PDD(PDD) - 2025 Q2 - Quarterly Results

Management Commentary and Business Highlights Management prioritizes long-term platform health through merchant support, noting moderated revenue growth and potential short-term profitability impacts from investments - The company focuses on long-term value creation by investing in merchant support initiatives to build a healthier and more sustainable platform ecosystem[3] - Management acknowledged that revenue growth has moderated amid intense competition and that continued investments may negatively impact short-term profitability[3] Financial Performance Summary Q2 2025 revenues grew 7% to RMB 104.0 billion, but operating profit declined 21% to RMB 25.8 billion, and net income fell 4% to RMB 30.8 billion Key Financial Metrics (Q2 2025) Q2 2025 total revenues grew 7% to RMB 104.0 billion, but operating profit fell 21% to RMB 25.8 billion, and net income decreased 4% to RMB 30.8 billion Q2 2025 Key Financial Metrics (YoY Comparison) | Financial Metric | Q2 2025 (RMB million) | Q2 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | 103,984.8 | 97,059.5 | +7% | | Operating Profit | 25,792.9 | 32,564.5 | -21% | | Net Income | 30,753.5 | 32,009.4 | -4% | | Diluted EPS (RMB) | 5.19 | 5.40 | -3.9% | | Diluted ADS (RMB) | 20.75 | 21.61 | -4.0% | Revenue and Expense Analysis Revenue growth of 7% was driven by a 13% increase in online marketing services to RMB 55.7 billion, while costs of revenues rose 36% and operating expenses increased 5% Revenue Breakdown (Q2 2025 vs Q2 2024) | Revenue Source | Q2 2025 (RMB million) | Q2 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Online marketing services and others | 55,703.2 | 49,115.9 | +13% | | Transaction services | 48,281.6 | 47,943.7 | +0.7% | Costs and Expenses Breakdown (Q2 2025 vs Q2 2024) | Item | Q2 2025 (RMB million) | Q2 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Costs of revenues | 45,858.9 | 33,698.1 | +36% | | Sales and marketing expenses | 27,209.9 | 26,049.1 | +4.5% | | Research and development expenses | 3,591.3 | 2,909.2 | +23.4% | Cash Flow and Balance Sheet Highlights Net cash from operating activities decreased 50.6% to RMB 21.6 billion, while liquidity remained strong with RMB 387.1 billion in cash and short-term investments - Net cash from operating activities decreased by 50.6% YoY to RMB 21.6 billion, mainly due to lower net income and changes in working capital[11] - The company's cash, cash equivalents, and short-term investments stood at RMB 387.1 billion as of June 30, 2025, an increase from RMB 331.6 billion at the end of 2024[11] Detailed Financial Statements Detailed financial statements present total assets of RMB 567.2 billion, Q2 2025 revenues of RMB 104.0 billion, net income of RMB 30.8 billion, and operating cash flow of RMB 21.6 billion Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were RMB 567.2 billion, liabilities RMB 205.3 billion, and shareholders' equity RMB 361.9 billion, driven by increased short-term investments Balance Sheet Summary (in thousands RMB) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | 567,156,296 | 505,034,316 | | Total Liabilities | 205,292,640 | 191,721,192 | | Total Shareholders' Equity | 361,863,656 | 313,313,124 | Condensed Consolidated Statements of Income Q2 2025 revenues were RMB 104.0 billion (up 7%), but a 36% cost increase led to a 21% operating profit decline to RMB 25.8 billion and a 4% net income decrease to RMB 30.8 billion Q2 Income Statement Highlights (in thousands RMB) | Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | 103,984,832 | 97,059,531 | | Operating profit | 25,792,899 | 32,564,536 | | Net income | 30,753,457 | 32,009,355 | Earnings Per ADS (in RMB) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Basic EPS | 22.01 | 23.14 | | Diluted EPS | 20.75 | 21.61 | Condensed Consolidated Statements of Cash Flows Q2 2025 net cash from operating activities decreased to RMB 21.6 billion, with RMB 27.0 billion used in investing, and total cash balance at RMB 129.9 billion Q2 Cash Flow Summary (in thousands RMB) | Cash Flow Activity | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash generated from operating activities | 21,641,656 | 43,792,640 | | Net cash used in investing activities | (27,021,892) | (42,622,100) | | Net cash generated from financing activities | 353 | 728 | Non-GAAP Financial Measures Reconciliation Non-GAAP metrics, excluding non-cash charges, show Q2 2025 operating profit at RMB 27.7 billion (down 21%) and net income at RMB 32.7 billion (down 5%) - The company uses non-GAAP financial measures, which exclude share-based compensation expenses and fair value changes of certain investments, to help identify underlying business trends[14][15] Reconciliation of GAAP to Non-GAAP Metrics (Q2 2025 vs Q2 2024, in thousands RMB) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Non-GAAP Operating Profit | 27,747,793 | 34,987,298 | -21% | | Non-GAAP Net Income | 32,708,351 | 34,432,134 | -5% | | Non-GAAP Diluted EPS (RMB) | 5.52 | 5.81 | -5% | | Non-GAAP Diluted ADS (RMB) | 22.07 | 23.24 | -5% | Supplementary Information This section provides investor details, including an earnings call webcast, a safe harbor statement, and a corporate profile of PDD Holdings - An earnings conference call is scheduled for 7:30 AM ET on August 25, 2025, to discuss the financial results[13] - The report contains forward-looking statements subject to risks and uncertainties, as detailed in the 'Safe Harbor Statements' section[18] - PDD Holdings is a multinational commerce group aiming to bring more businesses and people into the digital economy[19]