PDD Holdings Reports Q2 2025 Profit Decline Amid Increased Investments

PDD Holdings (PDD.US) reported second-quarter 2025 non-GAAP net income attributable to ordinary shareholders of RMB32,708.4 million (US$4,565.9 million), a 5% decrease from RMB34,432.1 million in the same quarter of 2024. Total revenues reached RMB103,984.8 million (US$14,515.7 million), marking a 7% increase from RMB97,059.5 million in the prior year quarter. The non-GAAP diluted earnings per ADS of US$3.08 exceeded the analyst estimate of US$1.91, while total revenues exceeded the analyst estimate of RMB103,195.9 million in Q2 2025.

Revenue Growth Drivers

The 7% increase in total revenues was primarily driven by growth in online marketing services and transaction services. Revenues from online marketing services and others increased by 13% to RMB55,703.2 million (US$7,775.9 million) from RMB49,115.9 million in the same quarter of 2024. Revenues from transaction services also saw an increase, reaching RMB48,281.6 million (US$6,739.9 million) compared to RMB47,943.7 million in the same quarter of 2024.

Operational Performance and Costs

Total costs of revenues significantly increased by 36% to RMB45,858.9 million (US$6,401.7 million) from RMB33,698.1 million in Q2 2024. This rise was mainly attributed to increased fulfillment fees, bandwidth and server costs, and payment processing fees. Total operating expenses also increased by 5% to RMB32,333.0 million (US$4,513.5 million), primarily due to higher sales and marketing expenses.

Management Commentary

Management highlighted continued investment in merchant support initiatives to foster a healthier and more sustainable platform ecosystem. Mr. Lei Chen, Chairman and Co-Chief Executive Officer, emphasized prioritizing long-term impact over short-term results. Mr. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer, expressed enthusiasm for opportunities to drive efficiencies for merchants.

Ms. Jun Liu, VP of Finance, noted that revenue growth moderated amid intense competition. She also indicated that sustained investments might continue to impact short-term profitability. Net cash generated from operating activities decreased to RMB21,641.7 million (US$3,021.1 million) from RMB43,792.6 million in the same quarter of 2024, mainly due to a decrease in net income and changes in working capital.