How will the RMB 100 billion investment be allocated, when will it impact financials, and what is the growth potential? Also, why did online marketing service growth slow despite solid consumption growth?

The investment will cover product design, standard setting, manufacturing, quality control, warehousing, fulfillment, legal compliance, and customer service. It aims to provide sales certainty to manufacturers, empowering R&D and process innovation. The online retail market still has potential, but the focus is on high-quality development and empowering the supply chain through initiatives like upgrading village pickup points and logistics support, which are long-term investments. “Under our first party brand model, we provide certainty of sales volume to the supply chain and empowering the manufacturers to confidently invest in R&D and process innovation and significantly cutting down the cost and risks that are inherent in the innovation and brand building.”

How does PDD assess the impact of new e-commerce models (live stream, quick commerce) and does it plan to expand into these? What are the expectations for future margin trends and a steady-state profit margin level?

PDD acknowledges the fast evolution and intense competition in e-commerce, driven by underlying supply chain capabilities. The company's strategy is to focus and invest heavily in the supply chain, particularly the first-party brand business, to create unique value. Regarding margins, PDD prioritizes long-term sustainable growth and intrinsic value over short-term fluctuations, continuing to invest resolutely in high-impact supply chain projects. “The long-term value of the platform is fundamentally tied to the value we create for consumers and the broader ecosystem.”

PDD

PDD Holdings (PDD) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Industrials· May 27, 2026

Source: earnings call transcript

Executive summary

PDD Holdings Inc. Q1 FY26 — Strategic Shift to First-Party Brand Business and Supply Chain Investment

PDD Holdings is embarking on a strategic reinvention, focusing on high-quality development and deep supply chain investments, including a new first-party brand business. The company delivered solid Q1 FY26 results, with revenue growth driven by transaction services, while prioritizing long-term value creation over short-term financial fluctuations. This strategic shift aims to empower manufacturers, enhance product quality, and strengthen the platform's ecosystem.

Highlights

Group revenue increased 11% year-over-year to RMB 106.2 billion in Q1 FY26.
Revenues from transaction services grew 20% year-over-year to RMB 56.3 billion in Q1 FY26.
Non-GAAP operating profit margin expanded to 20% in Q1 FY26 from 19% in Q1 FY25.
Net cash generated from operating activities increased to RMB 16.4 billion in Q1 FY26 from RMB 15.5 billion in Q1 FY25.
Non-GAAP R&D expenses increased 32% year-over-year to RMB 4 billion in Q1 FY26, reflecting investment in innovation.

Concerns

GAAP net income attributable to ordinary shareholders decreased to RMB 12.5 billion in Q1 FY26 from RMB 14.7 billion in Q1 FY25.
Non-GAAP diluted EPS decreased to RMB 9.51 in Q1 FY26 from RMB 11.4 in Q1 FY25.
Online marketing services and others revenue growth slowed, increasing to RMB 49.9 billion in Q1 FY26 from RMB 48.7 billion in Q1 FY25.
Total cost of revenues increased 15% year-over-year to RMB 46.9 billion in Q1 FY26, outpacing revenue growth.

Guidance & targets

Category	Target	Timeline	Confidence
Investment in first-party brand business	RMB 100 billion high materiality	Next few years	High
Strategic Goal	Build another Pingle door high materiality	Next 3 years	High

Deals & partnerships

Dedicated company in Changan New Business Launch RMB 15 billion initial cash injection, RMB 100 billion planned investment Next few years

The dedicated company was incorporated in March 2026, marking the official launch of the first-party brand business. This initiative aims to drive deep transformation in the supply chain.

Risks & headwinds

Supply chain challenges for manufacturers Current

Many good manufacturers are constrained by factors such as talent, information and scale have not yet completed their brand transformation and our call in homogeneous competition.

Mitigation:PDD's first-party brand model provides sales volume certainty, empowering manufacturers to invest in R&D and process innovation, cutting costs and risks.

Intense competition in e-commerce Ongoing

The e-commerce industry is highly competitive with low switching costs for consumers.

Mitigation:Focus on supply chain capabilities, deep transformations across teams, business processes, and organizational management to create sustainable and differentiated value.

Fluctuation in quarter-to-quarter financial results Short-term

Due to seasonality and our only open Crop -- it is normal to see some fluctuation in our quarter-to-quarter financial results.

Mitigation:Prioritize long-term sustainable growth, healthy development of the platform ecosystem, and accumulation of supply chain capabilities over short-term financial performance.

Q&A highlights

Why launch the first-party brand initiative now, and what are the key considerations? Also, what is the primary focus for the global business moving forward, given its user growth?

The first-party brand model addresses supply chain challenges where manufacturers lack branding capabilities. PDD leverages its technology and scale to provide sales certainty, enabling manufacturers to focus on R&D and quality. For global business, the focus is on supply chain integration and optimization, eliminating bottlenecks, and deepening the first-party brand model to strengthen consumer mindshare and product quality standards.

“As a platform, we have both the responsibility and capability to deepen our investment in the supply chain and bring our own solutions to the challenges that is faced by the industry.”

asked by Alicia Yap · answered by Jiazhen Zhao

2 min read 6 chapters

Detailed narrative

Strategic Reinvention and High-Quality Development

PDD Holdings is initiating a deep restructuring of its organization and internal management, centered on safety, compliance, and social responsibility. This marks the beginning of the company's second decade, with a focus on high-quality development. The leadership team is committed to creating positive value for users, the industry, and society by stepping up as a platform enterprise.

Launch of First-Party Brand Business

A dedicated company was incorporated in Changan in March 2026, officially launching PDD's first-party brand business with an initial cash injection of RMB 15 billion and a plan to invest RMB 100 billion over the next few years. This initiative aims to consolidate supply chain resources, collaborate with global IPs for co-creation, and empower the supply chain's transition towards brand development, customizing breakthroughs across the entire supply chain.

$100 Billion Support Program Initiatives

The $100 billion support program continues with high levels of investment, integrating initiatives like premium produce, new quality supply, and logistics support for remote regions. In agriculture, the 2026 Dudu premium products program deepens support across the value chain, including planting, cultivation coaching, logistics, and deep processing. This helps improve quality and efficiency, enabling production regions to move up the value chain.

Supply Chain Upgrades and Merchant Empowerment

The new quality supply initiatives are yielding results in manufacturing hubs, helping merchants shift from homogeneous competition to consumer-centric R&D-driven models. Factories are transforming into automated smart facilities, offering a new roadmap for industry upgrades. The platform provides certainty of sales volume to supply chain partners, empowering manufacturers to invest confidently in R&D and process innovation, thereby cutting costs and risks in brand building.

Logistics and Rural Development

Logistics support for remote regions has unlocked new growth opportunities, with shipping costs for large items significantly reduced (e.g., from RMB 40-50 to RMB 10 for lighting from Zhongshan). The 'reciting villages' initiative, building on logistics support, has expanded direct-to-village coverage to over 70% of local villages in some areas by March, with daily order volumes approaching 10,000 orders at transfer warehouses, creating local jobs and boosting rural economies.

Platform Governance and Compliance

Multiple rounds of initiatives have strengthened platform oversight and compliance capabilities. In Q1, over 20 food safety initiatives were introduced, including compliance reviews, advertising moderation, a dedicated food database, and enhanced inspection of live streaming. The turnaround time for handling store violations has been shortened to within hours, safeguarding food safety for consumers.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.