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    PDD
    Earnings call· Sep 2025(Q3 FY25)

    PDD Holdings Inc. PDD

    Nov 18, 2025 Source

    Executive summary

    PDD Holdings Q3 FY25 — Ecosystem Investments Impact Profitability Amidst Intense Competition

    PDD Holdings reported moderate revenue growth in Q3 FY25, driven by transaction services, but profitability was impacted by significant investments in its platform ecosystem and intensified industry competition. The company emphasized a long-term strategic focus on high-quality development and social responsibility, acknowledging that financial performance will fluctuate due to ongoing investments and a complex global regulatory environment. Management reiterated its commitment to supporting merchants and consumers, even if it means sacrificing short-term profits.

    Highlights

    5

    • Total revenues increased 9% year-over-year to RMB 108.3 billion.

    • Revenues from transaction services grew 10% year-over-year to RMB 54.9 billion.

    • Net cash generated from operating activities was RMB 45.7 billion, up from RMB 27.5 billion in Q3 2024.

    • Net income attributable to ordinary shareholders increased to RMB 29.3 billion from RMB 25 billion in Q3 2024.

    • Agricultural sales grew by 47% year-over-year in the first half of FY25.

    Concerns

    5

    • Online marketing services revenue growth moderated to 8% year-over-year due to intensified competition and ecosystem investments.

    • Non-GAAP operating profit declined to RMB 27.1 billion from RMB 28 billion in Q3 2024.

    • Non-GAAP operating profit margin decreased to 25% from 27% in Q3 2024.

    • Total cost of revenues increased 18% year-over-year to RMB 46.8 billion.

    • R&D expenses increased 41% year-over-year to RMB 3.7 billion on a non-GAAP basis.

    Guidance & targets

    5
    CategoryTargetConfidence
    Quarterly profitability
    Will fluctuate and is inherently unpredictable
    high materiality
    High
    Financial performance in next few quarters
    Will continue to fluctuate
    high materiality
    High
    Revenue and profit performance
    Will be impacted by long-term investments
    high materiality
    High
    Financial performance
    May fluctuate over the coming quarters
    high materiality
    High
    Revenue growth
    Set to slow down
    medium materiality
    High

    Operational metrics

    25
    Total revenues
    RMB 108.3 billion9% year-over-year
    Q3 FY25

    Driven by online marketing services and transaction services.

    Online marketing services and others revenue
    RMB 53.3 billion8% year-over-year
    Q3 FY25

    Growth moderated due to intensified competition and investments in merchant ecosystem.

    Transaction services revenue
    RMB 54.9 billion10% year-over-year
    Q3 FY25
    Total cost of revenues
    RMB 46.8 billion18% year-over-year
    Q3 FY25

    Mainly due to increased fulfillment fees, bandwidth and server costs, and payment processing fees.

    Non-GAAP total operating expenses
    RMB 34.4 billionvs RMB 32.9 billion in Q3 2024
    Q3 FY25
    Non-GAAP total operating expenses as percentage of total revenues
    32%roughly in line with Q3 2024
    Q3 FY25
    Non-GAAP sales and marketing expenses
    RMB 29.8 billionflat compared to Q3 2024
    Q3 FY25
    Non-GAAP sales and marketing expenses as percentage of revenues
    28%vs 30% in Q3 2024
    Q3 FY25
    Non-GAAP general and administrative expenses
    RMB 896 millionvs RMB 647 million in Q3 2024
    Q3 FY25
    Non-GAAP research and development expenses
    RMB 3.7 billion41% year-over-year
    Q3 FY25

    Investment in R&D reached a new high, reflecting focus on core technology capabilities.

    GAAP operating profit
    RMB 25 billionvs RMB 24.3 billion in Q3 2024
    Q3 FY25
    Non-GAAP operating profit
    RMB 27.1 billionvs RMB 28 billion in Q3 2024
    Q3 FY25

    Impacted by investments in the platform ecosystem.

    Non-GAAP operating profit margin
    25%down from 27% for Q3 2024
    Q3 FY25

    Impacted by investments in the platform ecosystem.

    Net income attributable to ordinary shareholders
    RMB 29.3 billionvs RMB 25 billion in Q3 2024
    Q3 FY25
    Basic earnings per ADS
    RMB 20.96vs RMB 18.02 in Q3 2024
    Q3 FY25
    Diluted earnings per ADS
    RMB 19.7vs RMB 16.91 in Q3 2024
    Q3 FY25
    Non-GAAP net income attributable to ordinary shareholders
    RMB 31.4 billionvs RMB 27.5 billion in Q3 2024
    Q3 FY25
    Non-GAAP diluted earnings per ADS
    RMB 21.08vs RMB 18.59 in Q3 2024
    Q3 FY25
    Net cash generated from operating activities
    RMB 45.7 billionvs RMB 27.5 billion in Q3 2024
    Q3 FY25
    Cash, cash equivalents and short-term investments
    RMB 423.8 billion
    As of Sep 30, 2025
    Agricultural sales growth
    47%year-over-year
    H1 FY25

    Based on the 2025 agricultural product half year report.

    Agricultural merchants born in 2000s growth
    over 30%year-over-year
    H1 FY25

    Reflects rapid increase in the number of agricultural merchants.

    Industrial merchants aged 25-30 growth
    31%year-over-year
    Annual

    Reported in the 1-year development report on new quality supply.

    Industrial merchants born in 2000s growth
    44%year-over-year
    Annual

    Reported in the 1-year development report on new quality supply.

    High-quality SKUs increase
    over 50%year-over-year
    Annual

    Reported in the 1-year development report on new quality supply.

    Industry KPIs

    3
    MetricValueDetails
    Segment revenue mixRMB 53.3 billion; RMB 54.9 billionRMB
    Advertising revenue take rateRMB 53.3 billionRMB
    Operating income EBIT and adjusted EBITDARMB 27.1 billionRMB

    Risks & headwinds

    5
    Intensified industry competitionQ3 FY25 and ongoing

    Online marketing services growth moderated to 8% YoY; non-GAAP operating profit margin declined to 25% from 27% YoY.

    Mitigation: Increase investments in platform ecosystem, merchant support initiatives (CNY 10B fee reduction, CNY 100B support program), focus on high-quality growth and core capabilities.

    Complex global regulatory environment for global businessOngoing

    Unpredictable and difficult to quantify risks; potential impact on financial performance in short and long term.

    Mitigation: Strengthening internal capabilities, enhancing platform compliance, building professional compliance teams, adapting to changes in trade policies, tax, data security, and product compliance.

    Impact of ecosystem investments on profitabilityQ3 FY25 and coming quarters

    Non-GAAP operating profit declined to RMB 27.1 billion from RMB 28 billion YoY; operating profit grew in low single digits.

    Mitigation: Management views these as long-term investments for sustainable growth, willing to forgo short-term profits. Focus on creating unique value for consumers and merchants.

    Slower revenue growth due to platform scale and competitionFuture periods

    Growth rate is set to slow down as platform increases in scale and competition intensifies.

    Mitigation: Focus on high-quality growth, enhancing core capabilities, and deepening efforts in supply chain improvement and platform ecosystem development to identify new growth opportunities.

    Commoditized competition in industrial beltsOngoing

    Growth in e-commerce merchants in industrial belts led to commoditized competition.

    Mitigation: Investment in 'new quality supply' initiative through CNY 100 billion support program, leveraging digital capabilities, fee reduction, and merchant support to enhance quality and efficiency.

    What to watch in Q4 FY25

    4

    Online marketing services revenue growth

    Next quarter
    Current8% year-over-year
    TargetStabilization or acceleration

    Why it matters

    This metric reflects the impact of intensified competition and the effectiveness of ecosystem investments on a key revenue stream.

    Online marketing services growth moderated further as competition intensified and as we invest in the merchant ecosystem.

    Q&A highlights

    3

    What are PDD's views on the recovering online retail sector, the slowdown in online marketing service revenue, and the competitive landscape given new business models and increased investments by peers?

    Management acknowledges the overall recovery but focuses on creating unique value for consumers and merchants, not short-term trends or competitor moves. The slowdown in online marketing revenue and overall growth is expected due to platform scale and ecosystem investments. Competition is intensifying with new business models, prompting PDD to increase its own long-term investments, which will impact revenue and profit fluctuations.

    “And as we see it from here onwards, we must leverage our inherent strength to pursue high-quality growth and enhance our core capabilities in order to better serve our merchants and consumers and along the way, creating more value.”

    asked by Joyce Ju · answered by Jiazhen Zhao

    2 min read6 chapters

    Detailed Narrative

    01

    10th Anniversary and Core Values

    PDD Holdings celebrated its 10th anniversary, reflecting on its journey from pioneering the team purchase model in 2015 to becoming a key e-commerce player. The company emphasized its core values of 'benefit all, people first, and more open,' focusing on creating value for users, merchants, and the industry. This long-term perspective guides its strategy, prioritizing intrinsic value over short-term financial results.

    02

    Ecosystem Investments and Merchant Support

    The company continues to roll out strategic initiatives like the CNY 10 billion fee reduction program and the CNY 100 billion support program. These investments aim to foster innovation and growth for both established brands and SMEs, facilitate supply chain upgrades, and address challenges faced by merchants lacking brand recognition. Management views these as long-term investments, willing to forgo some profits for ecosystem development.

    03

    Agricultural Initiatives and Impact

    As a platform with deep roots in agriculture, PDD has made long-term investments in the agricultural industry, from supply chain and logistics to supporting new generations of farmers. The Duo Duo Premium Produce initiative, backed by the CNY 100 billion support program, led to a 47% year-over-year growth in agricultural sales in H1 FY25. The number of agricultural merchants born in the 2000s increased over 30% year-over-year.

    04

    Global Business Challenges and Regulatory Environment

    PDD's global business, developed over three years, serves many markets but faces significant challenges from evolving regulatory environments. Changes in trade policies, tax rules, data security, and product compliance across different countries introduce unpredictable risks. The company is investing in compliance teams and refining policies to adapt, acknowledging potential impacts on financial performance in both the short and long term.

    05

    Intensified Competition and Profitability Fluctuations

    The e-commerce sector is experiencing intensified competition, with peers deploying significant capital into new business models. This competitive pressure, combined with PDD's ongoing ecosystem investments, has led to moderated revenue growth and a decline in operating margins. Management explicitly stated that quarterly profitability will fluctuate and that linear projections are not appropriate for forecasting future performance.

    06

    R&D Investment and Core Technology

    The company's investment in research and development reached a new high this quarter, with non-GAAP R&D expenses up 41% year-over-year to RMB 3.7 billion. This reflects a focus on improving the core technology capabilities of the platform, capturing opportunities in supply chain innovation, and enhancing consumer experience. This commitment to R&D is part of its long-term high-quality development strategy.

    AI-generated summary of the company’s earnings call. Not investment advice.