PDD Holdings Inc. (NASDAQ: PDD) shares climbed around 3% in early trading on Monday after the company reported second-quarter earnings that exceeded analyst expectations, despite a revenue shortfall.
The Chinese e-commerce giant posted adjusted earnings per American Depositary Share (ADS) of RMB 19.33 ($2.85), topping the RMB 18.35 consensus estimate. Revenue totaled RMB 112.4 billion ($16.6 billion), missing the RMB 113.9 billion forecast but rising 8% year-over-year from RMB 104.0 billion in the same period of 2025.
Transaction services revenue, a key driver, grew 13% to RMB 54.7 billion. Operating profit, adjusted, increased 5% to RMB 29.1 billion ($4.3 billion), while adjusted net income attributable to ordinary shareholders declined 13% to RMB 28.5 billion ($4.2 billion), down from RMB 32.7 billion a year earlier.
Operating expenses rose 13% to RMB 36.6 billion, primarily due to higher sales and marketing costs, which climbed to RMB 29.7 billion from RMB 27.2 billion in the year-ago quarter. Operating cash flow strengthened to RMB 25.7 billion, up from RMB 21.6 billion in the second quarter of 2025.
Morgan Stanley analysts noted that order management system revenue accelerated sequentially, contrasting with industry trends, while transaction services revenue decelerated. They also highlighted that Temu, PDD's global e-commerce platform, faces evolving global trade and regulatory challenges alongside potential opportunities.
Jun Liu, PDD's Vice President of Finance, emphasized the company's focus on ecosystem investments, stating that merchant support and industry ecosystem strengthening remain priorities for sustainable long-term development.
