributable to ordinary shareholders (281,517) (1,877,708) (279,787) Add: Share-based compensation 13,610 498,632 74,298 Non- GAAP net loss attributable to ordinary shareholders (267,907) (1,379,076) (205,489) Weighted-average number of ordinary shares outstanding basic and diluted 1,758,770 4,559,017 4,559,017 Non-GAAP basic deficits per share (0.15) (0.30) (0.05) Non-GAAP basic deficits per ADS (0.60) (1.20) (0.20) Non-GAAP diluted deficits per share (0.15) (0.30) (0.05) Non-GAAP diluted deficits per ADS (0.60) (1.20) (0.20) _1 “GMV” refers to the total value of all orders for products and services placed on the Pinduoduo mobile platform, regardless of whether the productsand services are actually sold, delivered or returned. Buyers on the platform are not charged for shipping fees in addition to the listed price ofmerchandise. Hence, merchants may embed the shipping fees in the listed price. If embedded, then the shipping fees are included in GMV. As aprudential matter aimed at eliminating any influence on Pinduoduos GMV of irregular transactions, the Company excludes from its calculation of GMVtransactions over certain amounts (RMB100,000) and transactions by buyers over a certain amount (RMB1,000,000) per day.2 This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience ofthe reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB6.7112 to US$1.00, the noon buying rate in effecton March 31, 2019 as set forth in the H.10 Statistical Release of the Federal Reserve Board.3 “Monthly active users” refers to the number of user accounts that visited the Pinduoduo mobile app during a given month, which does not includethose that accessed the platform through social networks and access points.4 “Active buyers” in a given period refers to the number of user accounts that placed one or more orders (i) on the Pinduoduo mobile app, and(ii) through social networks and access points in that period, regardless of whether the products and services are actually sold, delivered or returned.5 “Annual spending per active buyer” in a given period refers to the quotient of total GMV in that period divided by the number of active buyers in thesame period.6 Non-GAAP