--- title: "PDD Q2 Revenue RMB 112.36 Billion, Transaction Service Revenue Up 13%, Adjusted Earnings per ADS Beat Expectations | Earnings Review" type: "News" locale: "en" url: "https://longbridge.com/en/news/296778774.md" description: "PDD's revenue in the second quarter of 2026 grew 8% year-over-year, with a 13% increase in transaction service revenue serving as the main support. Net profit attributable to shareholders fell 12% year-over-year to RMB 27.2 billion, but adjusted earnings per ADS of RMB 19.33 exceeded expectations. The company increased investment in its ecosystem, leading to significant rises in sales, R&D, and administrative expenses. Operating cash flow reached RMB 25.7 billion, up 19% year-over-year, while cash reserves totaled RMB 456.4 billion, providing support for long-term ecosystem development" datetime: "2026-08-24T11:16:09.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296778774.md) - [en](https://longbridge.com/en/news/296778774.md) - [zh-HK](https://longbridge.com/zh-HK/news/296778774.md) generator: "portal-rs" --- # PDD Q2 Revenue RMB 112.36 Billion, Transaction Service Revenue Up 13%, Adjusted Earnings per ADS Beat Expectations | Earnings Review On August 24, PDD released its unaudited financial results for the second quarter of 2026 ended June 30. In the second quarter, the company achieved revenue of RMB 112.36 billion, an 8% year-over-year increase, **with transaction service revenue rising 13% year-over-year to RMB 54.7 billion, becoming the primary support for revenue growth.** Profit performance showed divergence. Operating profit in the second quarter increased 8% year-over-year to RMB 27.8 billion, but net profit attributable to ordinary shareholders decreased 12% year-over-year to RMB 27.2 billion. Non-GAAP net profit declined 13% year-over-year to RMB 28.5 billion. Pressure on profits was mainly due to increased ecosystem investments and losses from non-operating items. **However, adjusted earnings per ADS were RMB 19.33, higher than the market expectation of RMB 18.51, with adjusted operating profit and net profit also exceeding expectations.** Cash flow performance remained robust. Net cash flow from operating activities in the second quarter was RMB 25.7 billion, an increase of approximately 19% from RMB 21.6 billion in the same period last year. As of June 30, the company's total cash, cash equivalents, and short-term investments amounted to RMB 456.4 billion, further increasing from RMB 422.3 billion at the end of 2025. Ample cash reserves provide support for continued business and ecosystem investments. From management's statements, the company is currently emphasizing long-term platform ecosystem construction. Management stated that **ecosystem investments were increased this quarter, prioritizing "helping merchants develop" and "strengthening the industry ecosystem." In the short term, this means the company is still exchanging increased investment for platform ecosystem strength and long-term competitiveness, which has consequently impacted profit performance.** Following the earnings release, PDD's US shares initially dropped in pre-market trading before quickly rebounding, currently up more than 3%, after having fallen nearly 5% earlier. **** ## Revenue Growth Slows, Transaction Services Become Main Support In the second quarter, PDD's revenue grew 8% year-over-year to RMB 112.36 billion, slightly below the market expectation of RMB 115.2 billion. From a business structure perspective, **transaction service revenue performed more prominently, reaching RMB 54.7 billion, a 13% year-over-year increase, becoming the main driver of revenue growth this quarter.** **In contrast, online marketing services and other revenue totaled RMB 57.6 billion, a year-over-year increase of approximately 3.5%, marking a significant slowdown from previous periods. The revenue scales of the two business segments are now relatively close, further enhancing the importance of transaction services.** Cumulatively for the first half of the year, the company's online marketing service revenue was approximately RMB 107.6 billion, while transaction service revenue was approximately RMB 111 billion, with the latter basically keeping pace with marketing revenue. As the platform's transaction volume expands, PDD's revenue structure is continuously shifting towards transaction services. ## Profit Under Pressure, But Core Operating Indicators Remain Resilient Profit performance showed divergence. The company's operating profit in the second quarter was approximately RMB 27.8 billion, an 8% year-over-year increase; net profit attributable to ordinary shareholders was approximately RMB 27.2 billion, a 12% year-over-year decrease. On a Non-GAAP basis, net profit was RMB 28.49 billion, a 13% year-over-year decline. **However, looking at the adjusted metrics closely watched by the market, the company's profitability still exceeded expectations.** Adjusted earnings per ADS in the second quarter were RMB 19.33, higher than the market expectation of RMB 18.51; adjusted operating profit was RMB 29.07 billion, also higher than the expected RMB 28.41 billion; adjusted net profit was RMB 28.49 billion, higher than the expected RMB 28.02 billion. Profit margins were affected by increased investments and fluctuations in non-operating items. The "other income/(loss), net" recorded a loss of approximately RMB 7.4 billion in the second quarter, compared to a small profit in the same period last year, significantly dragging down current net profit. Meanwhile, net interest and investment income reached RMB 13.5 billion, a year-over-year increase of approximately 30%, partially offsetting this impact. ## Increased Expense Investment, Ecosystem Construction Enters Investment Phase In the second quarter, the company's cost of revenue was RMB 48 billion, a year-over-year increase of approximately 5%; the three operating expenses—sales and marketing, general and administrative, and research and development—totaled approximately RMB 36.6 billion, a 13% year-over-year increase, higher than the revenue growth rate. Among these, sales and marketing expenses were RMB 29.7 billion, a year-over-year increase of approximately 9%; R&D expenses were RMB 4.6 billion, a year-over-year increase of approximately 27%; general and administrative expenses were RMB 2.3 billion, a year-over-year increase of approximately 53%. **The significant increase in R&D and governance-related investments reflects the company's continued strengthening of platform capabilities, technological investments, and compliance construction.** Management also explicitly stated that ecosystem investments were further increased this quarter, focusing on merchant development and industry ecosystem construction. **In other words, the company is not currently maximizing short-term profits as its sole goal, but continues to improve the platform ecosystem through investment, leaving room for subsequent growth.** ## Cash Flow Maintains Growth, Capital Reserves Remain Ample Despite the year-over-year decline in net profit, the company's operating cash flow performance actually improved. Net cash flow from operating activities in the second quarter was RMB 25.7 billion, a year-over-year increase of approximately 19%; cumulative operating cash flow for the first half of the year reached RMB 42.1 billion, a year-over-year increase of approximately 13%. As of June 30, the company's total cash, cash equivalents, and short-term investments amounted to approximately RMB 456.4 billion, further increasing from RMB 422.3 billion at the end of 2025. Ample cash reserves provide strong support for the company's continued investment in business, technology, and ecosystem construction. The balance sheet also remains robust. As of the end of the second quarter, the company's total assets were approximately RMB 663.4 billion, total liabilities were approximately RMB 215.6 billion, and the debt-to-asset ratio was approximately 32.5%; shareholders' equity increased from RMB 413.4 billion at the beginning of the year to RMB 447.8 billion. ### Related Stocks - [PDD.US](https://longbridge.com/en/quote/PDD.US.md) - [KPDD.US](https://longbridge.com/en/quote/KPDD.US.md) - [PDDL.US](https://longbridge.com/en/quote/PDDL.US.md) ## Related News & Research - [04:30 ETTemu partners with Danish Startup Group to support the Danish startup ecosystem](https://longbridge.com/en/news/296196684.md) - [Pinduoduo Adds “Arrive as Early as Tomorrow” Entry to Its Homepage](https://longbridge.com/en/news/295489441.md) - [Shein's slowing growth tests investor appetite ahead of Hong Kong IPO](https://longbridge.com/en/news/295680641.md) - [EU Commission charges Temu for not cooperating in December raid](https://longbridge.com/en/news/294491041.md) - [Exxon, Lyondell among suitors for Shell's US chemical assets, could fetch US$8 billion, FT reports](https://longbridge.com/en/news/296840104.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**