PDD Holdings reported higher revenue and operating profit for the second quarter of 2026, but net income fell after a large loss appeared below the operating line.
The owner of Pinduoduo and Temu generated unaudited revenue of RMB112.36 billion ($16.56 billion) in the three months ended June 30. That was 8% more than a year earlier.
Revenue nevertheless came in below the RMB116.35 billion average estimate compiled by LSEG and reported by Reuters.
Operating profit rose 8% to RMB27.76 billion. Net income attributable to ordinary shareholders moved in the opposite direction, falling 12% to RMB27.18 billion.
Diluted earnings were RMB18.45 per American depositary share, compared with RMB20.75 a year earlier. An American depositary share, or ADS, is the US-traded certificate representing the company’s foreign shares. Each PDD ADS represents four ordinary shares.
Transaction services grew faster than advertising
Transaction services revenue increased 13% to RMB54.72 billion. PDD said this category drove most of the company’s overall growth.
Online marketing services and other revenue rose more slowly, from RMB55.70 billion to RMB57.64 billion. This category includes the advertising services merchants use to promote products on PDD’s platforms.
Total operating expenses increased 13% to RMB36.58 billion. Sales and marketing expenses rose to RMB29.67 billion from RMB27.21 billion, while research and development spending increased to RMB4.57 billion from RMB3.59 billion.
Jun Liu, PDD’s vice president of finance, said the company had “stepped up our ecosystem investments” during the quarter. Management said its priorities included helping merchants, improving trust and safety, and strengthening compliance.
The largest profit swing came below operating profit
The decline in net income did not come from a lower operating profit. The largest change was a RMB7.40 billion net “other loss,” compared with RMB119 million of other income in the second quarter of 2025.
PDD did not explain that loss in its results release. It should therefore not be assigned to Temu, regulation or any other specific cause without further disclosure.
Net interest and investment income actually increased to RMB13.51 billion from RMB10.42 billion, while the foreign-exchange loss narrowed. Income tax expense rose to RMB6.09 billion from RMB4.82 billion.
Operating cash flow also improved, rising to RMB25.7 billion from RMB21.6 billion. Cash, cash equivalents and short-term investments totaled RMB456.4 billion at the end of June, up from RMB422.3 billion at the end of 2025.
PDD still does not disclose Temu separately
PDD’s consolidated figures do not reveal how much revenue or profit came from Temu. The company’s 2025 annual report says it manages the business as one operating and reportable segment covering e-commerce services.
That reporting structure matters. Temu operates outside China, while Pinduoduo serves the Chinese market, but investors cannot use these quarterly accounts to separate the economics of the two platforms.
Reuters cited price competition in China and regulatory challenges abroad as pressures on the group. PDD co-chief executive Lei Chen also said global trade and regulatory conditions had continued to change.
PDD did not provide formal financial guidance in the release. The next results will show whether transaction services can continue to outgrow marketing revenue, how quickly expenses rise, and whether the unexplained other-loss line was a one-quarter event.
