Revenue Climbs 12% While Net Income Drops 11%
PDD Holdings announced on March 25, 2026, that its fourth-quarter revenue grew 12% year-over-year to RMB123.9 billion ($17.7 billion), beating analyst expectations. The growth was led by a 19% rise in revenues from transaction services, which reached RMB63.9 billion. Revenue from online marketing services also increased by a more modest 5%.
However, this top-line growth came at a cost to profitability. Net income attributable to ordinary shareholders for the quarter decreased by 11% to RMB24.5 billion ($3.5 billion). Non-GAAP net income saw a similar 12% decline to RMB26.3 billion ($3.8 billion). The contraction in profit reflects a significant rise in operating costs, as total costs of revenues expanded by 15% during the quarter.
Company Boosts Spending With 30% Increase in Annual R&D
PDD's leadership framed the profit decline as a deliberate part of its long-term strategy. The company is channeling significant resources into strengthening its core infrastructure, particularly its supply chain. For the full fiscal year 2025, research and development expenses surged 30% to RMB16.5 billion, while sales and marketing expenses grew 13% to RMB125.3 billion, primarily due to increased promotion and advertising.
Management explicitly acknowledged the trade-off between current earnings and future growth. The company's focus on what it calls "high-quality development" involves making substantial, long-term investments that are expected to weigh on financial results in the short term.
The external environment and competitive landscape are undergoing rapid changes. To meet the evolving needs of consumers, we must continually explore and make investments. These investments are firm and long-term, and will inevitably affect our financial performance.
— Jun Liu, VP of Finance of PDD Holdings.
PDD Signals Long-Term Focus Over Profitability
Co-CEOs Lei Chen and Jiazhen Zhao reinforced the message of strategic reinvestment, stating that 2026 marks the beginning of the company's "journey into the next decade." Zhao emphasized that supply chain investment is where the company will place its "greatest conviction" with an "all-in mindset." This pivot indicates that investors should anticipate continued pressure on margins as PDD prioritizes building a more resilient and efficient e-commerce ecosystem over delivering immediate profit growth.
The company is well-capitalized to pursue this strategy, ending the year with a formidable cash, cash equivalents, and short-term investments balance of RMB422.3 billion ($60.4 billion). This strong financial position provides PDD with the flexibility to absorb higher costs and fund its ambitious expansion and infrastructure projects without needing to tap external capital markets.
