PDD Holdings, the Chinese e-commerce group behind Temu and Pinduoduo, beat Wall Street's profit estimates for the second quarter even as revenue growth slowed and a fresh European Union fine weighed on the results, the company reported Monday.
Revenue rose 8% year over year to 112.36 billion yuan ($16.6 billion), missing analysts' forecast of roughly 113.9 billion yuan. Net income fell 12% from a year earlier to 27.18 billion yuan ($4 billion), though that still cleared Wall Street's estimate of about 24.4 billion yuan, and adjusted earnings per share of 19.33 yuan topped consensus of 18.35 yuan, according to Bloomberg. Operating expenses climbed 13% to 36.58 billion yuan, driven largely by higher sales and marketing spending as Temu keeps investing to win share overseas.
EU penalty adds to the pressure
The quarter's results were complicated by a fine of more than $230 million levied by European Union regulators, who found Temu's marketplace had inadequate safeguards against illegal product listings, according to Yahoo Finance. Co-chairman and co-CEO Jiazhen Zhao struck a conciliatory tone on the earnings call.
We view compliance as a fundamental priority and are fully committed to safeguarding consumer rights.
Jiazhen Zhao, Co-Chairman and Co-CEO, PDD Holdings
PDD ended the quarter with 456.4 billion yuan ($67.3 billion) in cash, cash equivalents and short-term investments, up from 422.3 billion yuan at the end of 2025 — a cushion the company has been reluctant to deploy toward buybacks or dividends, a point of continuing frustration for some investors. The stock's reaction Monday was muted and mixed across trading desks, consistent with American depositary receipts that are down more than 20% so far this year amid intensifying domestic competition from Alibaba and JD.com alongside regulatory scrutiny of Temu's international expansion.
Deutsche Bank analysts said following the report that PDD's "fundamentals haven't yet bottomed out," citing concerns over shareholder returns and disclosure transparency. The results add PDD to a growing list of Chinese consumer-tech names navigating both slowing domestic growth at home and mounting regulatory friction in Western markets, as Temu tries to sustain its overseas expansion without triggering further penalties from EU authorities who have scrutinized the platform's product-safety practices before.
The report lands in a busy week for Chinese consumer and tech earnings more broadly, with investors using PDD's mixed results as an early read on how much pricing and margin pressure persists across the sector heading into the back half of the year.