PDD Q2 2026 Earnings Report

PDD EPS Results

• Actual EPS: $2.84
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

PDD Revenue Results

• Actual Revenue: $16.54 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

PDD Announcement Details

• Quarter: Q2 2026
• Date: 8/14/2026
• Time: Before Market Opens
• Conference Call Date: N/A
• Conference Call Time: N/A

PDD (NASDAQ:PDD) (NASDAQ: PDD) is the holding company best known for operating Pinduoduo, a China-based, mobile-first e-commerce platform that emphasizes interactive, social shopping and group-buying mechanics to drive user engagement and low prices. Founded in 2015 by entrepreneur Colin Huang, the business has grown by connecting consumers directly with merchants and manufacturers, with particular emphasis on value-oriented goods and fresh agricultural produce. The company is based in Shanghai and completed a U.S. public listing in 2018.

The company’s core offerings center on its consumer-facing apps and marketplaces, which blend traditional product listings with social features, promotional team purchases, in-app games and other engagement tools to encourage sharing and viral growth. PDD provides merchant services such as storefronts, advertising and marketing tools, and works with third-party logistics partners to facilitate order fulfillment. In addition to Pinduoduo’s China-focused marketplace, PDD has expanded into international e-commerce through platforms built on a cross-border, direct-from-manufacturer model to reach consumers outside China.

PDD’s strategy has emphasized supply-chain integration, digital marketing and technology-driven user acquisition to serve price-sensitive and rural consumers in China while pursuing international growth opportunities. The company was founded by Colin Huang, who played a central role in its early development; PDD’s broader leadership team and operational focus continue to evolve as it scales its marketplaces and supporting services.

PDD Q2 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Profitability declined as Q2 revenue rose 8% year over year to RMB 112.4 billion, while net income fell 12% to RMB 27.2 billion and non-GAAP operating margin narrowed to 26% from 27%.
• Positive Sentiment: Despite near-term earnings pressure, operating cash flow increased to RMB 25.7 billion from RMB 21.6 billion, and the company held RMB 456.4 billion in cash equivalents and short-term investments at quarter-end.
• Neutral Sentiment: Management is accelerating long-term investment in platform governance, supply chains, rural delivery infrastructure, and merchant support; however, higher R&D and ecosystem spending contributed to the near-term margin decline.
• Negative Sentiment: New EU customs duties are expected to reduce fulfillment efficiency and increase costs for affected cross-border orders in the short term, creating a meaningful headwind for overseas growth.
• Neutral Sentiment: The first-party brand rollout is progressing but took longer than expected, with management emphasizing a selective, long-term approach while maintaining an open marketplace where first-party and third-party products coexist.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings Inc.'s second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today. Sir, please go ahead.

[Company Representative at PDD]

Thank you, operator. Hello everyone, and thank you for joining us today. PDD Holdings earnings release was distributed earlier and is available on our website at investor.pddholdings.com, as well as through the GlobeNewswire services. Before we begin, I'd like to refer you to our safe harbor statement in the earnings press release, which applies to this call, as we'll make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures. Joining us today on the call are Mr. Chen Lei, our Co-Chairman and Co-Chief Executive Officer, Mr. Zhao Jiazhen, our Co-Chairman and Co-Chief Executive Officer, as well as Mr. Li Jiong, our Financial Director. Lei and Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus.

[Company Representative at PDD]

Jiong will then walk us through our financial results for the second quarter ended June 30th, 2026. On today's call, certain management remarks will be in Chinese. I will help translate. Please kindly note that English translation is for reference only, and in case of any discrepancy, statements in the original language should prevail. Now it's my pleasure to introduce our Co-Chairman and Co-Chief Executive Officer, Mr. Zhao Jiazhen. Jiazhen, please go ahead.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Hello, everyone. This is Zhao Jiazhen, and thank you for joining our earnings call for the second quarter of 2026.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Before we formally begin, we would like to take this opportunity to express our deepest condolences on the passing of our Independent Director, Professor Ivonne Rietjens, and to pay our highest tribute to her significant contributions and dedicated service during her tenure with us.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Professor Rietjens served a long tenure as Chair of the Toxicology Department at Wageningen University & Research in the Netherlands, and earned an international reputation in the fields of food research and drug effects. Since joining the company as an Independent Director in August 2023, Professor Rietjens provided invaluable professional advice on the company's governance and development.

[Company Representative at PDD]

At the same time, as a long-standing partner of our smart agricultural competition, Wageningen University & Research has consistently brought international perspectives and expert guidance to the event, helping it become an important global platform for innovation in agricultural technology as well as for talent development. We will carry forward her passion for agricultural research and continue to increase our investment in agriculture and agricultural research. And through these long-term commitments, honor her professional legacy and make greater contributions to agricultural and food safety research worldwide. Now, let us return to the results for the quarter.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

The second quarter this year marked a new phase in the new decade of high-quality development, as we moved from initial rollout to deeper execution. Our RMB 100 billion support program has entered a phase in which our sustained investment is beginning to yield tangible results. The positive effects across our platform and industry are being unlocked at a faster pace, with improvements in both the quality and efficiency across the supply and demand sides. At the same time, we continue to make steady progress on our strategic goal of building another PDD over the next three years. Although the initial rollout of our first-party brand model over the past six months was slower than expected due to certain external factors, the overall momentum remains positive. The operations are now fully underway and are progressing smoothly.

[Company Representative at PDD]

We will commit fully to transforming the supply chain for higher quality growth, drive the upgrading of traditional industries, and continue to unlock the supply chain's new growth potential from within. Furthermore, to accelerate supply chain transformation and upgrades, we have established a dedicated company in the Xiongan New Area and purchased an office building there to focus on new opportunities created by intelligent technologies. To support upgrading and high quality development of traditional manufacturing, we have also established a data processing service center for traditional industries and an integrated service center to help traditional manufacturers move up the value chain and pursue high quality development.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

We delivered solid results for the quarter. Group revenue was RMB 112.4 billion, representing a year-over-year increase of 8%, while group net income was RMB 27.2 billion, declining 12% year-over-year. This mainly reflected our continued investments in our platform and a broader industry ecosystem, which partly weighed on our performance this quarter.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

In the first half of this year, competition in the e-commerce industry remained intense. A complex and rapidly evolving market environment placed greater demands on both platform governance and industry development, presenting us with new challenges. We continue to step up investment in our platform and industry ecosystems through a coordinated set of measures focused on governance, fee reductions, and merchant support, with the goal of building a platform ecosystem that creates value for all participants.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

We have significantly increased our R&D spending on platform governance. In addition to upgrading our technology-enabled risk prevention and control systems, we significantly expanded our specialist trust and safety teams and strengthened our oversight across all product categories. By taking into account specific characteristics of the different categories and launching targeted governance initiatives, we made ecosystem governance more regular, granular, and rules-based.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

To date, the platform has introduced more than 150 comprehensive trust and safety measures. In June alone, we launched over 50 targeted initiatives addressing key areas such as product listing controls, food and drug safety, qualification reviews, advertising compliance, intellectual property protection, misleading marketing, livestream e-commerce standards, and the prevention of technology misuse. We are dedicated to upholding high compliance standards through rigorous rules, taking a systematic approach to reshaping our governance framework and fostering a safer, better regulated, and more trustworthy shopping environment.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

On food safety, we launched a dedicated governance initiative that prohibits the sale of freshly prepared food and beverage products. We further tightened merchant qualification reviews as well as information disclosure requirements to prevent and mitigate food safety risks early on. At the same time, the platform introduced more detailed requirements governing the permitted scope of food products sold via live streaming, live streamer conduct, and how products are described and presented. From product information to live stream presentations, we guide merchants throughout the full process to operate with integrity and present products truthfully, so that consumers can purchase and consume their food products with ease of mind.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

In early June, we also produced and released a number of video courses addressing common challenges and pain points in platform governance. These courses encourage merchants to familiarize themselves with the rules relevant to their industries, avoid violations, and protect their legitimate rights and interests in accordance with platform rules. Namely, the course Frequently Asked Questions about store business licenses received 340,000 views within 24 hours of launch.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Building on the systematic upgrade of our platform governance, we have continued to step up investment in the RMB 100 billion support program. Our support now extends beyond our broad merchant base to upstream and downstream participants across agricultural production regions and industrial clusters, helping drive comprehensive upgrades throughout the supply chain. In agricultural production regions, the 2026 Duoduo Premium Produce Initiative has reached dozens of specialty agricultural regions, including those for Jiangsu aquatic products, Chongqing plums, Shanxi Chinese [inaudible], Hainan pineapples, Hainan lychees, Hunan preserved duck, and Hubei crayfish. Through the initiative, we help these regions develop new products, raise cultivation standards, and improve cold-chain logistics, thereby unlocking greater value for their agricultural products.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Take Hainan’s pineapple growing region as an example. In recent years, local merchants have begun introducing a new variety known as the Golden Diamond Pineapple. Unlike traditional varieties, it has a distinct sweetness and requires neither removing the eyes nor soaking in saltwater before serving. Supported by high-traffic programs on our platform, including Flash Sale and 10,000 People Group Buy, the variety quickly gained market traction and became one of the season's most popular fruits. The greater certainty provided by e-commerce orders has also given growers the confidence to expand production. To date, the local cultivation area for Golden Diamond Pineapples has grown from scattered trial plots to more than 100,000 [inaudible].

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Across the industrial belt, our dedicated new quality supply team has visited manufacturers across different regions and sectors, including home textiles in Suzhou, tent manufacturers in Shaoxing, outdoor products in Jinhua, cosmetics in Guangzhou, menswear in Jieyang, and textiles in Xinyang. We provide a suite of support measures to these merchants, such as traffic support, data enablement, expansion of market reach, cost reduction, smart manufacturing, and warehousing upgrades. As a result, manufacturers have cut their production cycles by half and have substantially improved their fulfillment capabilities. They can now rapidly handle large order volumes on our platform while tailoring to consumers' customization needs. This has enabled manufacturers to take a transformative leap from traditional manufacturing to building brands of their own while accelerating the shift from traditional to new growth drivers across these industrial belts.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Xinyang's textile industry is a good example. Gushi County in Xinyang was once a major source of migrant labor, with more than 200,000 local residents previously working in the textile industry in Jiangsu and Zhejiang provinces alone. In recent years, younger generation from the county have begun establishing factories locally and selling textile products nationwide through Pinduoduo. Their annual sales have grown by an average of four to five times and have built leading brands in niche categories such as mosquito nets that are exported to Southeast Asia and Europe during the summer season. Today, the local economy has moved beyond its traditional reliance on labor migration and has established an integrated path to industrial development that brings together capital, technology, talent and sales channels.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

In addition, our free shipping to villages program has continued to deliver positive results since its launch six months ago. We have now established last mile delivery networks across more than 10 provinces and municipalities nationwide, including county level transit hubs and village pickup points. These networks have brought significant job creation to counties and rural communities, while accelerating the distribution of consumer goods, home appliances, agriculture supplies, and farming equipment to rural markets. In doing so, we are helping merchants unlock new growth opportunities and enabling consumers in remote villages to improve quality of life.

[Company Representative at PDD]

Take Shandong as an example. As one of China's leading agricultural provinces, it is a key region for Pinduoduo's free shipping to villages program. Earlier pilots in Heze, Juancheng, and Yishui have already produced significant results, with order volumes in the villages increasing severalfold. Qingzhou, meanwhile, is a major domestic production hub for water soluble and innovative fertilizers, and many local agriculture supply companies are building on this momentum to reach more villages across the country.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

As a platform serving the public, we have always sought to fulfill our social responsibilities and give back to the society. Recently, typhoons and heavy rainfall caused severe flooding in several parts of Guangxi. To support frontline disaster relief efforts, Pinduoduo made a cash donation of RMB 10 million to the affected areas. The funds were used to procure relief supplies and equipment, provide assistance and temporary shelter to affected residents, and support post-disaster recovery and reconstruction.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

As we embark on our next decade, we are more convinced than ever that high quality development calls for both the intensity of a sprint and, more importantly, the perseverance of a marathon. We will stay committed to taking a long-term approach and execute our new decade of high quality development strategy with patience and resolve to deliver solid and tangible progress at every step. We will continue to invest resolutely in our supply chain, empower merchants and industries, and deliver better products and services to consumers. Through concrete actions, we aim to create greater positive value for our users, merchants, and the society as a whole.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

With that, I will turn the call over to Chen Lei, who will provide further details.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

Hello, everyone. I'm Chen Lei, and thank you for joining our earnings call for the second quarter of 2026. In the first half of the year, we made tangible progress under the new decade of high quality development strategy and laid a solid foundation for long-term growth. As Jiazhen just mentioned, we focus on two key areas. First, through the RMB 100 billion support program, we continue to give back to both consumers and merchants. At the same time, we upgraded our platform governance framework across the board. These initiatives have helped foster a healthier environment both on our platform and in the broader industrial ecosystem. Second, we continue to work towards our three-year initiative of building another PDD. We stepped up supply chain investment and helped supply chain partners build and develop their own brands.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

During the quarter, our long-term investment in RMB 100 billion support program started to materialize into gains in a healthier platform ecosystem. On the supply side, our merchants benefited from a combination of fee reductions, merchant support initiatives, and a stronger platform governance. These initiatives unlocked greater innovation among merchants, leading to the launch of new products and new brands, which drove incremental demand and new sources of growth. Many manufacturers adopted digital and intelligent technology to enable customized production, and this drove improvements in quality and efficiency across the supply chain and enabled manufacturers to transition towards a new development model. On the demand side, we continue to serve consumers' evolving needs for different product categories and diverse consumption occasions.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

This was particularly evident in rural areas, where our free shipping to villages program put a much wider selection of products within the reach of consumers, helping improve their quality of life. Drawing on the supply chain capabilities and brand development experience gained through the RMB 100 billion support program, we took steps in this quarter to further integrate the supply chain. Our teams delved into the industrial belts of different product categories and started early-stage collaborations with high-quality suppliers. By setting clear standards for products, production processes, and quality control, we helped merchants and manufacturers adapt their operations and develop a range of higher quality products with higher margins. Through these efforts, we continue to unlock the strength and the potential within the supply chain, driving the manufacturing sectors up the value chain. Since the beginning of the year, global regulatory and compliance landscapes have undergone significant shifts.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

This change created challenges as well as opportunities, and they also come with greater responsibilities. We find ourselves at a unique intersection of global trade, constantly navigating diverse international regulatory frameworks. At the same time, our position is a unique one. The business touches the daily lives of billions of people around the world. While there is substantial potential for growth, it is accompanied by increased expectation and higher standards of accountability. We will stay true to our mission and continue to do every part of our work with dedication and discipline. First, we will keep strengthening our compliance capabilities and fine-tuning platform governance. To protect intellectual property, we combine screening technologies with expert review to monitor and assess product listings across all categories in real time. This enables us to address IP risks earlier in the process and has led to systematic improvements of IP protection across our platform.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

Second, we continue to invest resolutely in the supply chain. By thoughtfully executing on these structural upgrades, our ultimate goal is to build a highly resilient e-commerce platform that consumers around the world can rely on for competitive price and great quality. As we step into our next decade, we remain laser-focused on our core e-commerce business. By deepening our supply chain investments, we will continue to empower our merchants and broader industry, delivering a wider range of high-quality products and services.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

We are confident in our ability to translate our three-year initiative of building another PDD into tangible, verifiable results. In doing so, we will strive to help the traditional supply chains to capture the opportunity in this new intelligent era and empowering them to transform and move out of value chain and build brands with global reach. Now let me turn it over to Li Jiong, who will walk you through our results for the second quarter 2026.

[Jiong Li, Financial Director at PDD]

Well, thank you, Lei. Hello, everyone. This is Jiong. Now let me walk you through our financial performance for the second quarter ended June 30, 2026. First, income of income statement. In the second quarter, our total revenues increased 8% year-over-year to RMB 112.4 billion. This was mainly driven by an increase in revenues from transaction services. Revenues from online marketing services and others were RMB 57.6 billion this quarter, compared with RMB 55.7 billion in the same quarter of 2025. Revenues from transaction services were RMB 54.7 billion, up 13% from the same quarter last year. Moving on to costs and expenses. Our total costs of revenues increased 5% from RMB 45.9 billion in Q2 2025 to RMB 48 billion this quarter. On a GAAP basis, total operating expenses this quarter increased 13% to RMB 36.6 billion from RMB 32.3 billion in the same quarter of 2025.

[Jiong Li, Financial Director at PDD]

On a non-GAAP basis, total operating expenses increased to RMB 35.3 billion this quarter from RMB 30.4 billion in Q2 2025. Our total non-GAAP operating expenses as a percentage of total revenue this quarter was 31% versus 29% in the same quarter last year. Looking into specific expense items. Our non-GAAP sales and marketing expenses this quarter were RMB 29.3 billion, up 10% versus the same quarter last year. On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenues this quarter were 26%, in line with the same quarter last year. Our non-GAAP general administrative expenses were RMB 2.3 billion versus RMB 1.5 billion in the same quarter of 2025. Our research and development expenses were RMB 4.6 billion this quarter on a non-GAAP basis, up 40% year-over-year.

[Jiong Li, Financial Director at PDD]

On a GAAP basis, operating profit for the quarter was RMB 27.8 billion versus RMB 25.8 billion in the same quarter last year, up 8% year-over-year. Non-GAAP operating profit was RMB 29.1 billion versus RMB 27.7 billion in the same quarter last year. Non-GAAP operating profit margin was 26% this quarter versus 27% for the same quarter last year. Net income attributable to ordinary shareholders was RMB 27.2 billion for a quarter, compared to RMB 30.8 billion in the same quarter last year.

[Jiong Li, Financial Director at PDD]

Basic earnings per ADS was RMB 19.32, and diluted earnings per ADS was RMB 18.45 versus basic earnings per ADS of RMB 22.01 and diluted earnings per ADS of RMB 20.75 in the same quarter of 2025. Non-GAAP net income attributable to ordinary shareholders was RMB 28.5 billion versus RMB 32.7 billion in the same quarter last year. Non-GAAP diluted earnings per ADS was RMB 19.33 versus RMB 22.07 in the same quarter of 2025.

[Jiong Li, Financial Director at PDD]

That completes the income statement. Now let me move on to cash flow. Our net cash generated from operating activities was RMB 25.7 billion compared with RMB 21.6 billion in the same quarter last year. As of June 30, 2026, we had RMB 456.4 billion in cash equivalents and short-term investments. Thank you, and this concludes my prepared remarks.

[Company Representative at PDD]

Well, thank you, Jiong. We'll now move on to the Q&A session. In today's Q&A session, Lei, Jiazhen, and Jiong will take questions from analysts on the line. We could take a maximum of two questions from each analyst. Lei and Jiazhen will answer questions in Chinese, and we'll help translate for convenience purpose. Operator, we're open for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. Participants are requested to restrict to two questions at each time. Your first question comes from Thomas Chong with Jefferies. Please go ahead.

[Thomas Chong, Analyst at Jefferies]

[Non-English content]. I will translate myself. My first question is about the company's global business. We noticed that the EU introduced a temporary customs duty on low-value cross-border consignments starting from July this year. Can management help us understand the expected impact of this change on the company's overall order volume? In light of these policy headwinds, what will be the company's growth strategy for the global business going forward? My second question is on the company's first-party brand business announced last quarter. Could management provide an update about the rollout and the progress made so far? More broadly, how should investors frame the potential impact of this initiative on the company? How are you thinking about the mix and the positioning of first party versus third-party products, and what will guide your pricing strategy for first party products.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Translator]

Hi Thomas, this is Chen Lei. Let me take your first question about our global business. Over this period, the regulatory and compliance landscape facing our global business has changed significantly. These changes have created challenges as well as opportunities for our business. They also come with great responsibilities.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Translator]

We believe we stand at a unique intersection in the global economy and global trade. We face pressure from different regulatory policies while also occupying a distinctive position. Currently, our business touches the daily lives of billions of people around the world. While there is substantial potential for growth, it is accompanied by increased expectations and higher standards of accountability.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Translator]

On the changes to the EU customs duties that you mentioned, our team is actively assessing and adapting to them. Drawing on the experience that we have gained over the years, we have adjusted our supply chain and we are optimizing our fulfillment processes. With compliance as our bottom line, we are working to balance consumer experience, merchant operations, and the long term development of our business. In the short term, cross-border orders in the affected markets will face lower fulfillment efficiency and higher costs, which will have a considerable impact on those parts of our business.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Translator]

However, over the medium to long term, changes in the external environment have further underscored the importance in our supply chain, and has prompted us to accelerate the development of the relevant capabilities. First, the platform will continue to onboard and support more high quality local merchants to broaden the supply of local products. Second, we are accelerating the build out of local warehousing and fulfillment infrastructure and expanding the coverage of local fulfillment. Through these investments, we hope to integrate more deeply into every market we serve, strengthen the foundation and resilience of our supply chain, and better navigate changes and volatility in the environment.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Translator]

In addition to supply chain capabilities, compliance capabilities and platform governance are also critical foundational capabilities in which we will invest for the long term. We will continue to enhance platform governance, further improve product quality, and strengthen consumer protection, with the goal of providing consumers around the world with a platform they can trust.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Translator]

At the same time, we have done extensive work on intellectual property compliance to provide a healthy business environment and level playing field for merchants around the world. Building on technology-enabled monitoring and manual review, the platform has developed systematic IP protection capabilities. Our recent favorable ruling in the IP litigation involving an industry peer has further demonstrated the effectiveness of our IP protection mechanism. We will remain committed to protecting the legitimate rights and interests of our ecosystem partners and to fostering a fair and reliable business environment.

[Lei Chen, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Translator]

Regulatory and policy changes are issues that the entire industry must address. We are confident in our execution capabilities and organizational resilience. Short-term volatility will not change the long-term direction of our global business. Going forward, we will continue to steadily advance our work across supply chain fulfillment, compliance, and consumer service. We will strive to provide consumers around the world with a shopping platform that remains stable over the long term and offers compelling prices and reliable quality. A platform that they can count on, trust, and enjoy using. Thank you.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Hi, this is Zhao Jiazhen. Regarding your second question, our first party brand business is an important extension of our long-term investment in supply chain capabilities. We aim to work closely with manufacturers that have strong capabilities and willingness to invest in long-term product development. By leveraging the platform's market insights and global reach, we seek to bring greater certainty to brand development and value creation across the industry value chain, and in turn turn that incremental value into tangible benefits for all the participants.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

And in terms of execution, we will first focus selectively on core product categories where our platform and supply chain capabilities provide some distinctive advantages. We will work with manufacturers over the long term, from product planning and R&D, to setting quality standards and market testing.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

The business requires an extended period of development and collaboration, and the initial rollout has taken longer than we originally expected. Nevertheless, it remains a clear long-term strategic priority for the platform, and we will remain patient and focused on getting every step right. We are confident in the long-term prospects of our first-party brand model.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

In terms of operating strategy, our commitment to maintaining an open and fair marketplace will not change. We have always believed that consistently delivering quality products and services to consumers requires a healthy, fair, and diverse supply chain ecosystem. Going forward, our first-party brand products and products offered by third-party merchants will complement each other in meeting consumers' diverse needs across different use cases and market segments, and ultimately creating an ecosystem that benefits all participants. Thank you.

[Thomas Chong, Analyst at Jefferies]

[Non-English content].

[Company Representative at PDD]

Thank you. Thank you so much. Operator, we can move on to the next analyst on the line.

[Operator]

Your next question comes from Alicia Yap with Citigroup. Please go ahead.

[Alicia Yap, Analyst at Citigroup]

Hi, thank you [Non-English content] Thanks for taking my question. So two questions. First is that we have seen many global e-commerce company invest in their own warehousing and also delivery capabilities as their skill, for example, by building out their own warehouse networks and also delivery capabilities. How should we think about the company investment priority in this area over the long term? The second question is on the quick commerce. Many global peers have made significant investment in this area. How does management assess the potential impact of the shift in consumer behavior on the industry competitive landscape and also the company's core business? As the industry ramp up investment in the same day delivery, what strategy is the company pursuing to strengthen user mind share and also defend your market share? Thank you.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Hi, this is Zhao Jiazhen. As with our other investments, our investments in logistics and fulfillment are guided by the need to improve consumer experience and address the practical challenges that merchants face in doing business. We make prudent and targeted investments where we believe we can create tangible value. Accordingly, our investment priorities vary across markets and business models.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

In the domestic market, e-commerce logistics networks are already quite well developed across most regions. However, last mile delivery remains a significant bottleneck in remote western regions and many rural communities. To address this problem, we have committed substantial resources to strengthening logistics network. Under our hundred billion support program, we are firmly advancing the free shipping to villages initiative and our logistics support for remote regions.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Since the end of last year, under the free shipping to villages initiative, we have established local service stations covering all 177 villages in You County. In Shandong Yishui, we have increased the number of parcels delivered to villages to more than 100,000 per day. This infrastructure not only helps agriculture supplies such as fertilizers reach farmers more directly, but also enables a wider range of high quality products to reach rural consumers more efficiently. And in doing so, we are helping unlocking significant consumer demand in underserved regions and meaningfully improve order conversion for merchants that serve these communities.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

In certain overseas markets, fragmented point to point shipping by individual merchants oftentimes makes it very difficult to achieve economies of scale that is made possible through the consolidation of shipments. This results in higher overall fulfillment costs and leaves some consumer demand unmet. In markets facing these challenges, we invest targetedly in development and operations of transit warehouses. These investments help local merchants streamline their fulfillment processes and lower logistics barriers, while providing local consumers with a more reliable delivery experience.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Back to your question, we will continue to take a practical and solution-oriented approach to fulfillment related investments. By building stronger supply chain capabilities and improving the efficiency and reliability of fulfillment services, we aim to enhance the consumer experience, create a virtuous cycle between supply and demand, and strengthen the platform's capacity for sustainable organic growth over the long term.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

To your second question, retail and e-commerce business models are constantly evolving, and we are seeing a growing range of innovative business models emerge across the market. Quick commerce serves different consumer needs and use cases as compared to our core e-commerce and grocery businesses. Given the current stage of our business, these are fairly different in terms of both supply chain requirements and operating model, with limited scope for synergies. We have therefore chosen to focus our resources and efforts on areas where we have established strength and are best positioned to create differentiated value.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

As the industry matures, platforms will take different approaches to serving consumers based on their respective capabilities and experience. Our path has always been quite clear, which is we will continue strengthening our supply chain capabilities. Our current supply chain investments have two complementary priorities. Firstly, is ensuring a strong supply of quality products, and second is building the infrastructure to deliver them efficiently.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

On the product supply side, through initiatives such as new quality supply and Duoduo Premium Produce Initiative, we continue to help capable traditional manufacturers strengthen their product development and brand building capabilities, enabling them to move up the value chain and giving consumers greater access to high quality products at compelling value. On the infrastructure side, through projects such as free shipping to villages, we are improving our distribution network and addressing last mile delivery gaps in remote areas, and enabling consumers in more regions to benefit from the convenience and affordability of e-commerce.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

The supply chain investments we have chosen to make may not yield immediate results, but we believe over the long term, they will create tangible value for the industry, consumers, and our merchant ecosystem. We will remain focused on this foundational, yet very important work, and continue creating differentiated value for consumers and merchants. Thank you. Operator, I think we have time for one more analyst.

[Operator]

Thank you. Your final question comes from Joyce Ju with Bank of America. Please go ahead.

[Joyce Ju, Analyst at Bank of America]

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[Joyce Ju, Analyst at Bank of America]

My first question is on long term commercialization potential. It has been like almost a year since the company launched the RMB 100 billion support program. Could management provide an update on the health and activity of the merchant ecosystem following the investments? As the ecosystem improves, are you seeing or would you expect to see a corresponding increase in merchants willingness to spend on advertising? My second question is on the revenue growth outlook. Based on the trends observed in the first half, how are you thinking about the consumer spending outlook for the full year? Looking ahead, does platform revenue have the potential to outgrow the broader consumer market? Thank you very much.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

Hi, this is Zhao Jiazhen. As mentioned earlier, the RMB 100 billion support program is starting to show results from the RMB 10 billion fee reduction program introduced in 2024 to the RMB 100 billion support program early last year. The resources and the supply chain support that we have provided have reached major agricultural regions and manufacturing clusters.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

We are encouraged to see that these efforts have enabled many merchants in industrial belts to make meaningful gains in both quality and efficiency. For example, with the support from the platform, a cosmetics company in Guangdong significantly reduced its customer acquisition and operating costs. This company reinvested the profits in a two-year R&D effort, successfully transitioning into patented and national brands. And merchants in Zhongshan Lighting manufacturing belt have also leveraged the platform's fast product testing capabilities to increase investment in high-quality lighting components and smart product features, which led to the launch of a best-selling product that generated several millions in sales within just a few months.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

These tangible results demonstrate that our efforts to reinvest in the supply chain ecosystem are working. Of course, building a healthier merchant ecosystem takes time. We will remain committed to these investments and help more merchants achieve healthier and more sustainable growth.

[Jiazhen Zhao, Co-Chairman and Co-CEO at PDD]

[Non-English content]

[Company Representative at PDD]

E-commerce platforms are two-sided networks. The merchants growth prospects are closely tied to a high-quality consumer experience and a healthy platform ecosystem. Our hundred billion support program is therefore focused first and foremost on improving product quality, strengthening the supply chain, and supporting the merchant ecosystem, such that small and medium-sized merchants can reinvest their efficiency gains in product upgrades. Over the long term, lower operating costs, stronger profitability, and greater business confidence among merchants will ultimately drive sustainable organic value creation across the platform. Thank you.

[Jiong Li, Financial Director at PDD]

Hi, this is Jiong. Let me take your second question. In the first half of the year, as consumption support policies continue to take effect, China's consumer market expanded steadily, and online retail penetration continued to grow. We remain confident in the long-term potential of China's consumer market and e-commerce industry. As e-commerce enters a new stage of development, platforms need to take a more proactive role in unlocking new growth by addressing fundamental supply chain bottlenecks. Like, for example, through our free shipping to villages initiative, we are investing in more comprehensive last mile delivery network, including transit warehouses and village pickup points.

[Jiong Li, Financial Director at PDD]

These efforts are helping strengthen rural commerce and distribution networks, and stimulate consumer demand in these regions. In the first half this year, retail sales in rural areas grew faster than the overall market, showing significant potential. On monetization, just as Jiazhen mentioned, we remain focused on strengthening the platform ecosystem and helping our merchant grow. Over time, by getting these fundamentals right, we believe the sustainable growth in the platform's intrinsic value will naturally follow. Thank you.

[Company Representative at PDD]

Okay, thank you, Jiong. Thank you all for joining us today. It is about time, and we look forward to seeing you next quarter.

[Operator]

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

Participants

Executives

• Company Representative
• Jiazhen Zhao, Co-Chairman and Co-CEO
• Lei Chen, Co-Chairman and Co-CEO
• Jiong Li, Financial Director

Analysts

• Thomas Chong, Analyst at Jefferies
• Translator
• Alicia Yap, Analyst at Citigroup
• Joyce Ju, Analyst at Bank of America