The Maze: PDD Holdings is still growing, but growth now comes with a heavier operating bill. The owner of Pinduoduo in China and Temu abroad reported second-quarter revenue of RMB112.4 billion, up 8% year over year. That missed the RMB116.35 billion analyst consensus cited in the lead story, while net income fell 12% to RMB27.2 billion. The tension is scale versus the rising cost of defending a bargain marketplace at home and abroad.
Growth is shifting toward transactions while customer acquisition stays expensive. Transaction-services revenue rose 13% to RMB54.7 billion, but online marketing services and other revenue increased only about 3% to RMB57.6 billion. Total operating expenses climbed 13% to RMB36.6 billion, led by RMB29.7 billion of sales and marketing spend. Research and development also rose 27% to RMB4.6 billion. PDD is collecting more revenue around completed commerce, yet it is still funding the demand, technology and merchant ecosystem that make those transactions happen.
The profit decline needs a careful read. Operating profit rose 8% to RMB27.8 billion, matching revenue growth, and operating cash flow increased to RMB25.7 billion. The 12% fall in net income also reflects a RMB7.4 billion “other loss” and higher tax expense. This is pressure, not distress: PDD held RMB456.4 billion in cash, equivalents and short-term investments. The group does not disclose Temu separately, so the numbers cannot prove how much of the profit movement came from tariffs, Europe, China or any single platform.
China's marketplace war makes restraint difficult. Pinduoduo competes with Alibaba's Taobao and Tmall, JD.com and ByteDance's Douyin for cautious shoppers and merchants. Weak consumer confidence and the property slump have made discounts, subsidies and support programmes harder to withdraw. PDD is responding with logistics help, merchant investment, platform governance and trust-and-safety work. That can strengthen retention and fulfilment economics over time, but it also turns low prices into a recurring operating commitment rather than a launch tactic.
Temu's overseas advantage is moving from postage to infrastructure. The European Union introduced a temporary €3 customs duty for low-value ecommerce imports from 1 July. The charge can multiply across declaration lines, while new product-identifier requirements raise the standard for catalogue, seller and customs data. Separately, a €200 million fine under the Digital Services Act requires Temu to improve its assessment of illegal-product risks. Cheap parcels now need expensive data, governance and compliance behind them.
Why it matters: Temu's original growth loop paired low-priced Chinese supply with aggressive marketing and friction-light cross-border delivery. Each part is becoming costlier. PDD has the cash to absorb that transition, but the strategic moat is changing. The winners will not simply be the platforms willing to subsidise the next order. They will be the ones that can localise fulfilment, improve product traceability, keep merchants economically healthy and preserve the perception of a bargain after duties and compliance costs arrive. Scale buys time. It no longer buys simplicity.
