PDD Holdings Reports Q2 Revenue Exceeding Market Estimates Despite Lower Profit

PDD Holdings, operator of Pinduoduo in China and Temu internationally, reported Q2 revenue that exceeded market estimates, despite a decline in net profit due to investments to counter growing competition. The company's stock rose 0.3% in pre-market trading. The Chinese government has been trying to boost domestic consumption to revive the economy, which has faced various pressures, including a weak real estate sector and US President Donald Trump's trade policies. To attract customers, major e-commerce firms, including Pinduoduo, JD.com, and Alibaba, have resorted to discounts and promotions, leading to a price war.

PDD Holdings, the operator of Pinduoduo in China and Temu internationally, reported its second-quarter earnings today. The company's revenue exceeded market estimates, rising 7% to 103.98 billion renminbi [1]. However, net profit fell year-over-year to 22.07 renminbi per American depositary share, missing analyst expectations of 15.53 renminbi [1].

The decline in net profit can be attributed to significant investments in merchant support measures, including a 100 billion renminbi program [1]. PDD's co-Chief Executive Lei Chen noted that these investments are crucial for long-term value creation, despite the short-term impact on profitability [1].

The company's revenue growth was moderated by intense competition in the market. PDD's stock rose 0.3% in pre-market trading following the announcement [1].

The Chinese government has been trying to boost domestic consumption to revive the economy, which has faced various pressures, including a weak real estate sector and US President Donald Trump's trade policies [2]. To attract customers, major e-commerce firms, including Pinduoduo, JD.com, and Alibaba, have resorted to discounts and promotions, leading to a price war [2].

PDD's revenue from online marketing services grew 13% year on year to 55.7 billion renminbi, while transaction services revenue increased to 48.28 billion renminbi [1]. Total operating expenses rose 5%, according to the company [1].

The company's focus remains on investing for the long term, such as strengthening the ecosystem, driving value chain upgrade, and delivering tangible benefits to consumers [1].

References:
[1] https://finance.yahoo.com/news/pdd-quarterly-earnings-fall-amid-143734488.html
[2] https://www.financialexpress.com/world-news/adani-reliance-quietly-hunt-for-chinese-tech-as-trump-tariff-war-reshapes-global-supply-chains-report/3950602/