PDD Holdings Inc, the parent company of Pinduoduo, is experiencing a slowdown in performance growth but remains committed to long-term strategic investments.

The company's full-year 2025 financial results show continued revenue growth but significant profit contraction, reflecting structural tensions between intensifying domestic e-commerce competition and ongoing increased investments. Management explicitly stated that future strategy will involve "all-in" supply chain investments and directly warned that this would pressure financial performance.

For full-year 2025, PDD's total revenue increased 10% year-over-year to 431.8 billion yuan, while net income attributable to common shareholders fell 12% to 99.4 billion yuan. Fourth-quarter net profit similarly declined 11% to 24.5 billion yuan, down from 27.4 billion yuan in the same period last year. The company's Vice President of Finance stated, "These investments are resolute and long-term, and will inevitably impact our financial performance."

Following the earnings release, market investors should note a key signal: as revenue growth moderates, cost pressures continue to rise, and management has clearly prioritized strategic investment over short-term profitability. Regarding cash reserves, as of the end of 2025, the company's combined cash, cash equivalents, and short-term investments reached 422.3 billion yuan, significantly higher than the 331.6 billion yuan at the end of the previous year.

After the earnings report, PDD's stock price experienced a short-term decline.

**Slowing Revenue Growth, Intensifying Cost Pressures**

For full-year 2025, PDD's total revenue reached 431.8 billion yuan (approximately $61.8 billion), a 10% year-over-year increase, though the growth rate slowed compared to 2024. Both primary revenue streams maintained growth: online marketing services and other revenues grew 10% to 217.8 billion yuan; transaction services revenue increased 9% to 214.1 billion yuan.

However, cost expansion significantly outpaced revenue growth. Full-year operating costs surged 23% to 188.8 billion yuan, an increase roughly double the revenue growth rate, primarily driven by higher fulfillment expenses, bandwidth and server costs, and payment processing fees.

Total operating expenses grew 13% to 148.4 billion yuan, with research and development expenses showing the most notable increase, rising 30% to 16.5 billion yuan, mainly due to higher employee-related costs and bandwidth/server expenditures.

This accelerated cost expansion directly compressed profit margins. Full-year GAAP operating profit fell 13% to 94.6 billion yuan; Non-GAAP operating profit, excluding share-based compensation expenses, also declined 13% to 102.6 billion yuan.

**Fourth Quarter Performance: Revenue Recovery, Net Profit Under Pressure**

In the fourth quarter, revenue increased 12% year-over-year to 123.9 billion yuan, showing a sequential improvement in growth rate. Transaction services revenue performed particularly well, growing 19% to 63.9 billion yuan; online marketing services revenue increased 5% to 60.0 billion yuan.

Quarterly operating profit saw a slight year-over-year increase, rising from 25.6 billion yuan to 27.7 billion yuan. However, pressured by foreign exchange losses and other non-operating items, coupled with a significant year-over-year increase in income tax expenses, quarterly net profit ultimately decreased 11% to 24.5 billion yuan.

Basic earnings per ADS decreased to 17.50 yuan from 19.76 yuan in the prior-year period. Diluted earnings per ADS fell to 16.51 yuan from 18.53 yuan. Non-GAAP diluted earnings per ADS were 17.69 yuan, down 12% year-over-year. Net cash provided by operating activities for the quarter was 24.1 billion yuan, lower than the 29.5 billion yuan in the same quarter last year.

**Management's Stance: Supply Chain Investment is Core to the Next Decade**

Facing slowing performance growth, PDD's management collectively emphasized a clear long-term strategy in the earnings report, steering market expectations.

Co-Chairman and Co-CEO stated that the company adhered to its high-quality development strategy throughout the past year and will continue upholding a long-term approach, dedicating more resources to all stakeholders.

Another Co-Chairman and Co-CEO positioned 2026 as the "starting point for entering the next decade," listing supply chain investment as the highest priority. He emphasized an "all-in" mindset to commit substantial resources for driving lasting benefits across the entire ecosystem.

The Vice President of Finance was most direct, noting that the external environment and competitive landscape are rapidly changing. To meet consumers' evolving needs, the company must continuously explore and increase investment, and these investments "will inevitably impact financial performance." This wording clearly signals to the market that profit pressure may not be a short-term phenomenon.

**Balance Sheet Remains Robust, Cash Reserves Continue to Expand**

Despite profit contraction, PDD's balance sheet remains healthy. As of December 31, 2025, the company's combined cash, cash equivalents, and short-term investments totaled approximately 422.3 billion yuan (about $60.4 billion), an increase of approximately 90.7 billion yuan from 331.6 billion yuan at the end of 2024, providing ample funding for subsequent large-scale strategic investments.

Other non-current assets reached 104.7 billion yuan (approximately $15.0 billion), significantly higher than the 83.4 billion yuan a year earlier, primarily consisting of time deposits, held-to-maturity debt securities, and available-for-sale debt securities.

Total assets expanded from 505.0 billion yuan at the end of 2024 to 630.0 billion yuan. Total equity increased from 313.3 billion yuan to 414.9 billion yuan. For full-year 2025, net cash provided by operating activities was 106.9 billion yuan, lower than the previous year's 121.9 billion yuan, mainly due to the decline in net profit.