Summary of PDD Holdings Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: RMB 112.4 billion, up 8% year-over-year.

Net Income: RMB 27.2 billion, down 12% year-over-year.

Earnings per ADS: Basic earnings of RMB 19.32 and diluted earnings of RMB 18.45, compared to RMB 22.01 and RMB 20.75 in Q2 2025.

Operating Profit: RMB 27.8 billion (GAAP), up 8% year-over-year; Non-GAAP operating profit was RMB 29.1 billion.

Cash Position: RMB 456.4 billion in cash, cash equivalents, and short-term investments.

R&D Expenses: Increased by 40% year-over-year to RMB 4.3 billion.

2Strategic Updates and Business Highlights

The company is transitioning to a "new decade of high-quality development," focusing on supply chain transformation and building a second PDD over the next three years.

The CNY 100 billion support program is yielding results, enhancing platform governance and merchant support, leading to improved product quality and efficiency.

Initiatives such as the "Pinduoduo Premium" program are helping agricultural regions develop new products and improve logistics.

Investments in logistics, particularly through the "free shipping to villages" program, are expanding last-mile delivery networks and improving access to rural consumers.

A dedicated company was established in the Xiong'an New Area to explore opportunities in intelligent technologies.

3Forward Guidance and Outlook

The management expressed confidence in the long-term growth potential of China's consumer market and e-commerce industry, despite current challenges.

The company aims to continue strengthening its supply chain capabilities and platform governance to enhance consumer experience and merchant operations.

Future growth will be driven by addressing supply chain bottlenecks and enhancing the merchant ecosystem, which is expected to lead to increased advertising spending by merchants.

4Bad News, Challenges, or Points of Concern

Declining Net Income: The 12% year-over-year decline in net income reflects ongoing investments that are weighing on short-term profitability.

Intense Competition: The e-commerce industry remains highly competitive, presenting challenges in platform governance and market dynamics.

Regulatory Changes: New EU customs duties on low-value cross-border consignments may impact order volumes and fulfillment efficiency in affected markets.

Slow Rollout of First-Party Brand Model: The initial rollout of the first-party brand initiative has been slower than expected, raising concerns about its long-term impact on the business.

5Notable Q&A Insights

Global Business Strategy: Management acknowledged the impact of regulatory changes on cross-border orders but emphasized a commitment to enhancing supply chain and compliance capabilities.

First-Party Brand Business: Management reiterated that the first-party brand initiative is a long-term strategic priority, focusing on core product categories and collaboration with manufacturers.

Investment in Logistics: The company is prioritizing investments in logistics to improve last-mile delivery, particularly in rural areas, while also exploring local warehousing to enhance fulfillment efficiency.

Consumer Spending Outlook: Management remains optimistic about consumer spending growth, particularly in rural areas, and believes that improvements in the merchant ecosystem will drive sustainable growth in platform revenue. Overall, PDD Holdings is navigating a complex market landscape with strategic investments aimed at long-term growth, despite facing challenges such as declining net income and regulatory pressures.