Affected by fierce competition in the e-commerce industry and continued investment in merchant support, PDD Holdings Inc's second-quarter net profit continued to decline, though still significantly exceeded market expectations. During the earnings call, PDD Holdings management emphasized their willingness to sacrifice short-term profits while maintaining long-term commitment to ecosystem reinvestment.

On Monday evening, PDD Holdings Chairman and Co-CEO Chen Lei stated during the earnings call: "As the external environment continues to evolve and competition intensifies, we remain committed to long-term value creation rather than short-term performance. Our team will prioritize driving high-quality growth by creating long-term opportunities for merchants and investing in consumer experience. As we increase our investment efforts, profitability will inevitably fluctuate, and this quarter's performance may not represent future conditions."

Zhao Jiazhen, Executive Director and Co-CEO of PDD Holdings, commented: "With substantial cash investments, this quarter's revenue and profit were once again impacted to some extent. As Chen Lei mentioned, compared to short-term performance, we are more focused on investments that can bring long-term returns to our platform ecosystem. This is why we are willing to sacrifice profits and maintain long-term commitment to ecosystem reinvestment."

The earnings call is still ongoing. PDD Holdings' US-listed shares turned negative in pre-market trading after previously rising nearly 12%.

Following is the transcript of PDD Holdings' Q2 earnings call (AI-assisted translation):

Host: Joining us today for our conference call are our Chairman and Co-CEO Mr. Chen Lei; our Executive Director and Co-CEO Mr. Zhao Jiazhen; and our VP of Finance Mr. Liu Jin. Chen Lei and Zhao Jiazhen will provide some general comments on our performance over the past quarter and strategic priorities. Liu Jun will present our second-quarter financial results for the period ended June 30, 2024. During the Q&A session, Chen Lei and Zhao Jiazhen will answer questions in Chinese with translation assistance. Please note that English translations are for reference only, and in case of any discrepancies, the original statements should prevail. Now, I am honored to introduce our Chairman and CEO Mr. Chen Lei.

Chen Lei: Hello everyone, thank you for joining our Q2 2025 earnings call. In the first half of 2025, the external environment has undergone rapid changes. At this critical juncture when platform merchants face challenges, we have increased our investment in high-quality development and launched the "100 Billion Support Plan." Through this initiative, we have invested and will continue to invest substantial resources to support our merchant ecosystem. We work hand-in-hand with merchants to actively explore new business models for global operations, seek new growth opportunities, and navigate market cycles.

These significant ecosystem investments are reflected in our Q2 financial performance. Revenue growth further decelerated, and operating profit declined 21% year-over-year. However, as we have emphasized in the past, we prioritize long-term value creation over short-term financial performance. Our focus remains on long-term investments, such as strengthening ecosystem development, driving value chain upgrades, and delivering tangible benefits to consumers. Thanks to our investment in the 100 billion support plan, we are pleased to see our platform ecosystem steadily moving toward sustainable and high-quality development.

Since August last year, our 10 billion fee reduction initiative has brought considerable savings to merchants, creating space for them to innovate and offer consumers more quality products. Meanwhile, our logistics support measures have significantly reduced shipping costs to remote areas, resulting in a 40% increase in order volume in these regions, injecting new vitality.

Over the past quarter, the entire company has worked together to support the 100 billion support plan, providing innovative solutions to help merchants expand their businesses while further reducing merchant costs and commissions. We see businesses of all sizes, from well-known brands to small merchants, gaining new development momentum in our ecosystem.

We observe successful consumer brands reinventing themselves by leveraging consumer insights to shorten product launch cycles and reduce costs. Many industrial belt manufacturers have transitioned from OEM to branded products by entering new market segments, breaking free from homogeneous competition. With help from our dual-origin premium agricultural products program, we see farmers and growers achieving higher profits by strengthening quality control and venturing into food processing for higher added value.

Beyond merchant support, we have also expanded consumer benefit programs. In addition to the 100 billion plan, we launched new long-term consumer activities such as the 10 billion coupon plan.

During this year's 618 shopping festival, beyond the national trade program, we provided additional coupons, driving record sales across multiple categories including fresh agricultural products, electronics, appliances, and Apple products, delivering more value to consumers.

Meanwhile, in our global business, merchants and our platform face a more complex business environment. To address market cycles, we are working with merchants to explore new business models and markets while providing innovative solutions to improve efficiency.

As a platform originating from agriculture, we continue investing in agriculture through initiatives like the Smart Agriculture Competition, now in its fifth edition. Forty-six global teams participated in the preliminary rounds held in July this year, showcasing cutting-edge technologies in AI agriculture, hydroponics, and essential ecological systems. This event is gradually becoming an important platform for agricultural technology research and application. In this year's later competition, participants will bring their technologies from laboratories to practical applications, testing the commercial viability of their research results.

Looking ahead, as the external environment continues to evolve and competition intensifies, we remain committed to long-term value creation rather than short-term performance. Our team will prioritize driving high-quality growth by creating long-term opportunities for merchants and investing in consumer experience. As we increase our investment efforts, profitability will inevitably fluctuate, and this quarter's performance may not represent future trends.

Now I'll pass the microphone to Zhao Jiazhen to share more details about our second-quarter performance.

Zhao Jiazhen: Thank you, Chen Lei. Hello everyone, I'm Zhao Jiazhen. Thank you for joining our Q2 2025 earnings call. In the quarter ended June 30, 2024, we achieved revenue of 37 billion yuan, representing 10% year-over-year growth.

The entire company has accelerated the implementation of the new strategy of 100 billion support, elevating high-quality development investment to an entirely new level, and for the first time in the e-commerce industry, launching a 100-billion-level merchant benefit initiative.

With substantial cash investments, this quarter's revenue and profit were once again impacted to some extent. As Chen Lei mentioned, compared to short-term performance, we are more focused on investments that can bring long-term returns to our platform ecosystem. This is why we are willing to sacrifice profits and maintain long-term commitment to ecosystem reinvestment.

Over the past quarter, based on the comprehensive investment of the 100 billion support plan, we have devoted more energy and resources to the 10 billion fee reduction program, e-commerce westward expansion, and supply enhancement initiatives, continuously reducing fees and improving efficiency for millions of merchants. Many merchants can save millions of yuan annually just from refund service fee reductions, creating more momentum and space for industrial upgrades. Driven by e-commerce westward expansion, eastern and western supply and demand move toward each other in a mutual embrace, with order volume in western regions growing rapidly, greatly enriching the material and spiritual lives of consumers in remote areas.

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