PDD Holdings increased second-quarter operating profit at the same pace as revenue, but a large swing in other income and losses below the operating line contributed to a double-digit decline in net income.
Second-quarter revenue increased 8% year-over-year to RMB112.4 billion, or approximately $16.6 billion. Operating profit also increased 8% to RMB27.8 billion, or approximately $4.1 billion, from RMB25.8 billion a year earlier.
The biggest divergence appeared below operating profit. PDD recorded RMB7.4 billion, or approximately $1.09 billion, of other loss, net, compared with RMB119 million of other income in the prior-year quarter. That represented a negative year-over-year swing of roughly RMB7.5 billion, or about $1.1 billion.
The earnings release did not provide a detailed explanation for the composition of the other loss, making it an important item to separate from the operating performance of the commerce business.
The impact was partly offset by stronger interest and investment income, which increased to RMB13.5 billion, or about $1.99 billion, from RMB10.4 billion a year earlier. Even with that increase, profit before income tax and results of equity investees declined to RMB33.3 billion from RMB35.5 billion.
Income tax expense also increased to RMB6.09 billion, or approximately $898 million, from RMB4.82 billion. Net income attributable to ordinary shareholders consequently fell 12% to RMB27.2 billion, or approximately $4.0 billion, while non-GAAP net income declined 13% to RMB28.5 billion.
PDD continued to generate operating growth across its core revenue streams. Transaction services revenue increased 13% to RMB54.7 billion, or approximately $8.1 billion, while online marketing services and other revenue increased to RMB57.6 billion from RMB55.7 billion.
Operating expenses increased faster than revenue, rising 13% to RMB36.6 billion. Sales and marketing expenses increased to RMB29.7 billion, general and administrative expenses climbed to RMB2.34 billion from RMB1.53 billion, and research and development expenses increased to RMB4.57 billion from RMB3.59 billion.
Management described the higher spending as part of an effort to step up ecosystem investment, including merchant support, governance, trust and safety, and compliance initiatives amid a changing global trade and regulatory environment.
Cash generation remained strong despite the net income decline. Net cash generated from operating activities increased to RMB25.7 billion, or approximately $3.78 billion, from RMB21.6 billion a year earlier.
PDD also maintained a very large liquidity position. Cash, cash equivalents and short-term investments totaled RMB456.4 billion, or approximately $67.3 billion, at the end of June, up from RMB422.3 billion at the end of 2025.
The quarter therefore presents a notable split between underlying operations and reported earnings: revenue and operating profit both grew 8%, transaction services expanded at a double-digit pace, and operating cash flow improved, while a roughly $1.1 billion other loss and higher taxes pulled reported net income lower.
KEY QUOTES:
“We stepped up our ecosystem investments in the second quarter.”
Jun Liu, Vice President of Finance of PDD Holdings
“We view compliance as a fundamental priority and are fully committed to safeguarding consumer rights and building lasting trust.”
Jiazhen Zhao, Co-Chairman and Co-Chief Executive Officer of PDD Holdings
