Business Context and Reporting Period
PDD Holdings Inc. (PDD) is a multinational commerce group operating the Pinduoduo platform in China and the Temu platform globally. The company utilizes a Variable Interest Entity (VIE) structure to consolidate operations in China. This Form 20-F covers the fiscal year ended December 31, 2025. The company is incorporated in the Cayman Islands with principal executive offices in Dublin, Ireland.
Key Financial Metrics (Fiscal Year 2025)
| Metric | 2025 (RMB) | 2025 (US$) | 2024 (RMB) | 2023 (RMB) |
|---|---|---|---|---|
| Total Revenues | 431,845,713 | 61,753,116 | 393,836,097 | 247,639,205 |
| Net Income | 97,842,539 | 13,991,297 | 112,434,512 | 60,026,544 |
| Operating Profit | 93,102,131 | 13,313,428 | 108,422,862 | 58,698,762 |
| Operating Margin | 21.6% | 21.6% | 27.5% | 23.7% |
| Cash from Operations | 106,938,690 | 15,292,029 | 121,929,292 | 94,162,531 |
| Cash & Equivalents (End of Period) | 108,900,587 | 15,572,577 | 57,768,053 | 59,794,469 |
| Restricted Cash | 73,830,824 | 10,557,667 | 68,426,368 | 61,985,436 |
| Total Assets | 630,044,327 | 90,095,139 | 505,034,316 | 383,254,411 |
| Total Liabilities | 216,659,171 | 30,981,848 | 191,721,192 | 165,482,504 |
Note: US$ amounts are translated at the rate of RMB 6.9931 to US$1.00 as of December 31, 2025.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 9.7% year-over-year (YoY) to RMB 431.8 billion. This was driven by growth in both transaction services (up 9.3%) and online marketing services (up 10.0%).
- Profitability Decline: Net income decreased 13.0% YoY to RMB 97.8 billion, and operating profit declined 14.1% to RMB 93.1 billion. The decline in operating margin (from 27.5% to 21.6%) was primarily due to increased sales and marketing expenses (up 12.6% to RMB 125.3 billion) and research and development expenses (up 30.3% to RMB 16.5 billion).
- Merchant Base: The number of active merchants increased to 16.8 million in 2025 from 15.8 million in 2024. Average transaction services revenue per active merchant rose to RMB 12,742.
- Debt Repayment: The company repaid the remaining principal of its 2025 Convertible Senior Notes (US$ 738.6 million principal) upon maturity in December 2025. As of year-end, there were no outstanding convertible bonds.
- Investment Activity: Net cash used in investing activities was RMB 43.4 billion, primarily due to purchases of short-term and long-term time deposits and debt securities.
Guidance, Outlook, and Risks
Management Commentary: Management prioritizes long-term growth over short-term profitability. The company continues to invest heavily in sales and marketing to drive user engagement and in R&D to enhance AI and big data capabilities. The company does not plan to pay cash dividends in the foreseeable future.
Key Risks and Contingencies:
- Regulatory Scrutiny (Global):
- EU Digital Services Act (DSA): The European Commission preliminarily found Temu in breach of DSA obligations regarding illegal products in July 2025. A final non-compliance decision could result in fines up to 6% of global turnover.
- US State Actions: Multiple US state Attorneys General (Arkansas, Nebraska, Kentucky, Arizona, Texas) have filed lawsuits alleging violations of consumer protection and deceptive trade practices laws.
- China Regulations: In April 2026, the State Administration for Market Regulation (SAMR) fined Pinduoduo approximately RMB 1.5 billion for violations of the E-Commerce Law and food safety laws, including a nine-month suspension on onboarding new cake vendors.
- Trade Policy: The elimination of the US Section 321 de minimis exemption for imports from China (effective May 2025) and all countries (effective August 2025) increases import costs and customs duties for Temu.
- VIE Structure: The company relies on contractual arrangements with a VIE to operate in China. If these arrangements are deemed unenforceable by PRC authorities, the company could lose control over a significant portion of its assets and operations.
- Legal Proceedings: The company is involved in ongoing litigation with SHEIN regarding intellectual property and unfair competition, as well as securities class actions regarding data security and compliance with the Uyghur Forced Labor Prevention Act.
Investor Verification Checklist
- Regulatory Penalties: Verify the financial impact and operational restrictions resulting from the SAMR fine and the EU DSA preliminary findings.
- Trade Policy Impact: Assess the long-term effect of the elimination of the US de minimis exemption on Temu's cost structure and pricing strategy.
- Expense Trajectory: Monitor the sustainability of rising sales and marketing and R&D expenses relative to revenue growth to determine if operating margins can stabilize.
- VIE Enforceability: Review updates on PRC legal interpretations regarding Variable Interest Entities and the enforceability of the company's contractual arrangements.
- Litigation Outcomes: Track the status of US state-level consumer protection lawsuits and the securities class action regarding data security.