PDD Holdings Announces First Quarter 2025 Unaudited Financial Results

Rhea-AI Summary

PDD Holdings (NASDAQ: PDD) reported its Q1 2025 financial results with mixed performance. Total revenues increased 10% YoY to RMB95.67 billion (US$13.18 billion), driven by growth in online marketing services (+15%) and transaction services (+6%). However, operating profit decreased 38% YoY to RMB16.09 billion (US$2.22 billion), while net income fell 47% to RMB14.74 billion (US$2.03 billion). The company increased investments in merchant support and ecosystem development, leading to a 37% rise in operating expenses, primarily due to higher sales and marketing costs (+43%). Management indicated that the slowdown in growth and continued ecosystem investments may impact future financial results. Cash position remained strong at RMB364.5 billion (US$50.2 billion) as of March 31, 2025.

Positive

• Revenue growth of 10% YoY to RMB95.67 billion despite challenging environment
• Strong cash position of RMB364.5 billion (US$50.2 billion), up from RMB331.6 billion in December 2024
• Online marketing services revenue increased 15% YoY
• Transaction services revenue grew 6% YoY

Negative

• Operating profit declined 38% YoY to RMB16.09 billion
• Net income decreased 47% YoY to RMB14.74 billion
• Operating expenses increased 37% YoY due to higher marketing costs
• Management warns of continued growth slowdown and pressure on financial results
• Diluted earnings per ADS decreased to RMB9.94 from RMB18.96 in Q1 2024

Insights

Financial Analyst

PDD reports 10% revenue growth but concerning 38% operating profit decline as management increases investments to support merchants.

PDD Holdings' Q1 2025 results present a mixed financial picture that deserves careful scrutiny. While total revenue increased by 10% year-over-year to RMB95.67 billion ($13.18 billion), profitability metrics showed significant deterioration. Operating profit plunged by 38% to RMB16.09 billion, while net income attributable to shareholders dropped 47% to RMB14.74 billion.

The revenue growth was primarily driven by online marketing services, which grew 15% to RMB48.72 billion, while transaction services increased by a more modest 6% to RMB46.95 billion. This suggests PDD is extracting more marketing dollars from merchants while transaction growth is slowing.

What's particularly concerning is the substantial increase in costs and operating expenses. Total costs rose 25%, primarily due to higher fulfillment and payment processing fees. Meanwhile, operating expenses surged 37%, with sales and marketing expenses jumping 43% to RMB33.40 billion. This aggressive spending represents a strategic shift by management to support merchants amid changing market conditions.

The company's cash position remains strong at RMB364.5 billion ($50.2 billion), up from RMB331.6 billion at the end of 2024. However, operating cash flow declined to RMB15.52 billion from RMB21.07 billion in the same period last year, reflecting the impact of increased spending on the company's cash generation.

Management's comments suggest this profit compression isn't temporary. Both co-CEOs emphasized increased investments in the platform ecosystem as strategic necessities to support merchants through external challenges. The VP of Finance explicitly warned that \"financial results may continue to reflect the impact of sustained investments\" - a clear signal that investors should expect continued margin pressure in coming quarters.

The diluted earnings per ADS fell to RMB9.94 ($1.37) from RMB18.96, a 47.6% decline that will likely disappoint shareholders. With management prioritizing ecosystem health over short-term profitability, investors face a critical question: is this temporary pain for long-term gain, or the beginning of a structural margin compression as PDD's business matures?

DUBLIN and SHANGHAI, May 27, 2025 (GLOBE NEWSWIRE) -- PDD Holdings Inc. (“PDD Holdings” or the “Company”) (NASDAQ: PDD), today announced its unaudited financial results for the first quarter ended March 31, 2025.

First Quarter 2025 Highlights

• Total revenues in the quarter were RMB95,672.2 million (US$¹ 13,184.0 million), an increase of 10% from RMB86,812.1 million in the same quarter of 2024.
  
  
• Operating profit in the quarter was RMB16,085.6 million (US$2,216.7 million), a decrease of 38% from RMB25,973.7 million in the same quarter of 2024. Non-GAAP² operating profit in the quarter was RMB18,259.7 million (US$2,516.3 million), a decrease of 36% from RMB28,552.2 million in the same quarter of 2024.
  
  
• Net income attributable to ordinary shareholders in the quarter was RMB14,741.8 million (US$2,031.5 million), a decrease of 47% from RMB27,997.8 million in the same quarter of 2024. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB16,916.0 million (US$2,331.1 million), a decrease of 45% from RMB30,601.8 million in the same quarter of 2024.

“In the first quarter, we made substantial investments in our platform ecosystem to support merchants and consumers amid rapid changes in the external environment,” said Mr. Lei Chen, Chairman and Co-Chief Executive Officer of PDD Holdings. “These investments weighed on short-term profitability but gave merchants the room to adapt and focus on high-quality, sustainable growth, strengthening the long-term health of the platform.”

“Amid growing uncertainties, we see enhanced merchant support as essential to building a healthy merchant ecosystem that can deliver satisfactory shopping experiences for consumers,” said Mr. Jiazhen Zhao, Executive Director and Co-Chief Executive Officer of PDD Holdings. “That is why we have made the strategic decision to increase our ecosystem investments to help drive sales and reduce costs for a broader base of SME merchants.”

“As communicated previously, a slowdown in growth rate is expected as our business scales and challenges emerge. This trend has been further accelerated by the changes in the external environment in the first quarter,” said Ms. Jun Liu, VP of Finance of PDD Holdings. “Our financial results may continue to reflect the impact of sustained investments in the ecosystem as we support merchants and consumers through uncertain times.”

^{_____________________________
1} This announcement contains translations of certain Renminbi (“RMB”) amounts into U.S. dollars (“US$”) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.2567 to US$1.00, the noon buying rate in effect on March 31, 2025 as set forth in the H.10 Statistical Release of the Federal Reserve Board.
² The Company’s non-GAAP financial measures exclude share-based compensation expenses and fair value change of certain investments. See “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this press release.

First Quarter 2025 Unaudited Financial Results

Total revenues were RMB95,672.2 million (US$13,184.0 million), an increase of 10% from RMB86,812.1 million in the same quarter of 2024. The increase was primarily due to the increase in revenues from online marketing services and transaction services.

• Revenues from online marketing services and others were RMB48,722.2 million (US$6,714.1 million), an increase of 15% from RMB42,456.2 million in the same quarter of 2024.
  
  
• Revenues from transaction services were RMB46,950.0 million (US$6,469.9 million), an increase of 6% from RMB44,355.8 million in the same quarter of 2024.

Total costs of revenues were RMB40,947.1 million (US$5,642.7 million), an increase of 25% from RMB32,694.7 million in the same quarter of 2024. The increase mainly came from the increased fulfilment fees and payment processing fees.

Total operating expenses were RMB38,639.5 million (US$5,324.7 million), an increase of 37% from RMB28,143.7 million in the same quarter of 2024. The increase was primarily due to the increase in sales and marketing expenses.

• Sales and marketing expenses were RMB33,402.7 million (US$4,603.0 million), an increase of 43% from RMB23,410.7 million in the same quarter of 2024, mainly due to the increased spending in promotion and advertising activities.
  
  
• General and administrative expenses were RMB1,658.9 million (US$228.6 million), compared with RMB1,823.4 million in the same quarter of 2024.
  
  
• Research and development expenses were RMB3,577.8 million (US$493.0 million), compared with RMB2,909.6 million in the same quarter of 2024.

Operating profit in the quarter was RMB16,085.6 million (US$2,216.7 million), a decrease of 38% from RMB25,973.7 million in the same quarter of 2024. Non-GAAP operating profit in the quarter was RMB18,259.7 million (US$2,516.3 million), a decrease of 36% from RMB28,552.2 million in the same quarter of 2024.

Net income attributable to ordinary shareholders in the quarter was RMB14,741.8 million (US$2,031.5 million), a decrease of 47% from RMB27,997.8 million in the same quarter of 2024. Non-GAAP net income attributable to ordinary shareholders in the quarter was RMB16,916.0 million (US$2,331.1 million), a decrease of 45% from RMB30,601.8 million in the same quarter of 2024.

Basic earnings per ADS was RMB10.59 (US$1.46) and diluted earnings per ADS was RMB9.94 (US$1.37), compared with basic earnings per ADS of RMB20.33 and diluted earnings per ADS of RMB18.96 in the same quarter of 2024. Non-GAAP diluted earnings per ADS was RMB11.41 (US$1.56), compared with RMB20.72 in the same quarter of 2024.

Net cash generated from operating activities was RMB15,516.9 million (US$2,138.3 million), compared with RMB21,067.2 million in the same quarter of 2024.

Cash, cash equivalents and short-term investments were RMB364.5 billion (US$50.2 billion) as of March 31, 2025, compared with RMB331.6 billion as of December 31, 2024.

Other non-current assets were RMB76.2 billion (US$10.5 billion) as of March 31, 2025, compared with RMB83.4 billion as of December 31, 2024, which mainly included time deposits, held-to-maturity debt securities, and available-for-sale debt securities.

Conference Call

The Company’s management will hold an earnings conference call at 7:30 AM ET on May 27, 2025 (12:30 PM IST and 7:30 PM HKT on the same day).

The conference call will be webcast live at https://investor.pddholdings.com/investor-events. The webcast will be available for replay at the same website following the conclusion of the call.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses non-GAAP measures, such as non-GAAP operating profit, non-GAAP net income attributable to ordinary shareholders, non-GAAP diluted earnings per ordinary share, and non-GAAP diluted earnings per ADS, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s non-GAAP financial measures exclude the impact of share-based compensation expenses and fair value change of certain investments.

The Company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses and fair value change of certain investments, which are non-cash charges. The Company also believes that the non-GAAP financial measures may provide further information about the Company’s results of operations, and enhance the overall understanding of the Company’s past performance and future prospects.

The Company’s non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. These non-GAAP financial measures do not reflect all items of income and expenses that affect the Company’s operations and do not represent the residual cash flow available for discretionary expenditures. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages you to review the Company’s financial information in its entirety and not rely on a single financial measure.

For more information on the non-GAAP financial measures, please see the table captioned “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this press release.

Safe Harbor Statements

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue” or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as the Company’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s growth strategies; its future business development, results of operations and financial condition; its ability to understand buyer needs and provide products and services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchants and third-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with merchants; trends and competition in the e-commerce markets globally and in the countries or regions where the Company has operations; changes in its revenues and certain cost or expense items; the expected growth of e-commerce markets globally and in the countries or regions where the Company has operations; developments in the relevant governmental policies and regulations relating to the Company’s industry; and general economic and business conditions globally and in the countries or regions where the Company has operations; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

About PDD Holdings

PDD Holdings is a multinational commerce group that owns and operates a portfolio of businesses. PDD Holdings aims to bring more businesses and people into the digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities.

For investor and media inquiries, please contact:

investor@pddholdings.com
media@pddholdings.com

 

PDD HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December 31, 2024		March 31, 2025
		RMB		RMB		US$
				(Unaudited)		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		57,768,053		70,126,217		9,663,651
Restricted cash		68,426,368		65,131,872		8,975,412
Receivables from online payment platforms		3,679,309		5,475,075		754,486
Short-term investments		273,791,856		294,374,619		40,565,907
Amounts due from related parties		7,569,180		7,411,701		1,021,360
Prepayments and other current assets		4,413,466		5,254,619		724,106
Total current assets		415,648,232		447,774,103		61,704,922
Non-current assets
Property, equipment and software, net		879,327		810,743		111,723
Intangible assets		19,170		18,224		2,511
Right-of-use assets		5,064,351		5,621,015		774,597
Deferred tax assets		15,998		62,764		8,649
Other non-current assets		83,407,238		76,226,396		10,504,278
Total non-current assets		89,386,084		82,739,142		11,401,758
Total Assets		505,034,316		530,513,245		73,106,680

 

PDD HOLDINGS INC.  CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December 31, 2024		March 31, 2025
		RMB		RMB			US$
				(Unaudited)			(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Amounts due to related parties		801,859		1,109,924			152,952
Customer advances and deferred revenues		2,947,041		2,945,057			405,840
Payable to merchants		91,655,947		92,515,127			12,748,925
Accrued expenses and other liabilities		69,141,831		76,207,380			10,501,657
Merchant deposits		16,460,600		16,620,020			2,290,300
Convertible bonds, current portion		5,309,597		5,302,063			730,644
Lease liabilities		2,105,978		2,325,177			320,418
Total current liabilities		188,422,853		197,024,748			27,150,736
Non-current liabilities
Lease liabilities		3,191,565		3,625,587			499,619
Deferred tax liabilities		106,774		161,511			22,257
Total non-current liabilities		3,298,339		3,787,098			521,876
Total Liabilities		191,721,192		200,811,846			27,672,612
Shareholders’ equity
Ordinary shares		180		180			25
Additional paid-in capital		117,829,308		120,003,756			16,536,960
Statutory reserves		237,680		237,680			32,753
Accumulated other comprehensive income		7,824,545		7,296,543			1,005,491
Retained earnings		187,421,411		202,163,240			27,858,839
Total Shareholders’ Equity		313,313,124		329,701,399			45,434,068
Total Liabilities and Shareholders’ Equity		505,034,316		530,513,245			73,106,680

 

PDD HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME   (Amounts in thousands of RMB and US$)
		For the three months ended March 31,
		2024			2025
		RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)
Revenues		86,812,059			95,672,175			13,183,978
Costs of revenues		(32,694,686	)		(40,947,100	)		(5,642,661	)
Sales and marketing expenses		(23,410,655	)		(33,402,741	)		(4,603,021	)
General and administrative expenses		(1,823,445	)		(1,658,943	)		(228,608	)
Research and development expenses		(2,909,620	)		(3,577,828	)		(493,038	)
Total operating expenses		(28,143,720	)		(38,639,512	)		(5,324,667	)
Operating profit		25,973,653			16,085,563			2,216,650
Interest and investment income, net		5,048,589			223,125			30,747
Foreign exchange gain/(loss), net		214,518			(242,140	)		(33,368	)
Other income, net		1,881,248			3,261,292			449,418
Profit before income tax and share of results of equity investees		33,118,008			19,327,840			2,663,447
Share of results of equity investees		(52,430	)		(105,180	)		(14,494	)
Income tax expenses		(5,067,752	)		(4,480,831	)		(617,475	)
Net income		27,997,826			14,741,829			2,031,478

 

PDD HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended March 31,
		2024		2025
		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)
Net income		27,997,826		14,741,829		2,031,478
Net income attributable to ordinary shareholders		27,997,826		14,741,829		2,031,478
Earnings per ordinary share:
-Basic		5.08		2.65		0.36
-Diluted		4.74		2.49		0.34
Earnings per ADS (4 ordinary shares equals 1 ADS ):
-Basic		20.33		10.59		1.46
-Diluted		18.96		9.94		1.37
Weighted-average number of ordinary shares outstanding (in thousands):
-Basic		5,509,682		5,567,803		5,567,803
-Diluted		5,907,021		5,932,325		5,932,325

 

PDD HOLDINGS INC. NOTES TO FINANCIAL INFORMATION (Amounts in thousands of RMB and US$)
		For the three months ended March 31,
		2024		2025
		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)
Revenues
- Online marketing services and others		42,456,243		48,722,171		6,714,094
- Transaction services		44,355,816		46,950,004		6,469,884
Total		86,812,059		95,672,175		13,183,978

 

PDD HOLDINGS INC. NOTES TO FINANCIAL INFORMATION (Amounts in thousands of RMB and US$)
		For the three months ended March 31,
		2024		2025
		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)
Share-based compensation expenses included in:
Costs of revenues		17,514		56,694		7,813
Sales and marketing expenses		672,375		637,284		87,820
General and administrative expenses		1,251,768		923,943		127,323
Research and development expenses		636,885		556,212		76,648
Total		2,578,542		2,174,133		299,604

 

PDD HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of RMB and US$)
		For the three months ended March 31,
		2024			2025
		RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)
Net cash generated from operating activities		21,067,179			15,516,943			2,138,292
Net cash used in investing activities		(28,290,121	)		(6,383,976	)		(879,736	)
Net cash generated from financing activities		30			219			30
Effect of exchange rate changes on cash, cash equivalents and restricted cash		147,924			(69,518	)		(9,579	)
(Decrease)/increase in cash, cash equivalents and restricted cash		(7,074,988	)		9,063,668			1,249,007
Cash, cash equivalents and restricted cash at beginning of period		121,779,905			126,194,421			17,390,056
Cash, cash equivalents and restricted cash at end of period		114,704,917			135,258,089			18,639,063

 

PDD HOLDINGS INC. RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES (Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended March 31,
		2024		2025
		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)
Operating profit		25,973,653		16,085,563		2,216,650
Add: Share-based compensation expenses		2,578,542		2,174,133		299,604
Non-GAAP operating profit		28,552,195		18,259,696		2,516,254
Net income attributable to ordinary shareholders		27,997,826		14,741,829		2,031,478
Add: Share-based compensation expenses		2,578,542		2,174,133		299,604
Add: Loss from fair value change of certain investments		25,437		-		-
Non-GAAP net income attributable to ordinary shareholders		30,601,805		16,915,962		2,331,082
Non-GAAP diluted weighted-average number of ordinary shares outstanding (in thousands)		5,907,021		5,932,325		5,932,325
Diluted earnings per ordinary share		4.74		2.49		0.34
Add: Non-GAAP adjustments to earnings per ordinary share		0.44		0.36		0.05
Non-GAAP diluted earnings per ordinary share		5.18		2.85		0.39
Non-GAAP diluted earnings per ADS		20.72		11.41		1.56

FAQ

What were PDD Holdings' (PDD) Q1 2025 revenue and profit numbers?

PDD Holdings reported Q1 2025 revenue of RMB95.67 billion (US$13.18 billion), up 10% YoY, while net income decreased 47% YoY to RMB14.74 billion (US$2.03 billion).

Why did PDD's profits decline in Q1 2025 despite revenue growth?

Profits declined due to substantial investments in the platform ecosystem and increased operating expenses, particularly a 43% rise in sales and marketing expenses to support merchants amid market uncertainties.

What is PDD Holdings' cash position as of March 2025?

PDD Holdings had cash, cash equivalents and short-term investments of RMB364.5 billion (US$50.2 billion) as of March 31, 2025.

What is PDD's management outlook for future performance?

Management expects continued slowdown in growth rates and potential impact on financial results due to sustained investments in the ecosystem and challenging external environment.

How much did PDD's operating expenses increase in Q1 2025?

Total operating expenses increased 37% YoY to RMB38.64 billion, primarily due to a 43% increase in sales and marketing expenses.