PDD Holdings Q2 revenue soars 66% on post-Covid demand

Photo credit: CFP

PDD Holdings, the parent firm of Chinese social commerce giant Pinduoduo, reported a 47% year-on-year growth in its net income to US$1.8 billion for the second quarter of 2023.

PDD’s profits surged due to a “positive shift” in consumer outlook spanning multiple product categories, marking the company’s rebound from the impacts of the Covid-19 pandemic, said Jiazhen Zhao, the firm’s executive director and co-CEO.

Meanwhile, the company generated US$7.17 billion in revenue for the June-ended quarter, marking a 66% increase from the same period last year.

While revenues from online marketing services rose 50% to US$5.2 billion, revenues from transaction services more than doubled to US$1.97 billion.

On the other hand, its total operating expenses jumped 41% to US$2 billion mainly due to the increased spending in promotional and advertising activities.

Apart from Pinduoduo, PDD also owns and operates Temu, an online marketplace that has been gaining ground overseas as a rival to ultra-fast fashion firm Shein.

Recently, the Pinduoduo app was barred on the Google Play Store after several Chinese security specialists called out the company for allegedly developing Android apps with malware aimed at tracking users.

Pinduoduo’s strong results come amid a price war in China’s ecommerce sector. JD.com is reportedly earmarking a US$1.5 billion subsidy to lower prices – a move seen as a direct challenge to Pinduoduo. After the news, both companies’ stocks have dipped due to investor concerns about costly price competition.

While Pinduoduo’s momentum and the predictions of it surpassing Alibaba and JD.com signal its strength, JD.com is making strategic changes, including cost cuts and restructuring.

See also: Why SEA should watch out for Shein’s top rival Temu

Currency converted from Chinese yuan to US dollar: US$1 = 7.29 yuan.