Summary of PDD Holdings Conference Call Company Overview - **Company**: PDD Holdings - **Industry**: E-commerce, Agriculture Key Points and Arguments Financial Performance - In Q3 2025, PDD Holdings reported total revenue of **RMB 108.3 billion**, a **9% year-over-year increase** driven by growth in online marketing and transaction services revenue [2][9] - Online marketing services and other revenue reached **RMB 53.3 billion**, up **8%** year-over-year, while transaction services revenue was **RMB 54.9 billion**, increasing by **10%** [9] - Operating profit margin slightly decreased to **25%**, with total operating costs rising **18%** to **RMB 46.8 billion** [9][10] Agricultural Initiatives - PDD Holdings has made long-term investments in the agricultural sector, resulting in a **47% year-over-year growth** in agricultural sales in H1 2025 [2][5] - The number of merchants born in the 2000s increased by over **30%**, indicating a growing merchant base [2][5] - A **RMB 1 billion subsidy** program was launched to support **300,000 agricultural merchants**, enhancing the distribution of agricultural products from rural to urban markets [5] Competitive Strategy - To address competition in the e-commerce sector, PDD Holdings is investing in its platform ecosystem, including a **RMB 100 billion support plan** to improve merchant quality [2][6] - The number of high-quality SKUs increased by over **50%**, and the number of brand stores significantly rose, indicating a shift towards higher quality development in key industrial areas [2][6] Future Development Strategy - PDD Holdings aims to focus on creating long-term value for consumers and enhancing platform quality, with plans for more strategic initiatives similar to the **RMB 100 billion support plan** [7][11] - The company is adapting to global trade policies, tax regulations, and data security changes to meet diverse consumer needs [2][7] Economic Impact in Western Regions - The removal of transit fees has significantly boosted economic activity in western regions, leading to increased orders for products like pet supplies and fresh agricultural products [2][8] Challenges and Compliance - PDD Holdings faces strict scrutiny from regulatory bodies in various countries, necessitating a commitment to sustainable development and compliance with local laws [12][16] - The company is investing in a compliance team to navigate regulatory changes and ensure a safe shopping environment [12][16] Social Responsibility - PDD Holdings has initiated several strategic programs, including a **RMB 100 billion agricultural research plan**, to contribute to rural revitalization and industry upgrades [17] Long-term Investment and Profitability - The company acknowledges that while current investments may pressure short-term profits, they are essential for establishing a sustainable ecosystem and long-term value [18][19] - Management anticipates potential fluctuations in financial performance due to the complex international environment and evolving regulatory landscape [19] Additional Important Content - The company has established a merchant protection committee and upgraded its after-sales service system to optimize the business environment for merchants [4][11] - PDD Holdings is committed to enhancing its technological capabilities to streamline merchant onboarding and product listing processes [15]

Core Insights - PDD reported total revenue of RMB108 billion in 3Q25, reflecting a 9% year-over-year increase and aligning with market expectations of RMB107.7 billion [1] - Online Marketing Services (OMS) revenue was RMB53 billion, below the consensus estimate of RMB56 billion, indicating potential softness in growth [1] - Transaction Services revenue reached RMB55 billion, a 10% year-over-year increase, surpassing consensus by 6% [1] - Non-GAAP net profit margin was 29%, bolstered by RMB8.6 billion in interest and investment income [1] Revenue and Profitability - Management indicated that revenue and profit may fluctuate in upcoming quarters due to aggressive reinvestment strategies aimed at enhancing long-term competitiveness [2] - Selling & Marketing expenses were RMB30 billion in 3Q25, stable year-over-year and below the consensus estimate of RMB33 billion, attributed to the temporary suspension of the domestic trade-in program [4] - R&D spending exceeded expectations due to increased personnel costs and higher bandwidth and server expenses [4] Market Position and Growth - Temu's GMV growth rebounded in 3Q25, achieving nearly 40% year-over-year quarterly growth, following disruptions in 2Q25 [3] - Temu's semi-entrusted model generated US$5.5 billion in GMV, accounting for about 29% of its total, indicating improved access to local supply [3] - Geographically, Europe now contributes the largest GMV share for Temu at around 40%, followed by the U.S. at just over 30% [3] Valuation and Future Outlook - The stock is trading at US$119.58 per ADS, implying a market cap of US$170 billion, with consensus forecasts for 2025/26 revenue of US$60 billion/US$70 billion, reflecting year-over-year growth of 10%/14% [5] - EBITDA is projected at US$14 billion/US$17 billion for 2025/26, both showing a 24% year-over-year increase [5] - The current valuation translates to 9x/7x EV/EBITDA for 2025/26, significantly below the sector average of 24x/20x [5]

Summary of PDD Holdings Conference Call Company Overview - **Company**: PDD Holdings - **Industry**: E-commerce Key Points and Arguments Financial Performance - In Q3 2025, PDD Holdings reported total revenue of **1,080.3 billion RMB**, a **9%** year-over-year increase, driven by growth in online marketing services and transaction services [4][10] - Online marketing services and other business revenue reached **533 billion RMB**, growing **8%** year-over-year, despite increased market competition and investments in the merchant ecosystem [2][4] - Transaction service revenue for Q3 was **549 billion RMB**, reflecting a **10%** increase year-over-year [9] - Total operating costs rose to **468 billion RMB**, with operating profit at **250 billion RMB** [9][10] - Non-GAAP operating profit was **271 billion RMB**, with a profit margin of **25%**, down from **27%** year-over-year [10] Strategic Initiatives - PDD is investing heavily in the agricultural supply chain, with agricultural CR growing **47%** year-over-year and a **30%** increase in post-2000 agricultural merchants [2][6] - The company launched a **10 billion RMB** subsidy and **20 billion RMB** traffic support during the "Harvest Season" to boost agricultural sales [2][6] - To combat homogenization in competition, PDD initiated a **100 billion RMB** support plan to enhance service quality and operational efficiency for merchants [2][7] Market Challenges and Regulatory Environment - PDD faces challenges from trade policies, tax regulations, and data security, prompting the company to strengthen internal capabilities and compliance [3][12] - The management acknowledges that these regulatory uncertainties could impact both short-term and long-term financial performance [12] Future Outlook - Management believes the online retail industry is entering a new investment cycle, focusing on creating unique value and high-quality services for consumers [11] - PDD plans to continue investing in its platform ecosystem, including the **1,000 billion RMB** support plan, despite potential short-term financial fluctuations [11][15] - The company aims to adapt to changing market conditions and consumer demands through technological upgrades and service enhancements [8][15] Agricultural and Merchant Ecosystem Investments - PDD has made significant investments in the agricultural sector, enhancing distribution efficiency and supporting farmers [5][6] - The company has initiated strategic measures like the **1,000 billion RMB** support plan to modernize agriculture and improve logistics for remote areas [13][14] Consumer Trends - Recent observations indicate a positive trend in consumer spending, with e-commerce demand improving during promotional periods [15] - PDD is committed to long-term growth, even if it means sacrificing short-term profits to build a sustainable platform ecosystem [15] Additional Important Information - The company has established a merchant protection committee to optimize the operating environment for merchants [11] - PDD's focus on high-quality development and social responsibility is evident in its initiatives aimed at rural revitalization and industry upgrades [13][14]