PDD Q1 Earnings Call Highlights

Key Points

• PDD’s Q1 revenue rose 11% year over year to RMB 106.2 billion, but net income attributable to ordinary shareholders fell to RMB 12.5 billion from RMB 14.7 billion a year earlier. Management said it is prioritizing long-term ecosystem investment over short-term results.
• The company is making a major push into a first-party brand model, launching a dedicated Shanghai unit with RMB 15 billion in initial funding and a plan to invest RMB 100 billion over three years. PDD says the initiative is meant to improve product quality, compliance, fulfillment and brand development across global markets.
• PDD also highlighted continued spending on supply chain and logistics programs, including agriculture, industrial hubs and rural delivery expansion. The company said these efforts are lowering shipping costs, boosting orders in western provinces and supporting merchants’ shift toward higher-quality production.

PDD NASDAQ: PDD Holdings reported first-quarter 2026 revenue of RMB 106.2 billion, up 11% from a year earlier, as management emphasized a multiyear push to deepen supply chain investments and expand a new first-party brand business.

On the company’s earnings call, Co-Chairman and Co-Chief Executive Officer Jiazhen Zhai said 2026 marks the start of PDD’s second decade and a “critical year” for what he described as a reinvention of the company’s organization and culture. Zhai said the company is prioritizing safety, compliance and social responsibility while focusing on “high-quality development.”

“Our priority is long-term value creation through sustained investment in the ecosystem and the supply chain, rather than short-term results,” Zhai said.

First-party brand initiative becomes a central focus

PDD executives said the company is moving ahead with a first-party brand model as part of a three-year strategy to “build another Pinduoduo.” Zhai said PDD incorporated a dedicated company in Shanghai in March to formally launch the initiative, with an initial cash injection of RMB 15 billion and a plan to invest RMB 100 billion over the next three years.

Management described the first-party brand business as an effort to work more closely with manufacturers and industrial hubs on product development, quality standards, fulfillment, compliance and after-sales services. Zhai said the model is intended to help manufacturers move beyond homogeneous competition and focus on higher-quality production.

“Through the first-party brand model, the platform takes on greater responsibility and also risks, allowing our industrial belt partners to focus on high quality production,” Zhai said during the Q&A session.

Co-Chairman and Co-Chief Executive Officer Lei Chen said the company’s teams have been working with merchants and manufacturers across categories to design and develop first-party brand products for different global markets. He said PDD sees brand development as a major opportunity for supply chain upgrades and a way to incubate globally recognized brands.

Supply chain programs target agriculture, industrial hubs and rural logistics

Management also highlighted continued spending under PDD’s Hundred Billion Support Program, including initiatives in agriculture, manufacturing hubs and logistics for remote regions.

In agriculture, Zhai said the company launched the 2026 Duoduo Premium Produce program, expanding support beyond products and merchants into planting, cultivation, cold-chain logistics and processing. He said initial projects have begun in regions associated with Nanning oranges, Hainan pineapples, Tongren matcha, Ningxia goji berries and Lianyungang seafood.

Within industrial belts, Zhai said PDD’s New Quality Supply initiative has been introduced to manufacturing hubs including Zhangzhou snacks, Zhengzhou skincare, Yiwu accessories, Jingdezhen porcelain enamel, Zhongshan lighting and Tianjin chocolate. He said some merchants and factories are shifting from copying existing products to consumer-focused research and development, while some traditional factories are moving toward automated and smart manufacturing.

The company also said its logistics support to remote regions has reduced shipping costs for merchants. Zhai cited an example in which shipping a large ceiling light from Zhongshan to Gansu fell from RMB 40 to RMB 50 previously to around RMB 10 after the platform covered transshipping fees. He said many merchants have seen order volumes to western provinces grow at an annual rate of more than 30%.

PDD said it is also expanding free shipping to villages. Zhai said that in some counties in Henan, the company built county-level transfer warehouses and village pickup points, extending direct-to-village coverage to more than 70% of local administrative villages by March.

Revenue rises, but net income declines

Financial Director Jun Liu said first-quarter revenue rose 11% year over year to RMB 106.2 billion, driven mainly by transaction services revenue. Revenue from online marketing services and others was RMB 49.9 billion, compared with RMB 48.7 billion a year earlier. Transaction services revenue rose 20% to RMB 56.3 billion.

Total costs of revenue increased 15% to RMB 46.9 billion, which Liu attributed mainly to higher fulfillment fees, bandwidth and server costs, and payment processing fees.

GAAP operating profit increased 22% to RMB 19.6 billion from RMB 16.1 billion a year earlier. Non-GAAP operating profit was RMB 21.1 billion, compared with RMB 18.3 billion in the prior-year period, and non-GAAP operating margin was 20%, up from 19%.

However, net income attributable to ordinary shareholders fell to RMB 12.5 billion from RMB 14.7 billion a year earlier. Basic earnings per ADS were RMB 8.94, and diluted earnings per ADS were RMB 8.48. Non-GAAP net income attributable to ordinary shareholders was RMB 14.1 billion, compared with RMB 16.9 billion a year earlier, while non-GAAP diluted earnings per ADS were RMB 9.51.

PDD generated RMB 16.4 billion in net cash from operating activities, up from RMB 15.5 billion in the same quarter last year. As of March 31, 2026, the company had RMB 436.1 billion in cash equivalents and short-term investments.

Management says margins may fluctuate as investment continues

Asked about margin trends, Liu said quarterly financial results may fluctuate because of seasonality and the company’s investment cycle. He said PDD is focused on long-term sustainable growth and the value it creates for consumers and the broader ecosystem.

“Instead of focusing on short-term financial performance, we prioritize the healthy development of the platform ecosystem and the accumulation of foundational supply chain capabilities,” Liu said.

Executives also addressed competition from newer e-commerce models such as live-streaming commerce and quick commerce. Zhai said PDD is monitoring new technologies, but he argued that the core consumer demands remain broader selection, competitive pricing and better service. He said competition among e-commerce platforms ultimately depends on supply chain capabilities.

On the company’s global business, Chen said PDD has gained support from consumers worldwide over nearly three years of development. He said the next phase will focus on supply chain integration, onboarding high-quality merchants and ecosystem partners, and developing first-party brands to strengthen consumer trust in quality and value while improving compliance capabilities.

About PDD NASDAQ: PDD

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.

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