PDD Holdings Second-Quarter Profit Falls as Heavy Spending Offsets Revenue Growth

PDD Holdings shares rose Monday after the Temu parent company reported mixed second-quarter 2026 results. Weakening consumer demand in China and higher investment weighed on profitability.

PDD Revenue Misses Estimates

Revenue rose 8% year-over-year to RMB 112.4 billion. However, the result missed the analyst estimate of $17.13 billion.

Online marketing services and other revenue rose 3.5% to $8.49 billion. Transaction services revenue rose 13.3% to $8.07 billion.

Cost of revenue rose 4.7% to $7.08 billion. Operating expenses rose 13% to $5.4 billion, primarily due to higher sales and marketing costs.

Adjusted operating profit rose 5% to $4.3 billion. But adjusted operating margin narrowed to 25.87% from 26.68% in the year-ago period.

Net income fell 12% to $4 billion. Adjusted net income fell 13% to $4.2 billion.

Adjusted earnings per American depositary share fell to RMB 19.33 from RMB 22.07 in the year-ago period. The figure still beat the analyst estimate of RMB 18.35.

Cash Position Remains Strong

The company held $67.3 billion in cash, cash equivalents, and short-term investments at the end of the quarter. It generated $3.8 billion in operating cash flow.

PDD, a major competitor of Alibaba Group Holding Ltd., continues to face weak Chinese consumer spending, intense competition, and regulatory scrutiny.

PDD Prioritizes Trust and Merchant Support

Co-Chairman and Co-CEO Chen Lei said changes in trade and regulatory conditions have created both challenges and opportunities. He added that PDD aims to build a global platform that consumers can trust.

Co-Chairman and Co-CEO Zhao Jiazhen said PDD strengthened platform governance in the first half of 2026. The company is focused on compliance, consumer protection, and trust.

Vice President of Finance Liu Jun said the company increased ecosystem investment during the quarter. The company also prioritized merchant growth and long-term industry development.

PDD stock performance: PDD shares rose 3.54% to $91.51 in premarket trading Monday.