PDD Holdings Inc - ADR

Revenue Growth and Profitability Decline: PDD Holdings reported Q1 2025 revenues of RMB 95.7 billion, a 10% year-over-year increase, primarily driven by online marketing (up 15%) and transaction services (up 6%). However, net income dropped significantly to RMB 14.7 billion from RMB 28 billion in the same quarter last year, reflecting a decline in net profit margin due to increased costs and strategic investments in merchant support.

High Quality Development Strategy: The company's new 100 billion support program aims to bolster merchant support, particularly for small and medium-sized enterprises (SMEs). This initiative reflects management’s commitment to long-term rather than short-term financial returns, emphasizing that significant resources will be directed towards strengthening the merchant ecosystem to foster sustained growth.

Increased Investments Pressure: Operating expenses rose sharply, with total costs jumping 25% from RMB 32.7 billion last year to RMB 40.9 billion in Q1 2025. Non-GAAP operating expenses increased by 37%, primarily due to heightened marketing support and merchant assistance initiatives, leading to a major decline in profitability.