PDD (PDD) Q1 2025 earnings summary

Executive summary

• Revenue for Q1 2025 reached RMB 95.7 billion, up 10% year-over-year, driven by growth in online marketing and transaction services.

• Profitability declined significantly, with operating profit dropping 38% year-over-year to RMB 16.1 billion, due to increased investments in merchant support, ecosystem initiatives, and higher operating expenses.

• Net income attributable to ordinary shareholders fell 47% year-over-year to RMB 14.7 billion.

• The company launched a comprehensive RMB 100 billion support program to lower merchant fees, provide subsidies, and enhance supply chain transformation.

• Management emphasized a long-term focus on ecosystem health and merchant support over short-term financial results amid external uncertainties.

Financial highlights

• Online marketing services revenue rose 15% year-over-year to RMB 48.7 billion; transaction services revenue increased 6% to RMB 47 billion.

• Total cost of revenues increased 25% to RMB 40.9 billion, mainly due to higher fulfillment and payment processing fees.

• Sales and marketing expenses surged 43% to RMB 33.4 billion due to increased promotion and advertising.

• GAAP operating profit dropped to RMB 16.1 billion from RMB 26 billion year-over-year; non-GAAP operating profit was RMB 18.3 billion, down from RMB 28.6 billion.

• Net cash from operating activities was RMB 15.5 billion, down from RMB 21.1 billion year-over-year.

Outlook and guidance

• Management expects continued pressure on profitability from sustained investments in merchant and consumer support as the business scales and external challenges persist.

• The company will prioritize long-term value creation and ecosystem health over quarterly financial performance.

• A slowdown in growth rate is anticipated as the company matures and faces a changing environment.