PDD $PDD falls 5% as Q1 revenue RMB106.2B misses consensus

PDD Holdings $PDD fell more than 5% in U.S. premarket trading on May 27 after first-quarter revenue missed market expectations. The company reported Q1 revenue of RMB106.2B, or $15.4B, up 11% year over year, according to its earnings release distributed through GlobeNewswire. Investor's Business Daily said FactSet consensus had expected revenue of RMB109.8B and EPS of RMB16.26 per ADS.

The profit gap was larger than the sales gap. PDD reported net income attributable to ordinary shareholders of RMB12.5B, down 15% from RMB14.7B a year earlier. Non-GAAP net income was RMB14.1B, down 17%, while non-GAAP diluted EPS per ADS was RMB9.51 versus RMB11.41 in Q1 2025.

The mix explains part of the pressure. Transaction-services revenue rose 20% to RMB56.3B, but online marketing services and other revenue was RMB49.9B, only slightly above RMB48.7B a year earlier. Costs of revenue increased 15% to RMB46.9B, and R&D expense rose to RMB4.4B from RMB3.6B.

Management framed the quarter as an investment phase. Co-CEO Jiazhen Zhao said supply-chain investments would be a core priority, and finance chief Jun Liu said the company was prepared to invest over the long term. For investors, that language matters because PDD's cash balance remains large at RMB436.1B, but margin compression is now tied to a strategic spending cycle rather than a one-quarter accounting item.

The next watch item is whether transaction-services growth can offset weaker marketing revenue and whether U.S.-listed China e-commerce peers trade on similar margin-reset concerns after the PDD print.

Not investment advice. Verify all figures with primary sources before acting.