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BEIJING, November 28 (TMTPOST)— Chinese e-commerce giant Pinduoduo posted much-better-than expected results in the past quarter, highlighting its overwhelming rapid growth as the Covid-19 restrictions boost online sales.

Source: Visual China

During the quarter ended September 30, Pinduoduo’s total revenue increased 65% year-over-year (YoY) to RMB35.504 billion (US$4.99 billion), beating the analysts’ projection of RMB30.937 billion. Net income attributable to ordinary shareholders in the quarter was RMB10.589 million (US$1,488.5 million) with a YoY increase of 546%, well above the estimates of RMB5.636 billion. Adjusted earnings per American depositary share (ADS) rose from the same quarter of last year’s RMB 2.18 to RMB8.62, compared with the market expected RMB4.75.

The profits booked in the third quarter was accidental, mainly due to the delay of multiple projects, and such profit level is unsustainable since the data in a quarter alone failed to fully reflect the actual operation, Pinduoduo management explained to analysts in an earnings call on Monday following the financial results. It is not recommended to use the quarterly earnings as a reference to to the company’s future profit, the executives added. “Investment in certain projects was affected in the third quarter,” said Ms. Jun Liu, Vice president of Finance. “We will continue to step up our investment in R&D and create long-term value through innovations.”

However, key measurements of business showed Pinduoduo did have unexpectedly robust growth in the quarter. Revenue from online marketing services and others, the company’s core business surged 58% YoY to RMB28.43 billion, suggesting a fourth straight quarter-over-quarter increase rather the analysts’ estimated slowdown. Transaction services including commission fees Pinduoduo charge marchants and DuoduoMaicai, the grocery delivery arm, generated RMB7.02 billion with a 102% YoY growth, beating the expected RMB6.5 billion. The company posted gross profit of RMB28.1 billion with the gross margin of 79%, up 4.4 points from the previous quarter, while the market projected gross profit down to RMB22.5 billion. The third quarter saw Pinduoduo’s operating profit set a new high to RMB10.4 billion, a strong beat compared with the market forecast of RMB5.7 billion, even its marketing expenses of RMB 14.05 billion increased about 40% YoY.

The U.S.-listed Pinduoduo shares settled about 12.6% higher to US$74.05 Monday, outperforming the market with the highest close in a year.