PDD (NASDAQ:PDD) used its fourth-quarter and fiscal year 2025 earnings call to emphasize a strategic pivot toward deeper, long-term investment in its supply chain ecosystem, even as management acknowledged intensified competition in China’s e-commerce market and rising uncertainty in global trade and regulatory environments.
Management highlights: “Hundred Billion Support Program” and supply chain focus
Co-Chairman and Co-CEO Jiazhen Zhao said 2025 marked the company’s 10th anniversary and “the year in which we made our largest investment in high-quality development,” pointing to the launch of the “Hundred Billion Support Program” aimed at supporting merchants. Zhao said the company improved its corporate governance by introducing a co-chair structure at the end of last year, sharpening its strategic focus on investing in the supply chain and pursuing “high-quality brand-oriented growth” to move the supply ecosystem up the value chain.
Operational initiatives: agriculture, industrial belts, and rural logistics
Executives detailed several projects under the company’s broader supply chain initiatives. Zhao said programs such as “Duoduo Local Specialties,” “New Quality Supply,” and a logistics initiative focused on remote regions broadened support from larger merchants and small and medium-sized businesses into “every segment of the supply chain,” with the goal of helping merchants evolve from focusing on product categories to quality and brand building.
In agriculture, Zhao said the Duoduo Local Specialties team worked in regions associated with products including Anyue lemons, Pu’er coffee, Meizhou pomelos, Wenshan blueberries, Fuzhou abalone, and Lianyungang seaweed. He said the company used “one product, one plan” customized support to address issues such as insufficient standardization and low value-add in fresh products, encouraging standardized planting and deeper processing intended to raise value and retain more profit in origin regions.
In manufacturing, Zhao said the “New Quality Supply” effort expanded across industrial clusters including Yiwu accessories, Pinghu down jackets, Hunan spicy snacks, Anhui roasted seeds and nuts, Tianjin potato chips, Zhongshan small appliances, and Shanghai chocolate. He said the company combined fee reductions with support measures to help upgrade supply chain operations and assist industrial regions in shifting from commoditized competition toward brand development.
Zhao also described continued expansion of a rural logistics initiative. Building on “e-commerce to the west,” he said the company has been working on the “last mile” of parcel delivery into villages. According to Zhao, PDD has deployed end-to-end delivery infrastructure in more than 10 provinces and municipalities, including county-level transfer warehouses and village pickup points, and the platform has covered transshipping fees for deliveries to villages to bring more remote rural areas into free-shipping zones.
Global business: compliance investment amid shifting trade and regulation
Co-Chairman and Co-CEO Lei Chen said PDD’s global e-commerce business continued to show steady growth and has reached “a meaningful scale in most countries it serves,” but he cautioned that a more complex geopolitical landscape and evolving trade and regulatory policies have introduced uncertainty that could “impact and even reshape” the company’s global development model.
During Q&A, Chen said the company has received inquiries from regulators in some markets, and that closer scrutiny was understandable as the business scales. He said management views regulatory review as potentially laying a foundation for the next stage of growth and guiding model iteration, while stressing that “compliance is the baseline.” Chen added that the company has made significant investments in compliance, but noted that policy requirements across regions—spanning trade, taxes, data, and product compliance—can vary widely and sometimes conflict, increasing uncertainty and pressure.
Looking ahead, Chen said the company’s global strategic focus will remain on investing in supply chain capabilities, arguing that each link in the supply chain directly affects the consumer shopping experience.
Financial results: revenue growth, higher costs, and margin pressure
Finance Director Jiong Li reported that fourth-quarter revenue rose 12% year-over-year to RMB 123.9 billion, while full-year revenue increased 10% to RMB 431.8 billion, driven by higher online marketing services revenue and transaction services revenue. Li said online marketing services and other revenue was RMB 60.0 billion in the quarter, up 5%, while transaction services revenue rose 19% to RMB 63.9 billion.
Costs and expenses increased as the company invested in operations. Li said cost of revenues rose 15% year-over-year to RMB 55.2 billion in the quarter and increased 23% for the full year to RMB 188.8 billion, primarily due to higher fulfillment fees, bandwidth and server costs, and payment processing fees.
On expenses, Li reported:
- GAAP operating expenses: up 10% year-over-year to RMB 41.0 billion in Q4.
- Non-GAAP operating expenses: RMB 39.3 billion in Q4 versus RMB 35.1 billion a year earlier; 32% of revenue in Q4.
- Non-GAAP sales and marketing: RMB 34.0 billion in Q4, up 9%; 27% of revenue versus 28% a year earlier.
- Non-GAAP G&A: RMB 907 million in Q4 versus RMB 998 million a year earlier.
- R&D: RMB 4.4 billion in Q4 on a non-GAAP basis, and RMB 5.0 billion on a GAAP basis.
Li said non-GAAP operating profit was RMB 29.5 billion in Q4 versus RMB 28.0 billion a year earlier, and non-GAAP operating margin was 24%, down from 25%. For the full year, non-GAAP operating profit was RMB 102.6 billion compared with RMB 118.3 billion in 2024.
Net income attributable to ordinary shareholders was RMB 24.5 billion for the quarter and RMB 99.4 billion for the full year. Basic earnings per ADS were RMB 17.50 and diluted earnings per ADS were RMB 16.51 in Q4, compared with RMB 19.76 and RMB 18.53, respectively, in the same quarter of 2024. Non-GAAP net income attributable to ordinary shareholders was RMB 26.3 billion in Q4 and RMB 107.3 billion for the full year.
Operating cash flow was RMB 24.1 billion in Q4 and RMB 106.9 billion for the full year, compared with RMB 29.5 billion in Q4 2024 and RMB 121.9 billion for 2024. Li said the company ended 2025 with RMB 422.3 billion in cash equivalents and short-term investments.
Outlook themes: growth slowing, competition rising, and profit variability
In response to analyst questions, Zhao said China’s e-commerce industry has entered a phase of intensified competition and slower growth. He argued that platforms should create incremental value across the supply chain rather than relying on traffic acquisition and allocation. Zhao highlighted two initiatives—free delivery to villages and New Quality Supply—as examples of foundational investments intended to support sustainable growth.
On profitability, Zhao said the company remains in a strategic investment phase and that timing differences between investment and return can affect results. He cautioned that, given continued strategic investment and a volatile macro environment, quarterly profit margins may continue to fluctuate and that this volatility could become “a normal” condition. Management encouraged investors to focus less on single-quarter margin performance and more on ecosystem “high-quality development,” which they said underpins long-term intrinsic value growth.
About PDD (NASDAQ:PDD)
PDD (NASDAQ: PDD) is the holding company best known for operating Pinduoduo, a China-based, mobile-first e-commerce platform that emphasizes interactive, social shopping and group-buying mechanics to drive user engagement and low prices. Founded in 2015 by entrepreneur Colin Huang, the business has grown by connecting consumers directly with merchants and manufacturers, with particular emphasis on value-oriented goods and fresh agricultural produce. The company is based in Shanghai and completed a U.S.
