PDD Holdings Inc (NASDAQ:PDD) reported fourth-quarter revenue that broadly met market expectations but posted a decline in profit, missing analyst estimates as rising costs weighed on earnings.
The owner of global discount platform Temu said revenue for the quarter rose 12% year-on-year to 123.9 billion yuan ($17.96 billion), roughly in line with analysts’ expectations of 124.4 billion yuan, according to LSEG data.
However, net income fell about 11% to 24.5 billion yuan ($3.56 billion), coming in below market estimates of around $4 billion, as the company ramped up spending to support growth and retain merchants on its platform.
Adjusted earnings also missed expectations. Non-GAAP net profit came in at 26.3 billion yuan, compared with consensus estimates of 31 billion yuan, according to analysts at Jefferies, who attributed the shortfall to weaker-than-expected non-operating income and higher tax expenses.
By segment, online marketing services and other revenue rose 5% year-on-year to 60 billion yuan, missing expectations of stronger growth, while transaction services revenue increased 19% to 64 billion yuan, beating forecasts.
Gross profit reached 68.8 billion yuan, slightly below consensus estimates, with gross margin at about 55.5%. Operating expenses remained elevated, with sales and marketing costs totaling 34.4 billion yuan in the quarter.
Jefferies analysts said non-GAAP operating profit of 29.5 billion yuan was largely in line with expectations but noted that higher costs continued to pressure the company’s bottom line.
Investors are expected to focus on updates around Temu’s strategy in the US and other overseas markets, as well as competition in China’s domestic e-commerce sector, where shifting consumer sentiment and intensifying rivalry are shaping growth prospects.