PDD Holdings Q3 2025 Performance Report
PDD Holdings, the parent company of e-commerce platforms Temu and Pinduoduo, has released its Q3 2025 earnings report, revealing a mixed bag of performance metrics. The company reported a 9% increase in revenue compared to the same quarter last year, amounting to RMB 108.3 billion ($15.2 billion). However, this figure fell slightly below analysts’ expectations of RMB 109.3 billion, impacting investor sentiment.
Breaking Down the Numbers
Despite the revenue miss, the company’s profitability shone through. Net income attributable to shareholders rose 17% year-over-year to RMB 29.3 billion ($4.1 billion), driven by strong operational efficiency. Furthermore, earnings per American Depositary Share (ADS) reached 21.08 yuan, significantly surpassing the forecast of 16.59 yuan.
Revenue Composition
- Online Marketing Services: RMB 53.3 billion, up 8% year-over-year.
- Transaction Services: RMB 54.9 billion, marking a 10% increase.
However, the rising costs associated with fulfillment fees, payment processing, and server infrastructure led to an 18% increase in total cost of revenue, which now stands at RMB 46.8 billion. Additionally, research and development spending surged 41% to RMB 4.3 billion, reflecting the company’s commitment to technological innovation.
Competitive Landscape
As PDD Holdings celebrates its 10th anniversary, Chairman and Co-CEO Lei Chen highlighted the company’s mission of creating a platform benefiting all stakeholders. However, the company’s core platform, Pinduoduo, continues to face pressure due to increased competition from domestic rivals like Alibaba and JD.com. Internationally, Temu is adjusting its operations in light of new U.S. tariff regulations and competitive pressures in global markets.
The recent quarter did mark progress in revenue growth stabilization, improving from 7% in Q2 to 9% in Q3. Nevertheless, this growth remains a far cry from the company’s historical highs, such as the 86% growth seen in Q2 2024 driven by Temu’s explosive expansion.
Market Response
Despite beating earnings expectations, PDD Holdings’ stock dropped 3.6% in premarket trading to $124.37. The dip reflects investor concerns over the revenue miss and broader headwinds, including weak Chinese consumer spending and a competitive e-commerce landscape.
Looking Ahead
VP of Finance Jun Liu acknowledged the evolving challenges, stating, “In the third quarter, revenue growth continued to moderate, reflecting the transition in the competitive landscape and external uncertainties.” PDD Holdings plans to counter these challenges by investing further in merchant support and platform development. However, the company has warned of potential financial fluctuations as it implements these initiatives.
Recommendation for Pinduoduo Users
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Conclusion
PDD Holdings has demonstrated resilience through its robust profitability and investments in innovation. However, navigating competitive pressures and evolving global markets remains a challenge. With strategic investments and careful planning, the company aims to maintain growth and adapt to the changing e-commerce landscape.
