PDD Holdings, the parent company of Chinese discount platform Pinduoduo and international shopping app Temu, reported quarterly revenue above market expectations on Monday, though net profit fell as the company poured money into countering rising competition. Revenue for the quarter rose 7% to 103.98 billion yuan ($14.53 billion), beating analysts’ forecast of 103.34 billion yuan, but operating profit slipped 21%. Adjusted earnings per American depository share came in at 22.07 yuan, well above the estimated 15.74 yuan.
The company’s aggressive investments—ranging from merchant support programs to server infrastructure and marketing—are weighing on margins as rivals Alibaba and JD.com intensify discounting to boost demand in China’s sluggish economy. U.S. tariffs have further driven up international shipping costs, adding pressure to Temu’s global operations. “Industry competition has intensified further… our revenue growth slowed and operating profit declined meaningfully,” said PDD co-CEO Jiazhen Zhao, cautioning investors about continued earnings volatility.
To cushion these challenges, Temu has been pushing products already in U.S. warehouses and onboarding more local sellers while shifting toward a “fully-managed” model, giving the platform greater control over pricing, logistics, and product selection. Still, the company faces stiff competition from Amazon, which leverages its scale for favorable supplier pricing. Despite Temu’s low-cost reputation, a recent Omnisend survey found that 30% of U.S. shoppers have noticed price increases. Analysts warn that PDD’s heavy exposure to the U.S. market could limit its revenue growth compared with peers, even as its top line continues to outperform expectations.