Select Language:
PDD Holdings reported better-than-expected earnings for the second quarter, but the company’s co-CEO warned that the current strong performance may not be sustainable.
In the three months ending June 30, net profit declined 4% to CNY30.8 billion (approximately $4.3 billion), according to the latest earnings report. Using non-GAAP measures, net profit fell 5% to CNY32.7 billion. Revenue increased 7% during this period, reaching CNY104 billion (about $14.5 billion).
Analysts anticipated that non-GAAP net profit and total revenue for the quarter would have reached CNY22.4 billion and CNY103.9 billion, respectively.
The company’s leadership indicated ongoing investments aimed at strengthening merchant support systems and developing a more sustainable platform ecosystem. “We continue to invest in supporting merchants and are pleased with the progress we’ve made toward building a healthier and more enduring platform,” said the chairman and co-CEO. “Our focus remains on long-term growth rather than quick gains.”
For the first half of the year, net profit fell 24% to CNY45.5 billion ($6.4 billion), and non-GAAP net profit dropped 17% to CNY49.6 billion, compared to the previous year. Revenue grew 8.6% to CNY199.7 billion ($27.9 billion).
The company plans to increase investments and accept reduced profits in order to give smaller merchants more room to grow, explained executive director and co-CEO Zhao Jiazhen during the earnings call. Zhao also cautioned that the impressive second-quarter results are unlikely to be maintained, and significant volatility is expected ahead.
While competitors like Alibaba and Meituan are concentrating heavily on food delivery services, Pinduoduo has adopted a more cautious stance, especially in its community group buying segment, Duoduo Maicai. This business requires substantial, long-term investment and is quite complex, according to management. Despite some rivals retreating from this space, Pinduoduo continues to invest in it. Duoduo Maicai’s network of pickup points now reaches over 70% of Chinese villages.
Shares of PDD closed at $128.21 on the NASDAQ, reflecting a 0.8% increase, after experiencing notable fluctuations during the trading day. In after-hours trading, the stock declined by 0.4%.
ChatGPT
Perplexity
Gemini AI
Grok AI
