Temu parent PDD Holdings Inc (NASDAQ:PDD) reported fiscal fourth-quarter 2025 results on Wednesday that missed the Street’s expectations.

Revenue grew 12% year-on-year (Y/Y) to $17.72 billion (123.92 billion Chinese yuan), missing the analyst consensus estimate of $17.93 billion.

Revenues from online marketing services and others rose 5% Y/Y to $8.58 billion, and revenues from transaction services grew 19% Y/Y to $9.14 billion.

Total costs of revenues rose 15% Y/Y to $7.89 billion, mainly due to higher fulfilment fees, bandwidth and server costs, and payment processing fees. Total operating expenses rose 10% Y/Y to $5.87 billion.

Profits And Margins

The Chinese online retailer reported:

• Adjusted operating profit rose 5.3% Y/Y to $4.21 billion. The adjusted operating margin declined from 25.3% to 23.8% Y/Y.
• The net income declined 11% Y/Y to $3.51 billion.
• The adjusted net income fell 12% to $3.76.
• Adjusted earnings per ADS of $2.53 (17.69 Chinese yuan) decreased from 20.15 Chinese yuan Y/Y, missing the analyst consensus estimate of $3.21. 
• $60.4 billion in cash and equivalents as of December 31, 2025.
• $3.45 billion in operating cash flow during the quarter.

PDD, a major rival to Alibaba Group Holding Ltd (NYSE:BABA), is facing pressure from a slowdown in Chinese consumer demand and increased regulatory scrutiny. Authorities in Beijing expanded an investigation into the company’s accounting and tax practices after a widely publicized clash between its employees and regulators in December, Bloomberg reported on Wednesday.

The company has rapidly grown from a venture-backed startup into a leading e-commerce player in China, at one point surpassing Alibaba in market value.

At the same time, PDD is dealing with volatile domestic consumption, rising tariffs, and the removal of a tax loophole that had supported discount-focused platforms like Temu and Shein in the U.S.

Executive Commentary

Jiazhen Zhao, co-chairman and co-CEO, said 2026 marks the start of the company’s next decade, with a strong emphasis on supply chain investment and a commitment to deploying significant resources to support the broader ecosystem.

Jun Liu, VP of Finance, said PDD is increasing investments to keep up with changing consumer needs and a shifting competitive landscape, noting that these long-term commitments will impact financial performance.

Price Action: PDD stock was trading lower by 1.35% to $96.77 premarket at last check on Wednesday.

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