Pinduoduo Conference Call: "Re-invest in Supply Chain, Create Another Pinduoduo in Three Years," Profit Margin Fluctuations Will Be the Norm

Pinduoduo maintained steady double-digit revenue growth in Q4 2025 and for the full year. However, amid fierce industry competition and complex global regulatory environments, the company explicitly announced its proactive sacrifice of short-term profits to “go all in” on supply chain re-investment, aiming to “recreate Pinduoduo” over the next three years.

Tonight, the company’s Co-Chairman and Co-CEO Chen Lei, Zhao Jiazhen, CFO Li Jiong, and other core management participated in the subsequent earnings call. During the hour-long discussion, in response to highly关注的热点问题 such as slowing growth, profit margin fluctuations, and global business compliance, Pinduoduo management provided very clear strategic guidance.

As of the release, Pinduoduo’s stock rose 1.91%.

Steady Revenue but YoY Decline in Net Profit, “Offering Benefits to Replenish Ecosystem” as Main Theme

In terms of key financial data, Pinduoduo’s revenue continued to grow steadily. In Q4 2025, total revenue reached 123.9 billion RMB, up 12% YoY; for the full year, total revenue was 431.8 billion RMB, up 10% YoY. Notably, transaction service revenue in Q4 was impressive, reaching 63.9 billion RMB, up 19% YoY.

However, contrasting with revenue growth, the company’s net profit for this quarter and the full year both declined YoY. Regarding this highly sensitive profit indicator, Co-CEO Zhao Jiazhen responded directly. He clearly stated that the profit decline mainly stems from ongoing investments on both supply and demand sides. Zhao Jiazhen said:

“As we have emphasized multiple times, compared to short-term performance, we prefer to focus on the long-term value brought by ecosystem reinvestment.”

He revealed that the company launched a hundred-billion-level merchant benefit strategy in e-commerce for the first time, and absorbed the secondary transfer fees for “delivery into villages” orders, bringing more remote rural areas into free shipping zones. These substantial investments directly impacted current profits.

Focusing on core business: No pursuit of diversification, “Recreating Pinduoduo”

In the context of overall slowing growth in the e-commerce industry and entering a stage of stock competition, where is Pinduoduo’s future growth potential? Management’s answer is not blind expansion but deep internal exploration.

Zhao Jiazhen made a powerful strategic declaration during this meeting:

“In the next phase, the company’s strategic focus is not on diversification but on high-quality development of the supply chain, continuing to leverage our long-term advantages in supply chain to achieve platform re-creation. … We believe that in the next three years, we will have the opportunity to recreate Pinduoduo.”

He further added: “Reinvest in the supply chain, recreate Pinduoduo—that is our duty.” To achieve this, Pinduoduo has launched initiatives like “DuoDuo Good Specialty Products” and “New Quality Supply,” shifting from simple traffic tilt to in-depth support across product R&D, manufacturing, and sales lifecycle.

Facing global challenges: Compliance is the bottom line, external environment brings greater uncertainty

Regarding the highly关注的海外全球化业务（Temu等业务）面临的监管风暴，Co-CEO Chen Lei did not avoid the issue. He admitted that as global political landscapes become more complex, trade, tax, and data regulations in different countries and regions continue to evolve, bringing greater challenges to global operations.

“In recent times, we have indeed received inquiries from some regulatory agencies,” Chen Lei said:

“As our business scales and regulatory environments change rapidly across regions, we recognize that compliance is the bottom line. … This inevitably brings us greater challenges and uncertainties, which will influence and even reshape our development models.”

To address this uncertainty, Chen Lei pointed out that the company’s strategic focus remains on investing in supply chain capabilities, empowering merchants and manufacturers to build direct market-facing abilities, and iterating flexibly to adapt to changes in global trade policies.

Performance guidance: Increased competition, profit margin fluctuations will be “the norm”

Regarding investor concerns about future profit margins, Pinduoduo management provided expectations, explicitly breaking market expectations of sustained high profit margins.

Zhao Jiazhen candidly stated:

“The mismatch in timing between investment and returns will inevitably directly impact our performance at specific stages. … As we continue strategic investments, coupled with the current complex macro environment, the company’s future profit margins will continue to fluctuate between quarters, and this will become a norm.”

Chen Lei also made a sober forecast for the 2026 market environment:

“Since early 2026, competition in the e-commerce industry has intensified, centered around new business models and new technologies. … This will inevitably bring more challenges and pressure to our future performance, impacting our profitability and growth.”

The management strongly recommends the market to shift its evaluation metrics, urging investors to “not focus too much on profit margin in a single quarter, but pay more attention to the high-quality development of our platform ecosystem.”

Full transcript of the conference call:

Host
Now, I am pleased to introduce our Co-Chairman and Co-CEO Zhao Jiazhen. Please, go ahead.

Zhao Jiazhen
Hello everyone, I am Zhao Jiazhen. Thank you all for attending our Q4 2025 and full-year earnings release.

Host
Hello everyone, thank you for joining our Q4 and FY2025 earnings call.

Zhao Jiazhen
2025 marks the tenth year of Pinduoduo’s founding, and it is also the year of the platform’s largest investment in high-quality development. We launched the first hundred-billion-level merchant benefit strategy in e-commerce, with the entire company fully投入, elevating rural support and merchant benefits to a new level. At the year-end shareholders’ meeting, we upgraded our governance structure, implemented a co-chair system, and further shifted our strategic focus to heavy investment in the supply chain. Focusing on high-quality, branded development of the supply chain, driving value leap across the entire system.

Zhao Jiazhen
Over the past year, our performance remained steady. In this quarter, revenue was 123.9 billion RMB, up 12% YoY. For the full year, revenue was 431.8 billion RMB, up 10% YoY. Net profit for this quarter and the full year both declined YoY, mainly due to ongoing investments on both supply and demand sides. As we have emphasized repeatedly, we prefer to focus on the long-term value of ecosystem reinvestment rather than short-term performance.

Zhao Jiazhen
Benefiting from the hundred-billion support policy, long-term investments on both sides of supply and demand have led to steady progress in platform and industry ecosystem development. Agricultural and industrial supply chains have become key drivers supporting the platform and ecosystem, bringing more quality and affordable products to consumers.

Zhao Jiazhen
Under continuous investment, initiatives like DuoDuo Good Specialty Products, New Quality Supply, and Western expansion of e-commerce have expanded support from top merchants to small and medium-sized businesses, penetrating all links of the industry chain, helping merchants achieve differentiation, and crossing from product, quality to branding, greatly improving supply chain efficiency and industry capacity, creating more profit and innovation space for agricultural industry zones.

Zhao Jiazhen
In Q4, the DuoDuo Specialty team deepened support in agricultural specialty zones like Anyue lemons, Pu’er coffee, Wuhan sunflower seeds, Meizhou pomelos, Wenshan blueberries, Fuzhou abalones, and Lianyungang seaweed, through customized support for each product, solving issues like insufficient standardization and low added value, promoting standardization, quality, and deep processing in these zones, effectively increasing added value and leaving more profits at the origin, further promoting sustainable development of agricultural specialties.

Zhao Jiazhen
In industrial zones, the cultivation of new quality supply and upward speed are accelerating. Our teams have visited clusters like Yiwu jewelry, Pinghu down jackets, Hunan spicy strips, Anhui roasted nuts, Tianjin chips, Suzhou-Zhejiang small appliances, and Shanghai chocolates, delving into raw materials and components, and supporting supply chain upgrades through subsidies and support measures. This further releases supply chain advantages and upgrades operational models, helping industrial zones move away from homogeneity.

Zhao Jiazhen
While heavily investing in the supply chain, we also further activate consumption potential in remote areas through Western expansion of e-commerce, actively helping merchants explore new incremental markets. In Q4, based on successful Western expansion, we continued to push last-mile delivery into villages across multiple provinces, expanding inclusive e-commerce from western regions to broad rural areas. To date, we have deployed terminal infrastructure including county transfer warehouses and village collection points in over ten provinces, covering delivery into villages orders with secondary transfer fees, bringing more remote villages into free shipping zones.

Zhao Jiazhen
In platform governance, we continuously improve the consumer and business environment, further enhancing user and merchant experience. During the Spring Festival, we launched multiple measures for food safety governance, including compliance reviews, advertising regulation, live-streaming control, minors protection, IP protection, and food database construction, safeguarding consumers’ food baskets and holiday dinners.

Zhao Jiazhen
Regarding global e-commerce, despite external upheavals, our global business has maintained steady growth over the past year, leveraging our long-standing supply chain advantages. At the previous shareholder meeting, we announced a full re-investment in supply chain upgrades, aiming to recreate Pinduoduo—our core responsibility. Over recent months, this strategic shift has been transforming into concrete actions, with profound changes underway in business and organization. In the next stage, our strategic focus remains on high-quality supply chain development, leveraging our long-term supply chain expertise to achieve platform re-creation and value leap.

Zhao Jiazhen
2026 marks the 11th year since Pinduoduo’s founding and a new starting point for the next decade. We are restarting with an all-in attitude and a determined spirit, investing more manpower and resources, continuing to heavily invest in supply chain upgrades and re-creation. We believe that in the next three years, we will have the opportunity to recreate Pinduoduo.

Zhao Jiazhen
Now I will hand the microphone to Chen Lei for further elaboration.

Chen Lei
Thank you. Hello everyone. 2025 is our tenth anniversary. Jiazhen just mentioned that over the past year, we fulfilled our corporate responsibilities, launched a hundred-billion support plan to give back to the merchant ecosystem, established a co-chair system to improve governance, and kept our strategic focus firmly on high-quality supply chain development. Through these efforts, we continue to create long-term value for customers, merchants, industry, and society. It’s been nearly a year since we launched the hundred-billion support plan. During this period, we have reinvested through fee reductions, merchant support, food safety measures, and more. Our specialized teams have deepened support in agricultural zones and manufacturing clusters, helping hundreds of zones establish standardized production systems and explore differentiated and branded development models. These efforts have significantly improved supply chain efficiency and quality, shifting from scale-driven to value-driven transformation. This has also brought more high-quality, affordable products to consumers. Our ongoing investments in supply chain have unleashed strong consumer demand on the platform. During major sales events like 618, Double 11, and the Spring Festival, the platform performed strongly. High-quality products from different regions crossed geographic boundaries, offering consumers more choices and further improving their quality of life.

Chen Lei
Our global e-commerce business has continued steady growth, reaching a considerable scale in most countries. In three years, we have achieved what took Pinduoduo ten years domestically. However, over the past year, the global political landscape has become more complex. Trade and regulatory policies in various countries and regions continue to evolve, bringing greater uncertainty to our global operations and potentially reshaping our development models. Against this backdrop, we rely more than ever on the collective capabilities of our supply chain ecosystem. Therefore, we will continue to deepen investments in supply chain capabilities, channeling more resources into transformation. Our goal is to empower merchants and manufacturers to become innovators with direct market-facing abilities—insight into consumer needs, product conception, branding—driving high-quality, branded growth and creating real value for consumers.

Chen Lei
In recent months, the execution of our three-year strategic plan, approved at the shareholder meeting, has made steady progress. We are pleased to see some results in Q4. Our local investments in agricultural research have yielded new outcomes. Last October, we participated for the second consecutive year in the UN Food and Agriculture Organization’s World Food Forum, sharing our experience and achievements in supporting digital agricultural innovation. We also sponsored two agricultural R&D teams to present at the forum, injecting new vitality into agricultural research. Since early 2026, competition in the e-commerce industry has intensified, focusing on new business models and technologies. Meanwhile, the global environment has become more complex, with increased uncertainty in economic, trade, and regulatory policies. This will inevitably bring more challenges and pressure to our future performance, impacting profitability and growth. Nonetheless, we will continue to adhere to a long-term perspective, faithfully executing our supply chain deepening strategy, investing more resources to give back to industry and society. Now, I will hand the call to Li Jiong, who will discuss our financial performance for FY2025.

Li Jiong
Thank you, Lei. Hello everyone, I am Li Jiong. Let me now review our financial results as of December 31, 2025, for Q4 and the full year. Regarding the income statement, in Q4, our total revenue increased 12% YoY to 123.9 billion RMB; for the full year, total revenue was 431.8 billion RMB, up 10% YoY. This was mainly driven by increases in online marketing and transaction service revenues.

Li Jiong
Online marketing and other revenues in Q4 were 60 billion RMB, up 5% from 2024. Transaction service revenue in Q4 was 63.9 billion RMB, up 19% YoY. Moving to costs and expenses, our total cost of revenue rose 15% from 47.8 billion RMB in Q4 2024 to 55.2 billion RMB this quarter.

Li Jiong
For the full year, total cost of revenue increased 23% to 188.8 billion RMB, mainly due to higher fulfillment, bandwidth, server, and payment processing costs.

Li Jiong
Under GAAP, total operating expenses in this quarter grew 10% from 37.2 billion RMB in 2024 to 41 billion RMB. Under non-GAAP, total operating expenses increased from 35.1 billion RMB in Q4 2024 to 39.3 billion RMB. Non-GAAP total operating expense as a percentage of revenue was 32% in Q4. For FY2025, non-GAAP total operating expenses were 140.7 billion RMB, up from 122 billion RMB in 2024. Specific expense items include non-GAAP sales and marketing expenses of 34 billion RMB, up 9% YoY. As a percentage of revenue, non-GAAP sales and marketing expenses were 27% in Q4, compared to 28% in Q4 2024. For the full year, non-GAAP sales and marketing expenses increased from 109.1 billion RMB in 2024 to 123.3 billion RMB in 2025.

Li Jiong
Non-GAAP general and administrative expenses in Q4 were 907 million RMB, compared to 998 million RMB in the same period of 2024. For FY2025, non-GAAP G&A expenses were 3.2 billion RMB, up from 2.8 billion RMB in 2024. R&D expenses on a non-GAAP basis in Q4 were 4.4 billion RMB, and on GAAP basis 5 billion RMB.

Li Jiong
Under GAAP, operating profit in this quarter was 27.7 billion RMB, compared to 25.6 billion RMB in the same period of 2024. Non-GAAP operating profit was 29.5 billion RMB, versus 28 billion RMB in 2024. The non-GAAP operating profit margin was 24% in Q4, compared to 25% in the same period last year. For FY2025, non-GAAP operating profit was 102.6 billion RMB, down from 118.3 billion RMB in 2024. Net profit attributable to ordinary shareholders in this quarter was 24.5 billion RMB, and for the full year, 99.4 billion RMB. In Q4, basic EPS was 17.50 RMB per ADS, diluted EPS was 16.51 RMB per ADS, compared to 19.76 RMB and 18.53 RMB respectively in the same period of 2024.

Li Jiong
Non-GAAP net profit attributable to ordinary shareholders in Q4 was 26.3 billion RMB, and for the full year, 107.3 billion RMB.

Li Jiong
In Q4, non-GAAP diluted EPS was 17.69 RMB, compared to 20.15 RMB in the same period of 2024. That concludes the income statement. Now, I will talk about cash flow. Net cash from operating activities in Q4 was 24.1 billion RMB; for FY2025, it was 106.9 billion RMB, compared to 29.5 billion RMB in Q4 2024 and 121.9 billion RMB for the full year 2024. As of December 31, 2025, the company held 422.3 billion RMB in cash, cash equivalents, and short-term investments. Thank you, that concludes my prepared remarks. Thank you, Joey.

Host
Next, we will move to the Q&A session. Today, Lei and Jiazhen will answer questions from online analysts. Each analyst may ask up to two questions. Lei and Jiazhen will answer in Chinese and assist with translation. Operator, we are ready to begin.

Operator
Ladies and gentlemen, we will now begin the Q&A session. If you wish to ask a question, please press *1 on your phone and wait for your name to be announced. To cancel your request, press #. Each participant is limited to two questions at a time. The first question comes from Malaysia Yap of Citibank.

Malaysia Yap
Hello, thank you. Good evening, management. Thanks for taking my questions. I have two questions. First, at our company’s shareholder meeting at the end of last year, some organizational adjustments were made. Currently, the company operates in over 90 markets and faces new challenges from complex regulatory environments. How does management plan to maintain agility and execution in such an environment? Second, in the past quarter, we saw growth in e-commerce platforms slow down, and online marketing revenue growth in the past two quarters has also decelerated. Could management share their views on the current state of China’s e-commerce market and where the next phase of industry growth might come from? I will translate briefly. Two questions: first, about the organizational adjustments at the end of last year; second, about the slowdown in e-commerce growth and online marketing revenue, and where future growth opportunities lie.

Zhao Jiazhen
Hello, I am Zhao Jiazhen. I will answer the first question. Over the past few years, our global business has indeed made breakthrough progress, now covering nearly 100 markets and reaching a certain scale.

Zhao Jiazhen
During this process, we feel that our governance and internal talent development have lagged behind the business growth, especially in many areas. The rapid changes in international geopolitical situations, trade policies, and regulatory environments also pose new requirements for our company.

Zhao Jiazhen
Therefore, we believe there is both opportunity and necessity to systematically and structurally reform our organizational culture and governance. Of course, this is a process. In December last year, we announced the co-chair system and appointed new leadership, marking the beginning of this systemic transformation.

Zhao Jiazhen
Moving forward, we will invest greater efforts, capital, and resources into upgrading and re-creating the supply chain, achieving a comprehensive upgrade of our operational model.

Zhao Jiazhen
As for your second question, indeed, as you mentioned, in recent quarters, we have seen intensified competition and slowing growth in the e-commerce industry. In this new stage, we recognize that heavy investment in the supply chain is essential because e-commerce platforms should not be just simple transaction venues but should create more value for all participants in the supply chain.

Zhao Jiazhen
Heavy investment in the supply chain covers multiple aspects. Recently, initiatives like DuoDuo Good Specialty Products and Western expansion of e-commerce are all inclusive projects aimed at empowering the supply chain. I’d like to highlight two specific initiatives.

Zhao Jiazhen
The first is free delivery into villages, a new pilot project launched in Q4 last year. Its goal is to address the high logistics costs and low shipping willingness in remote administrative villages. We aim to include more remote villages into free shipping zones. Currently, Pinduoduo has built county transfer warehouses and village collection points across many regions, with the platform bearing the secondary transfer fees for delivery into villages.

Zhao Jiazhen
The second is the New Quality Supply platform, targeting high-quality merchants willing to improve product quality and service. Through industry insights and supply chain collaboration, we help merchants upgrade across R&D, manufacturing, and sales, reshaping the supply chain system.

Zhao Jiazhen
The platform can do a lot, such as product R&D. Traditionally, new product development involves luck, but within our ecosystem, key information is quickly shared with merchants, and supported by traffic, new products can be tested and iterated efficiently.

Zhao Jiazhen
These are two concrete examples of our supply chain upgrade. Facing industry slowdown and intensified competition, we have proactively invested resources into building high-quality supply chains. Our investments in new supply models and last-mile delivery into villages will be key drivers for sustainable growth in the next decade.

Host
Operator, we are ready for the next analyst question.

Operator
Your next question is from Kenneth Long of UBS. Please go ahead.

Kenneth Long
Thank you for taking my questions. I have two. First, regarding our global business, which has experienced some volatility recently, starting last year, we saw some major markets undergo high-profile regulatory investigations, and significant changes in trade policies related to our business. Could management share their views on the current external environment? Where will the focus of our global development be? Second, about profit margins—over the past few quarters, margins have fluctuated. Could management share how different business models introduced recently might impact long-term profit margins, and how we should think about the company’s long-term profit level? I will briefly translate.

Chen Lei
Kenny, hello. I am Chen Lei. I will answer your first question. Over the recent period, we have indeed received inquiries from some regulators. As our global business has grown rapidly, we operate in many countries, and the associated scrutiny and stricter reviews are understandable.

Chen Lei
However, we believe that current regulatory rectification lays a good foundation for our next growth phase and guides our model iteration amid rapid changes in international political and policy environments. Since we began global expansion, we have always adhered to a long-term perspective, focusing on sustainable development in each market based on supply chain strength. We aim to create real value for consumers.

Chen Lei
As our business scales and regulatory environments change quickly, we recognize that compliance is the bottom line. As a company operating in local communities, we believe we must meet local needs, stay true to our original mission, and fulfill our responsibilities. Contributing to society is the fundamental responsibility of an e-commerce platform. Our management team has invested heavily in compliance.

Chen Lei
At the same time, we see that trade, tax, data, and product compliance regulations are changing significantly across countries and regions. These requirements often vary greatly and sometimes conflict, inevitably bringing greater challenges and uncertainties.

Chen Lei
We are actively learning and adapting to these changes, continuously improving our compliance capabilities to create sustainable value for society.

Chen Lei
You also mentioned changes in global trade policies. Since early last year, we have observed some shifts in major markets’ trade policies. While ensuring compliance, our teams quickly iterated our business models based on local regulatory and market conditions to provide reliable services to consumers. This is closely related to our long-standing supply chain capabilities.

Chen Lei
Therefore, looking ahead, our global strategy will still prioritize investment in supply chain capabilities. Every link directly affects the shopping experience, so this will remain our key investment focus.

Zhao Jiazhen
Hello, I am Zhao Jiazhen. I will answer your second question. First, I want to clarify that the company is still in the strategic investment phase. External environments and competitive landscapes are changing rapidly. To meet evolving consumer needs, we are working closely with merchants, continuously exploring and launching new business models suitable for the new environment. Any new model requires initial resource投入.

Zhao Jiazhen
Whether exploring new business models or strategic investments in supply chain, these are foundational, long-term efforts. The mismatch in timing between investment and returns will inevitably impact our performance at certain stages.

Zhao Jiazhen
We have communicated multiple times that, in the short term, we prioritize platform ecosystem long-term value over immediate financial performance. As we continue strategic投入 and considering the complex macro environment, profit margins will continue to fluctuate between quarters—this will be the norm.

Zhao Jiazhen
In recent months, the major strategic initiatives announced at the shareholder meeting are turning into concrete projects, with profound changes in business and organization. We advise everyone not to focus too much on quarterly profit margins but to pay more attention to the high-quality development of our platform ecosystem. Only a healthy ecosystem and a strong supply chain can sustain long-term growth.

Host
Okay, Joyce, please ask your question.

Joyce
My first question also relates to profit margins. Since last year, the company has launched several investment initiatives, including the billion-yuan support plan last year. Management just mentioned reinvesting heavily in the supply chain. Could you elaborate on how the company views the investment return cycle of these projects? And in the long run, how will they impact our financial performance? My second question is about recent retail performance—over the first two months of this year, online retail showed very strong growth. Could management share their views on consumer markets? Does the company have targeted strategies to seize new opportunities in fast-growing categories? Thank you.

Zhao Jiazhen
Hello, I am Zhao Jiazhen. I will answer your questions. About a year ago, we realized the importance of sustainable long-term development of the platform ecosystem, so we launched a series of plans like the hundred-billion fee reduction and support initiatives, investing real resources to support merchants and industries, creating room for supply chain upgrades.

Zhao Jiazhen
Our management team believes that as the platform grows into a socially influential public platform, we should consider the broader public interest and industry health. The strategic focus on core business and supply chain upgrading announced at the last shareholder meeting is an extension and intensification of this approach.

Zhao Jiazhen
Over years of development, the e-commerce ecosystem has matured, and merchants now demand more diverse support from the platform—from initial transaction facilitation to comprehensive business partnership. Merchants’ needs now extend from traffic to R&D, manufacturing, and sales. This requires us to refine operations, tailor solutions for different industries, and build more competitive supply chains.

Zhao Jiazhen
Such long-term, structural investments involve countless merchants and cannot be achieved overnight. We are prepared for long-term patience. We are pleased to see some results already, such as merchants using the support from new quality supply projects to expand R&D and upgrade production lines, leveraging digital empowerment to pursue product differentiation.

Zhao Jiazhen
These long-term investments won’t immediately reflect in short-term financials, but they are crucial for the sustainable growth of our platform and ecosystem. We will diligently implement these investments, reinvesting in the ecosystem, reducing merchant costs, improving supply chain quality, and enhancing consumer experience. Through the core supply chain, we aim to recreate the platform and drive ecosystem value leap.

Zhao Jiazhen
Regarding your second question, we are very pleased to see the consumer market continue to improve. However, under intense competition, we still face challenges. Future platform performance will increasingly depend on how much incremental value we can create for the overall supply chain, rather than just traffic acquisition.

Zhao Jiazhen
Therefore, we firmly choose to focus on the supply chain. Our merchant teams will work closely with merchants, providing tailored industry solutions based on insights, helping merchants develop new models.

Zhao Jiazhen
We believe these investments are essential for advancing the high-quality development of the e-commerce supply chain, and we will pursue them long-term.

Host
Thank you, Joyce, and thank you, Jiazhen. Thank you all for participating today. We look forward to speaking with you again next quarter. Thank you, and have a great day.

Operator
Ladies and gentlemen, today’s conference has concluded. Thank you for your participation. You may now hang up.