PDD Holdings' Profit Exceeded Expectations, Though Revenue Fell Short of Forecast

PDD Holdings reported better-than-expected earnings in the second quarter, though revenue fell slightly short of analyst forecasts. The company's stock rose approximately 3% following the opening of trading.

The e-commerce company reported adjusted earnings per ADS of 19.33 yuan ($2.85) in the second quarter, compared to the analyst consensus of 18.35 yuan.

Revenue reached 112.4 billion yuan ($16.6 billion), representing 8% year-over-year growth, but came in slightly below the 113.9 billion yuan analysts had projected.

The transaction services segment was the primary driver of revenue growth. Revenue in this segment increased 13% year-over-year, reaching 54.7 billion yuan.

Morgan Stanley analysts noted that the growth pace of OMS revenue accelerated slightly compared to the previous quarter, while transaction services revenue growth decelerated.

Particular attention continues to focus on PDD's international platform Temu. According to Morgan Stanley's assessment, Temu faces a changing international trade and regulatory environment, which simultaneously presents the company with new challenges and opportunities.

PDD's adjusted operating profit increased 5% year-over-year to 29.1 billion yuan ($4.3 billion), compared to 27.7 billion yuan in the prior year.

However, adjusted net profit attributable to ordinary shareholders declined 13% to 28.5 billion yuan ($4.2 billion). A year earlier, this figure stood at 32.7 billion yuan.

Jun Liu, PDD's vice president of finance, stated that the company increased investments in its ecosystem during the second quarter. He noted that the primary priority at this stage is supporting merchants and strengthening the broader e-commerce ecosystem.