Temu parent PDD Holdings saw income drop dramatically last quarter, amid United States tariff pressures and low consumer confidence in China.
Net income was CN¥14.74 billion, falling by 47% year-over-year. Total revenues increased by 10% to ¥95.67 billion, but this was well below the ¥103.06 billion estimated by FactSet analysts.
“In the first quarter, we made substantial investments in our platform ecosystem to support merchants and consumers amid rapid changes in the external environment,” said PDD chair and co-CEO Lei Chen. “These investments weighed on short-term profitability but gave merchants the room to adapt and focus on high-quality, sustainable growth, strengthening the long-term health of the platform.”
Operating profit declined by 38% to CN¥16.09 billion. Diluted earnings per share fell to ¥2.49, down from ¥4.74 one year earlier.
Revenue from its online marketing services rose by 15% to CN¥48.72 billion, while transaction services revenue was up 6% to ¥44.36 billion.
Total operating expenses grew by 37%, reaching CN¥38.64 billion, largely due to a 43% increase in sales and marketing expenses.
China’s consumer confidence index has remained low since 2022, despite 4.6% overall sales growth in the country last quarter.
Chinese e-commerce retailers like Temu have also been heavily impacted by the U.S.’ tariffs. Temu began adding import charges of around 145% to the price of many products last month, before reversing course and electing to fulfill U.S. orders from local warehouses.
While the company did not provide full guidance, “a slowdown in growth rate is expected as our business scales and challenges emerge,” said PDD vice president of finance Jun Liu.
PDD Holding’s (NASDAQ: PDD) share price closed at US$102.98 after the earnings release, down from its previous close of $119.24. Its market capitalisation is $146.1 billion.
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