Temu’s parent company, PDD Holdings announced their Q3 2025 earnings earlier this week (18 November).
The quarterly results showed a slowdown in PDD’s advertising revenue growth, and company executives indicated that more focus will be placed on long-term investments such as platform ecosystem development and merchant subsidies, noting that profitability may remain unstable in the near term.
The market reacted negatively. PDD’s stock price fell 7.33% on the day of the earnings call and continued to trend downward over the following days.
We also noticed that AI – the buzz word for many listed companies – was not mentioned at all during the PDD earnings call.
PDD Co-CEOs Lei Chen & Jiazhen Zhao
We will share our views shortly, but first, here are the minutes we translated from the executives’ Chinese responses in the Q&A part of the earnings call. The text here might differ from the translation provided by the company itself. You can find the full earnings report on PDD Holdings’ investor relations web site.
Q&A Session
Q: Joyce Ju – BofA:
Online retail saw a recovery in Q3, with the industry posting its strongest year-on-year growth in recent quarters. How does the company view the recent industry trends?
A: Jiazhen Zhao, Co-CEO and Executive Director:
In recent quarters, the industry has entered a new investment cycle. The e-commerce landscape is changing rapidly and competition is inevitable. The company remains focused on creating unique value for consumers and merchants, rather than over-emphasising short-term industry movements or competitors. Leveraging its own advantages, the platform will pursue high-quality development and enhance capabilities to better serve merchants and consumers. The company also welcomes the recovery in online retail.
At the beginning of this year, the company upgraded its platform ecosystem and launched the “Hundred-Billion Merchant Support Initiative,” proactively giving back to merchants and the broader industry, creating space for innovation and growth for both brand merchants and SMEs. The company also established the Merchant Rights Protection Committee to build a long-term mechanism for communication with merchants, carried out targeted upgrades to the merchant after-sales service system, improved the handling of abnormal order after-sales issues, and optimised the overall merchant operating environment. Going forward, strategic programmes like the hundred-billion support plan—benefiting both supply and demand—will continue to increase, and the company will further enhance efforts to give back to industries and society.
Regarding growth, as the platform scales and competition intensifies, high growth is not sustainable and the growth rate will slow. After the implementation of investments such as the hundred-billion support plan, financial performance will experience fluctuations in the near term. However, the company will stay focused on long-term value creation, delivering unique value and achieving sustained intrinsic growth over time.
Q: Joyce Ju – BofA:
What are the main reasons for the slowdown in advertising revenue growth and the fluctuation in monetisation rates? Will this trend continue?
A: Jiazhen Zhao:
Competition in the market continues to intensify. Peers are investing substantial capital and resources to develop new models, and competition around emerging formats in e-commerce is heating up. The company will continue to invest real money to give back to the platform ecosystem. Major merchant-support initiatives—such as large-scale fee reductions and the hundred-billion support programme—will remain in place for the long term, and more such measures will be introduced going forward. The company is willing to sacrifice profits in order to create room for the ecosystem to grow—this is long-term investment. For example, under the CNY 100 billion support strategy, the company has launched several local specialty initiatives, helping high-quality agricultural merchants significantly expand the scale and efficiency of moving agricultural products online.
Long-term investments will inevitably affect revenue and profit performance. As the external environment changes and competition intensifies, long-term investments will certainly increase. This quarter’s profit should not be used as performance guidance, and fluctuations in performance over the coming quarters cannot be ruled out.
Q: Alicia Yap – Citigroup:
In your global operations, the company and industry peers are facing regulatory and public scrutiny in multiple countries. How does management view this situation, and what measures are being taken in response?
A: Lei Chen, Co-CEO and Chairman:
After more than three years of development, the company’s global business now serves consumers across multiple markets and has received positive feedback. The goal is to achieve long-term, healthy growth in every market and create value for consumers worldwide. To that end, the company has been focused on integrating into local cultures, customs, and legal and compliance systems, becoming an organic part of each local market.
Platform governance and product compliance are key pillars of the company’s high-quality development strategy. The company has invested heavily in this area: on the technology front, it continually optimises merchant onboarding and product listing procedures; dedicates substantial resources to combine automation with manual review to proactively monitor product listings, transactions, and after-sales processes; and enhances capabilities for identifying and responding to safety and compliance risks. The company also works closely with external stakeholders, listens to feedback, and holds itself to high standards. In terms of team building, it continues to invest in professional compliance teams that closely track regulatory trends in each market and adjust operations accordingly.
Even so, regulatory changes across countries and regions—in areas such as trade policy, tax data, and product compliance—remain significant, bringing greater challenges and uncertainty. As a young global company, the company is working hard to learn and adapt to these changes, but considerable uncertainty remains. Such uncertainty may expose the company to unpredictable and hard-to-quantify risks that could affect financial performance in the short and even long term. In the face of these uncertainties, the company will focus on strengthening its core capabilities, enhancing platform compliance capacity, and nurturing a healthier and more sustainable ecosystem.
Q: Alicia Yap – Citigroup:
How effective are the company’s current investments in the merchant ecosystem? How do you assess their financial impact?
A: Jiazhen Zhao:
The company has grown from a startup into a public platform with meaningful social influence, benefiting from the development of the digital economy. It has always upheld its social responsibility and, over the past decade, explored how digital tools can serve broader communities—especially through continued investment in agricultural revitalisation and industrial upgrading. It launched large-scale, strategic initiatives such as the “Hundred-Billion Agriculture programme” to inject new momentum into agricultural modernisation. This year, it became the first in the e-commerce industry to roll out the “CNY 100 billion Merchant Support Initiative,” improving the platform ecosystem through measures such as “Duoduo Local Specialty (多多好特产)”, “New Quality Supply (新质供给)”, and “E-commerce Westbound (电商西进)”.
A healthy and sustainable merchant ecosystem is a key foundation for the platform’s high-quality development. The company hopes that its policies can help quality merchants achieve high-quality growth. For example, fee-reduction policies lower merchants’ operating costs and help them improve their products and services.
The platform’s ecosystem investments have already generated some positive feedback. Going forward, the company will continue addressing real issues faced by users, merchants, and industries, building a win-win ecosystem for all stakeholders and taking on greater social responsibility.
Q: Kenneth Fong – UBS:
How do you think about the pace of investment and profitability? What new consumer trends did you observe during the Double 11 shopping festival?
A: Jiazhen Zhao:
In Q3, competition intensified, and combined with continuous ecosystem investments under the CNY 100 billion support initiative, the company’s revenue remained under pressure, with operating margins declining both year-on-year and quarter-on-quarter. As the pace of industry competition continues to accelerate, the company will stay focused on the long term and continue increasing investments in the platform ecosystem—for example, through merchant fee reductions and marketing support for high-quality merchants—to create more room for industrial development and upgrading. These investments will pose financial challenges to revenue and profit for some time.
Meanwhile, the company’s global business faces a complex international environment. Macroeconomic policies and regulatory landscapes across countries and regions have undergone—and are expected to continue undergoing—significant changes, bringing unpredictable risks and challenges that may impact financial performance in the short and even long term. The company is committed to pursuing long-term, healthy, and high-quality development, and does not rule out fluctuations in financial performance over the coming quarters. Linear extrapolation should not be applied.
Over the past few months, overall consumer sentiment has remained positive, and market confidence is gradually recovering. During major promotional events, consumer activity in the e-commerce industry was further stimulated, showing a generally steady and improving trend. However, competition in the e-commerce sector remains extremely intense. New formats and business models continue to emerge, market dynamics keep evolving, and major players are increasing investments in new business directions, further escalating competition. The company’s business is facing challenges on all fronts.
In this environment, the company will raise its own standards, strengthen core capabilities, and continue deepening efforts in supply chain optimisation and platform ecosystem development to seek new growth opportunities. With a long-term perspective, the company will increase high-quality investments and translate its capabilities into products and services that offer better value-for-money for consumers. This process is difficult and ongoing. For a considerable period, the company may find itself at a temporary disadvantage compared with some peers, and may face financial pressure such as slowing revenue growth. Nevertheless, the company remains confident and determined, choosing to assess competition with a long-term view and proactively increasing investment—even at the expense of short-term profits—to create more possibilities for healthy ecosystem growth and future development, thereby building more solid and sustainable long-term value.
[THE END]
Disclaimer:
This earnings call minutes was compiled by Momentum Works from the publicly available earnings call of PDD Holdings held on 18 November 2025. It is intended solely for informational and analytical purposes. The minutes may contain unintentional errors or omissions of some details due to audio quality, accents, and real-time interpretation during the call.
All spoken content remains the copyright and intellectual property of PDD Holdings. Please refer to the company’s official recording or transcript for complete accuracy and authoritative reference.
Any analysis, commentary, or opinions provided by Momentum Works are independent, based on our own research and perspectives, and do not represent the views of PDD Holdings or any other organisations mentioned.
You can also make reference to the following Momentum Works reports for more:
