TLDR
- PDD shares rose over 11% premarket to $141.14 after Q2 results on August 25, 2025.
- Adjusted EPS was RMB22.07 per ADS, topping estimates of RMB14.80.
- Revenue climbed 7% year over year to RMB103.98 billion ($14.52B).
- Operating profit fell 21% compared to the prior year.
- Strong Temu expansion and merchant support drive growth despite margin pressure.
Shares of PDD Holdings Inc. (NASDAQ: PDD) closed at $127.11 on August 22, 2025, before climbing to $133.01 in after-hours trading. The rally strengthened in premarket trading on August 25, with the stock soaring 11.04% to $141.14 after the company reported second-quarter earnings that surpassed expectations. Investors responded positively to the strong earnings surprise, which offset concerns about falling profitability.
Q2 2025 Earnings Overview
On August 25, 2025, PDD posted second-quarter results for the period ending June 30. Adjusted earnings per share came in at RMB22.07 per ADS, well above consensus estimates of RMB14.80, representing a 38.7% upside surprise. Revenue reached RMB103.98 billion, or $14.52 billion, reflecting 7% year-over-year growth and slightly exceeding forecasts.
Despite this revenue strength, profitability slipped. GAAP net income declined to RMB30.75 billion from RMB32.01 billion in the same quarter last year, while non-GAAP net income fell 5% to RMB32.71 billion. Operating profit decreased 21% year over year to RMB27.75 billion, underscoring the impact of rising costs.
PDD Holdings, $PDD, Q2-25. Results:
📊 Adj. EPS: $3.08 🟢
💰 Revenue: $14.52B 🟢
📈 Net Income: $4.29B
🔎 Continued heavy investments in merchant support initiatives impacted short-term profitability amid intense competition. pic.twitter.com/nUa83mYseu— EarningsTime (@Earnings_Time) August 25, 2025
Profitability Challenges
PDD’s results revealed mounting pressure on its margins. While revenue from online marketing services rose 13% to RMB55.70 billion, transaction services revenue held nearly flat at RMB48.28 billion. Operating costs expanded 5% year over year to RMB32.33 billion, driven by higher sales and marketing expenses tied to promotional activities and international expansion.
This spending weighed on profitability, with non-GAAP operating profit dropping notably. On a GAAP basis, earnings per share fell slightly to RMB5.19 from RMB5.40 in the prior year, reflecting the company’s efforts to sustain growth at the cost of short-term profits.
Competitive Landscape
Management highlighted ongoing merchant support and ecosystem development as priorities, signaling a continued focus on long-term growth. Chairman and Co-CEO Lei Chen emphasized the company’s progress in building a sustainable platform, while Vice President of Finance Jun Liu acknowledged that growth moderated this quarter due to heightened competition.
The remarks highlight the balancing act between capturing market share through Temu’s aggressive global expansion and protecting profit margins.
Performance and Outlook
Despite current margin challenges, PDD continues to outperform broader benchmarks over the long term. Year to date, shares are up 34.66%, compared to a 13% gain for the MSCI World Index. Over three years, the stock has surged nearly 139%, while over five years, it has advanced 52.85%, although slightly trailing the benchmark’s 72.93% rise.
Looking ahead, analysts expect revenue of RMB106.96 billion for the third quarter and RMB432.94 billion for the full year. While the company did not issue guidance, strong international momentum through Temu and consistent merchant engagement provide optimism for sustained top-line growth, even as profitability remains under pressure.
