PDD Holdings ended 2025 with revenue still growing, but profitability under pressure as it increased spending on merchants and supply chains.
Fourth-quarter revenue rose 12% from a year earlier to RMB 123.9 billion (USD 17.9 billion), while net income fell 11% to RMB 24.5 billion (USD 3.5 billion). Revenue also came in below analysts’ average estimate of RMB 124.4 billion (USD 18 billion), according to LSEG.
Management reinforced that message on the earnings call. It said supply chain investment remains its top priority and argued that PDD should be judged more on ecosystem development rather than quarterly margins. It also said spending on merchant support, logistics, and operational upgrades would increase further in 2026.
The full-year figures pointed in the same direction. Revenue rose 10% to RMB 431.8 billion (USD 62.5 billion) in 2025, but operating profit fell 13% to RMB 94.6 billion (USD 13.7 billion), net income declined 12% to RMB 99.4 billion (USD 14.4 billion), and operating cash flow dropped to RMB 106.9 billion (USD 15.5 billion) from RMB 121.9 billion (USD 17.7 billion) in 2024. That marked a sharp slowdown from the previous year, when revenue grew 59%, operating profit rose 85%, and net income increased 87%.
The fourth quarter also showed where growth is coming from. Transaction services revenue rose 19% to RMB 63.9 billion (USD 9.3 billion), outpacing the 5% increase in online marketing services and others, which reached RMB 60 billion (USD 8.7 billion). But costs continued to rise faster than revenue. Cost of revenues increased 15%, sales and marketing expense climbed to RMB 34.4 billion (USD 5 billion), and R&D expense rose 32% to RMB 5 billion (USD 724.1 million).
Margin pressure had been building throughout the year:
- In the first quarter, operating profit fell 38% and net income dropped 47% as sales and marketing expenses rose 43%.
- The second quarter brought 7% revenue growth and another decline in net income.
- The third quarter was stronger, but management was already warning that revenue growth was slowing and that results could remain uneven as ecosystem investment increased.
The company is also positioning itself as more than a transaction platform. On the call, executives described a larger role in merchant operations, village delivery infrastructure, product development, and supply chain upgrades. The strategy may help PDD retain merchants and defend market share in a slower Chinese e-commerce market, but it also suggests that lower margins may persist.
Temu adds another layer of uncertainty. Management said the business continued to grow, but it also pointed to changing trade, tax, data, and product compliance rules across markets. PDD ended 2025 with RMB 422.3 billion (USD 61.2 billion) in cash, cash equivalents, and short-term investments, up from RMB 331.6 billion (USD 48 billion) a year earlier.
Note: RMB figures are converted to USD at rates of RMB 6.91 = USD 1 based on estimates as of March 26, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.