PDD Holdings misses Q2 revenue estimates as EU duties, competition bite

PDD Holdings (NASDAQ: PDD) reported Q2 revenue of RMB 112.4 billion ($16.6 billion), missing estimates of RMB 116.35 billion as EU duties and competition weighed.

"We feel a strong sense of responsibility that comes with our unique position in global trade," Lei Chen, Co-Chairman and Co-CEO of PDD Holdings, said.

Revenue from transaction services rose 13% to RMB 54.7 billion, while online marketing services grew to RMB 57.6 billion from RMB 55.7 billion. Net income fell 12% to RMB 27.2 billion ($4.0 billion), with non-GAAP net income down 13% to RMB 28.5 billion. Diluted earnings per ADS was RMB 18.45 ($2.72), compared with RMB 20.75 a year earlier.

Metric	Actual	Consensus	Beat/Miss
Revenue	RMB 112.4B	RMB 116.35B	-3.4%
Diluted EPS	RMB 18.45	Not disclosed	—

The miss reflects stepped-up investment in the company's RMB 100 billion merchant support program and new EU customs duties on low-value cross-border parcels that took effect in July. Management said cross-border orders face lower fulfillment efficiency and higher costs in the short term, while the company accelerates local warehousing and fulfillment build-out.

Total operating expenses rose 13% to RMB 36.6 billion, driven by higher sales and marketing spending. Research and development expenses increased to RMB 4.6 billion from RMB 3.6 billion. Operating profit grew 8% to RMB 27.8 billion, while non-GAAP operating profit rose 5% to RMB 29.1 billion.

Co-CEO Jiazhen Zhao said the RMB 100 billion support program is beginning to yield results, with merchants in industrial belts cutting production cycles by half and improving fulfillment capabilities. The program has expanded to agricultural regions and manufacturing clusters, including home textiles in Suzhou, outdoor products in Jinhua and cosmetics in Guangzhou. The company's Free Shipping to Villages initiative has established last-mile delivery networks across more than 10 provinces.

Cash, cash equivalents and short-term investments stood at RMB 456.4 billion ($67.3 billion) as of June 30, up from RMB 422.3 billion at year-end 2025. Net cash from operating activities was RMB 25.7 billion, compared with RMB 21.6 billion a year earlier.

Zhao also said the first-party brand model rollout was slower than expected due to external factors but remains a long-term strategic priority. The company has established a dedicated entity in the Tsing'an New Area to pursue supply chain transformation and intelligent technology opportunities.

The company competes with Alibaba Group and JD.com in China and faces intensifying price competition from Shein and other cross-border platforms in overseas markets. Management did not provide formal revenue guidance for the second half.

The revenue miss and margin compression show that PDD's investment cycle is far from over, with the company prioritizing ecosystem health over near-term profitability. Investors will watch the impact of EU tariff changes on Temu's cross-border volumes in the Q3 earnings report, expected in November.

This article is for informational purposes only and does not constitute investment advice.