Earnings Review: PDD's Online Marketing Growth Dips Under 10% Amid Ongoing Competitive Pressure

PDD Holdings Inc. has released its unaudited financial results for the third quarter, which concluded on September 30, 2025.

Core Financial Indicators

Total revenue for the quarter was RMB108,276.5 million (US$115,209.5 million), up 9% from RMB99,354.4 million in the same quarter of 2024.

Net income was RMB 29,328.2 million (US$4,119.7 million), up 17% from RMB24,980.7 million in the same quarter of 2024. Non-GAAP net income was RMB 31,381.7 million (US$4,408.2 million), up 14% from RMB 27,458.7 million in the same quarter of 2024.

Basic earnings per ADS rose to RMB20.96 (US$2.94) and diluted earnings per ADS to RMB19.70 (US$2.77), up from RMB18.02 and RMB16.91 in the same quarter of 2024.

Non-GAAP diluted earnings per ADS increased to RMB21.08 (US$2.96), compared with RMB18.59 a year earlier.

How it differed from expectations

This quarter's gross margin continued to decline year over year, likely still affected by the revenue mix and overseas spending.

The variance versus expectations came from marketing expenses being about RMB 2.6 billion lower than expected, which in turn boosted operating profit by roughly the same amount.

Business Segment Overview

Revenue from online marketing services and others was RMB 53,347.6 million (US$7,493.7 million), up 8% from RMB49,351.0 million in the same quarter of 2024. The growth rate in the previous quarter was 13.4%. This is the first time PDD's online marketing services growth has fallen below 10%, indicating ongoing pressure from competition in China's e-commerce market.

Transaction services revenue was RMB 54,928.9 million (US$7,715.8 million), up 10% from RMB50,003.4 million in the same quarter of 2024.

With the tariff headwinds on Temu largely fading, its U.S. business has returned to normal operations, and it is expanding rapidly in other regions. This drove transaction revenue growth back to 10%, slightly above Bloomberg's consensus, and helped overall revenue growth reaccelerate. However, compared with more optimistic forecasts from Goldman Sachs and others (around RMB 59 billion), Temu's growth doesn't appear as strong.

Summary

Overall, the earnings report was mixed. Although its overseas business has shown some recovery, pressures on its China e-commerce business remain significant.

The stock price fell after the earnings release.

~Valuation:

PDD's PE ratio is 13.87 times, which is at the 48th percentile of its historical range over the past five years.

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