Pinduoduo's Q1 Earnings Fall Short of Expectations, Pre-Market Drop Exceeds 5%

Pinduoduo Holdings released its unaudited financial report for the first quarter of 2026 today, with many core indicators falling below market expectations, causing the company's stock to fall by more than 5% before trading on the US market after the financial report was announced.

Revenue-wise, the total revenue for the first quarter was 106.23 billion yuan, a year-on-year increase of 11%, but lower than the market-anticipated 108.6 billion yuan. Of this, transaction service revenue grew by 20% to 56.3 billion yuan, becoming the main engine of growth; online marketing services and other revenues were essentially flat at 49.9 billion yuan.

The gap in profitability is even more pronounced. On a GAAP basis, net income attributable to ordinary shareholders fell by 15% year-on-year to 12.5 billion yuan; adjusted net profit was 14.07 billion yuan, significantly lower than the market's expectation of 24.6 billion yuan. Adjusted earnings per ADS were 9.51 yuan, significantly lower than the expected 16.08 yuan; earnings per share for ADS were 8.48 yuan, lower than the expected 14.48 yuan. Adjusted operating profit was 21.09 billion yuan, below the expected 22.43 billion yuan.

Operating profit grew by 22% year-on-year to 19.6 billion yuan, and Non-GAAP operating profit increased by 15% to 21.1 billion yuan, which is one of the few positive highlights this quarter.

The continuous expansion on the cost side is the core reason for the pressure on profits. Revenue costs increased by 15% year-on-year to 46.9 billion yuan; research and development expenses increased from 3.6 billion yuan to 4.4 billion yuan, slightly higher than the market-expected 4.3 billion yuan; sales and marketing expenses were 33.8 billion yuan; general and administrative expenses were 1.58 billion yuan, slightly lower than the expected 1.79 billion yuan.

On the cash side, as of the end of March, the company's cash, cash equivalents, and short-term investments reached 436.1 billion yuan, an increase of about 13.9 billion yuan compared to the end of the previous quarter; cash flow from operating activities was 16.4 billion yuan, an improvement from 15.5 billion yuan in the same period last year.

Co-Chairman and Co-CEO Chen Lei stated that this quarter marks the beginning of in-depth changes in the company's business, internal processes, and organizational levels. Another Co-Chairman and Co-CEO, Zhao Jia Zhen, emphasized that supply chain investment will be the core strategic priority for the company over the next decade, and the company will invest significant resources in building its own brand business and creating new opportunities for supply chain partners. Vice President of Finance, Liu Jun, stated that the company is ready to make a long-term commitment to supply chain capabilities.