Could not find a ticker for this position, may be a filing error
A Chinese e-commerce giant that runs Pinduoduo, a shopping app where friends team up for group deals to unlock lower prices, and Temu, its bargain marketplace for shoppers worldwide. It was founded in 2015 by Colin Huang, a former Google engineer, who wanted an experience he called "Costco meets Disneyland." The name "Pinduoduo" roughly means "together, more savings, more fun" — and the app even grew a virtual farm game that nudges users to keep coming back.
20-F · Fiscal year ended Dec 31, 2025 · SEC filing ↗
PDD Holdings' operating profit fell 14.1% in FY2025 as cost and marketing expense growth outpaced a 9.7% revenue increase.
PDD's fell for the first time in five years. rose 9.7% to RMB431.8 billion, but contracted 5.9 points to 21.6% as the cost of revenues and sales and marketing expenses grew faster than sales. The company is spending more to sustain growth, and the profitability trend has reversed.
Key takeaways
declined 14.1% to RMB93.1 billion, and contracted from 27.5% to 21.6%, as expense growth outpaced a 9.7% increase in total .
growth slowed to 9.7% in RMB terms, reaching RMB431.8 billion, driven by a 10.0% increase in online marketing services and a 9.3% increase in transaction services.
The cost of revenues rose 22.7% to RMB188.8 billion, driven by higher fulfillment fees, bandwidth and server costs, and payment processing fees, which pushed down further.
Sales and marketing expenses rose 12.6% to RMB125.3 billion, mainly from increased advertising and promotion spending to drive user growth and engagement.
The number of active merchants on the platforms rose to 16.8 million, and average per active merchant increased to RMB12,742.
The company held RMB182.7 billion in cash, equivalents, and restricted cash at year-end, and generated RMB106.9 billion in net .
What changed
The trajectory flagged in prior years continued to deteriorate, with the cost of revenues rising 22.7% and outpacing growth, though the filing does not report a specific gross margin percentage for FY2025.
The cash and equivalents balance, which halved to $7.9 billion in FY2024, was not reported as a standalone figure for FY2025; the company instead reported a combined cash, equivalents, and restricted cash balance of RMB182.7 billion, making a direct comparison unavailable.
What to watch
Whether the 14.1% decline in and 5.9-point contraction in represent a new expense trajectory or a one-year investment cycle.
The outcome of the EU Digital Services Act investigation into Temu and the financial impact of new EU customs duties on low-value parcels.
How the elimination of the U.S. de minimis exemption affects Temu's order volumes, merchant retention, and fulfillment cost structure in subsequent quarters.
Section summaries
Quantitative and Qualitative Disclosures About Market Risk
Primary market risk is foreign exchange exposure from Renminbi-denominated operations, with no material interest rate or inflation impact reported.
⌄
A significant portion of revenues and expenses are in Renminbi, exposing ADS investors to USD/RMB exchange rate fluctuations.
RMB appreciation against the USD would reduce the RMB amount received when converting USD for operations.
USD appreciation against the RMB would reduce the USD amount available when converting RMB for dividends or other business purposes.
The impact of the May 2025 elimination of the U.S. de minimis exemption, flagged as a key watch item, materialized as a stated risk factor directly threatening Temu's cross-border business model and merchant economics.
The VIE structure's contribution to fell further to 13.1% from 22.5% in FY2024, continuing the reduction in concentration of revenue tied to untested contractual arrangements in China.
The trajectory of the combined cash, equivalents, and restricted cash balance relative to the pace of capital deployment seen in FY2024.
Certain businesses are denominated in local currencies, and fluctuations against the reporting currency Renminbi may materially affect financial condition and results.
Interest rate risk is limited to interest income on excess cash, restricted cash, and debt securities, and no derivative instruments are used to manage it.
Inflation has not materially impacted results of operations to date, but no assurance is given against future effects.
PDD Holdings faces material risks from its VIE structure, global regulatory actions, trade policy shifts, and intense competition that could disrupt operations and financial performance.
⌄
The VIE structure, which contributed 13.1% of 2025 revenues, lacks direct equity ownership and its enforceability is untested in PRC courts, risking loss of control over key operations.
Global regulatory and legal actions are escalating, including a formal EU DSA investigation into Temu, a RMB1.5 billion fine on Pinduoduo, and multiple U.S. state AG lawsuits.
Elimination of U.S. tariff exemptions and new EU customs duties on low-value parcels directly threaten Temu's cross-border business model and merchant economics.
Intense competition from major e-commerce and internet firms, including those leveraging AI, could reduce market share, while reliance on social networks and app stores creates platform dependency risks.
Evolving data privacy and cybersecurity laws in China, the U.S., and Europe impose stringent, costly compliance burdens and create operational uncertainties, including potential cybersecurity reviews.
PDD Holdings is a multinational commerce group operating the Pinduoduo and Temu platforms, connecting third-party merchants with consumers globally.
⌄
The company operates two main platforms: Pinduoduo, a social e-commerce platform in China featuring a 'team purchase' model and the Duo Duo Grocery service, and Temu, a global online marketplace launched in 2022.
is generated primarily from transaction services and online marketing services provided to third-party merchants, totaling RMB431.8 billion in 2025.
The company relies on a structure and contractual arrangements with Hangzhou Aimi and its shareholders to conduct its e-commerce business in China due to foreign ownership restrictions.
PDD Holdings faces intense global competition from major e-commerce operators, brick-and-mortar retailers, and internet companies, competing on factors like pricing, user engagement, and brand recognition.
A key strategic initiative is the '10 Billion Agriculture Initiative,' which aims to advance agri-tech and promote digital inclusion for farmers in China, funded by company profits.
The business is subject to extensive regulations in China and other jurisdictions, including recent U.S. enforcement action against the Temu operator and the elimination of the duty exemption for low-value imports.
Revenue grew 9.7% to RMB431.8B in FY2025, but operating profit fell 14.1% as costs and marketing expenses rose faster than sales.
⌄
Total revenues increased 9.7% to RMB431.8 billion, driven by growth in both online marketing services (up 10.0%) and transaction services (up 9.3%).
Transaction services growth was fueled by a rise in active merchants to 16.8 million and higher average revenue per active merchant of RMB12,742.
Cost of revenues jumped 22.7% to RMB188.8 billion, primarily due to higher fulfillment fees, bandwidth and server costs, and payment processing fees.
Sales and marketing expenses rose 12.6% to RMB125.3 billion, mainly from increased advertising and promotion spending to drive user growth and engagement.
declined 14.1% to RMB93.1 billion, with contracting from 27.5% to 21.6% as expense growth outpaced growth.
Net was RMB106.9 billion, and the company held RMB182.7 billion in cash, equivalents, and restricted cash at year-end, with no liquidity concerns raised.